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Why an Employer of Record Plays Such a Vital Role

Posted on February 13th, 2019 Read time: 2 minutes

EOR

By: Sara Jensen, Vice President of Business Development

An employer of record is an administrative Swiss Army knife that can handle, among other things, payroll, back office support, billing, security clearances, pre-employment screenings, benefits, and contractor compliance, all while keeping you on the right side of any changes in tax and employment law.

Essentially, it’s all in the name — your EOR acts as the “employer” for all your HR needs so you can devote more time to business operations.

Of course, these tasks could all be handled in-house. But chances are you didn’t go into business because you love completing administrative paperwork. By letting an employer of record like IES take over the behind-the-scenes operations, you can focus more on what really makes your business successful.

And (because we eat, drink, and breathe this stuff), IES brings a wealth of background knowledge and expertise in compliance laws and regulations to every client we work with. That takes the risk off your hands and makes sure all your HR services are handled as efficiently as possible.

It can be easy to mix up an EOR and a professional employer organization, or PEO. They do many of the same things, but the difference lies in how they do these tasks — and for whom in the organization they do them for.

Companies that use PEOs outsource the employment and human resources functions for all of their employees. On the other hand, using an EOR allows companies to provide these functions for only a portion of their workforce — often where it makes the most sense for the business.

Here are some of the major differences between a PEO and an EOR:

PEO

  • Replaces your HR department
  • Typically requires you to have a minimum of five to 10 employees before it provides services
  • Requires you to roll all employees under its services
  • Requires you to register in each state where you have employees
  • Unemployment and workers’ compensation claims will typically be processed under your company

EOR

  • Lets you outsource a portion of your HR functions
  • Allows more flexibility, as you can outsource the employment of a portion of your workforce
  • Allows for a fluctuating workforce
  • Lets you employ workers in states where your company isn’t registered because the EOR is the legal employer
  • Covers all applicable insurance and coverage bases, including professional or general liability, workers’ compensation, and unemployment (provided under the EOR’s Federal Employer Identification Number on behalf of the employees)

EORs can take the burden of HR paperwork off your hands and help you focus on what you do best: running your business. If you think an EOR can help your business thrive, contact IES today to get started! Email us at info@innovative-es.com or call 858-300-2757.

Sara Jensen is Vice President of Business Development for Innovative Employee Solutions (IES), a San Diego-based provider of Employer of Record services, outsourced payrolling services, and contingent workforce solutions. For more than 40 years, IES has served thousands of employers and recruiters nationwide, offering superior outsourced payroll and HR administration services.

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