Employer of Record

A payroll partners that is responsible for employment compliance and liability of employees. Companies contract with them to outsource the work of setting up operations in all jurisdictions in which they have employees.

See also:

  • ASO

    An administrative services organization (ASO) is an outsourcing provider for HR related administrative work. This is similar to a PEO (professional employer organization), but without co-employment. It is significantly less expensive than a PEO because the ASO does not carry employment-related liability.

  • PEO Was Made up to Dress up the Image of Employee-Leasing

    Employee leasing was started in the 1960s and is a predecessor to professional employer organizations (PEO). It was used to exploit loopholes in the US tax system. The idea evolved from staffing agencies to include HR and worker safety services until someone coined the phrase PEO to sound more like HMO and clean up the image of employee leasing.

  • Global Employment Organization

    A global employment organization (GEO) is an employer of record that is used to hire employees outside of the client’s country. They provide payroll administration, benefits administration, and HR services. As an EOR, they also take on the liability for statutory compliance.

  • Peos Offer Better Healthcare for Small Businesses

    One of the benefits of a PEO for small businesses in the U.S. is access to better healthcare plans. Since the PEO is an employer of record, they have many employees which improves their buying power when negotiating plans. A small business on their own does not have many employees to negotiate better rates.

  • Professional Employer Organization

    An outsourcing firm that typically offers payroll services, tax withholding, HR, and benefits. Employees contract directly with the company (e.g. the offer letter origin is the company not the PEO) and then the PEO enrolls them in payroll and other services. PEOs charge two to seven percent of payroll.

  • Peos Are an Underwriting Business

    Since PEOs are the employer of record, they shoulder the insurance risk for health care, workers compensation, and unemployment. They must be mindful of this exposure as they grow and control for it with risk management.

  • Differences Between PEO and EOR

    An EOR is much more expensive because they take on all of the liability and compliance on behalf of the company. Company’s use an EOR to hire employees globally where they do not have a local legal entity.