It is not uncommon to hear employer of record services equated with staffing services. Although the two are mutually beneficial, an employer of record is a separate entity from a staffing agency, each with distinct functions and responsibilities.
Roles
A collaborative relationship exists between an employer of record and its client, which can be a business or a staffing agency. While an employee works for the client, the employer of record assumes the role of the legal employer for tax purposes. The employer of record handles all administrative functions, such as payroll processing, federal & state tax withholding and filing, record-keeping, and all HR support functions. The EOR also conducts pre-employment screening such as background checks and drug testing, in addition to human resources functions such as administering benefits, termination of employees, and all other worker issues. On the other hand, a staffing agency recruits candidates to meet the temporary workforce needs of clients. According to SHRM it's not uncommon for staffing agencies to utilize and EOR for their back-office duties.
Advantages
For the client company, the benefits of outsourcing employer of record services are numerous. By delegating its human resources and payroll functions, the client company saves both time and money. Bringing new talent aboard is no longer a struggle for businesses. Onboarding is quick and easy. Staffing agencies who partner with employers of record will acquire the backgrounds necessary to function as an employer. The EOR gives the client peace of mind, knowing that these ongoing duties are being handled by experienced professionals.
Duties & Liabilities
The purpose of each entity creates separate duties and liabilities. The day-to-day operations remain under the control of the client company while the behind-the-scenes duties are handled by the employer of record. The client manages workers and is responsible for maintaining workplace safety and compliance. The EOR handles the behind-the-scenes operations and assumes liabilities for these operations, as well, including legal compliance related to payroll, taxes, and employee benefits. This alleviates a company’s human resources department from the headache of staying updated on constantly changing local, state and federal laws.
Although the services provided are quite different, the symbiotic relationship between an employer of record and staffing agency makes this a mutually successful partnership. NexusCW is ready to bring this success to your company. Contact us today!
