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Employer of Record vs. Staffing: What’s the Difference?

When it comes to managing your workforce, the day-to-day tasks can add up quickly. This is especially true for companies that utilize contingent workers, who operate under an entirely separate set of rules and regulations than permanent employees.

As a result, many businesses choose to partner with an “employer of record,” otherwise known as payrolling services. But what exactly does that mean, and how is this service different from the other workforce and talent management solutions that exist today?

What is an employer of record (EoR), and what do they do?

An employer of record, or EoR, is a third-party partner that takes on critical administrative and payrolling responsibilities for a client’s contingent workforce.

Partnering with an EoR not only frees up internal resources to focus on other important duties but also reduces risk. In addition to handling administrative tasks like background screenings, onboarding, timesheet management, and benefits enrollment, an employer of record will also ensure compliance with all relevant payroll and tax laws.

Related: What is an Employer of Record (EoR)

What’s the difference between an employer of record and a staffing agency?

While the two are related, an employer of record is different than a staffing agency.

An employer of record focuses on the tasks and liabilities that come once an employment offer has been made and accepted. A staffing agency, on the other hand, is responsible for sourcing employees. This includes crafting job postings, finding and interviewing candidates, and negotiating offers.

Some companies use one vendor to fulfill both their staffing and employer of record needs, while others source candidates in-house, then hand them off to an employer of record for onboarding and payroll.

How can an employer of record help companies cut costs?

A good employer of record saves its clients critical time, resources, and money.

Anyone who has been responsible for payroll knows what an arduous task it can be. When adding contingent workers to the mix, your internal HR resources might be stretched even thinner.

Offloading payroll and other administrative tasks to an employer of record is a cost-efficient way to ensure you’re maximizing your contingent workforce. After all, the whole point of hiring contingent workers is to create more efficiency, and it shouldn’t come at the expense of losing efficiency elsewhere within your organization—for example, your payroll department.

Related: Employer of Record Benefits [Video]

How does an employer of record reduce liability for businesses?

As the worker’s legal employer, the EoR assumes liability for any employment issues, along with payroll compliance and tax laws.

By partnering with an EoR, you’ll have an entire team of experts working for you who understand sensitive co-employment and misclassification issues and the everchanging labor laws that pertain to your contingent workforce.

To sum it up, why should businesses partner with an employer of record?

Simply put, an employer of record will help ensure your contingent workforce is being managed efficiently and effectively from start to finish. An EoR can save you time and money while freeing up internal HR resources to focus on other essential parts of the business.

Related: Should Your Partner With an Employer of Record?

Contingent workers can bring tremendous value and efficiency to your organization, but it’s important to have an infrastructure in place to ensure their proper management and oversight. Learning more about Broadleaf’s employer of record services is a great first step.

Related: Employer of Record Success Stories

This blog was authored by Brandin Austin.