Employer of Record “Payrolling” Explained

What exactly is Employer of Record (EOR) payrolling anyway? And why has a word that isn’t a word at all become so popular? While we can’t answer the second question, we can give insight into the first.

EOR payrolling is a common, but often misunderstood service. Businesses are often unaware that they need or, in fact, are using this service. EOR payrolling is a service provided by third party companies. These companies become the employer of record. They handle the employment life cycles of workers, including onboarding, payroll processing, and offboarding, while they are on assignment with another company. While payroll processing or “payrolling,” an EOR pays payroll taxes, withholds federal and state taxes, administers benefits and maintains compliance. A company benefits from outsourcing these services by saving the time and money expended on these services.

Who Can Be Payrolled?
Payrollees are temporary workers on assignment with a company for a set period of time. These workers can be seasonal, contract or project-based. They fill a temporary need and the assignment ends once that obligation is fulfilled.

Benefits of Payrolling
Relieve Administrative Burden
When an EOR assumes control of the payroll process, tremendous administrative burden is removed from a company. The company no longer carries the administrative burden of new hire processing and paperwork. The EOR conducts pre-employment screening, including background checks and drug testing. For companies who do not have the back office support to onboard multiple employees at once, this service is especially useful.

Mitigate Risk
Legal liability and financial risk are also relieved when a company partners with an EOR. Compliance differs for contingent employees, making it difficult to manage this workforce. This challenge creates a higher risk of noncompliance for employers. EORs assume this risk and restore peace of mind.

Reduce Costs
Companies who do not have the resources to process an influx of temporary employees will save money when using an EOR. EORs handle unemployment and workers’ compensation insurance, reducing cost and liability for companies. Additionally, companies will not have to hire and pay additional internal staff to process these employees.

NexusCW Can Help!
We payroll hundreds of employees across a wide variety of industries. We have helped our clients save time and money. No longer do our clients face the challenge of engaging temporary talent. We streamline the process, giving our clients the freedom to focus on the growth of their business. Give us a call today to discover how we can do the same for you.

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