If you’re a recruitment firm placing talent across the U.S., outsourcing hiring and workforce management can be a game-changer. There are three primary types of services you can utilize: EORs (Employers of Record), PEOs (Professional Employer Organizations), and Payroll Providers. Understanding the differences between them is critical to ensuring a smooth experience. 

Each model supports your hiring, payroll/payments, and workforce management differently, but not all are created equal – especially when speed, compliance, and seamless onboarding matter most. 

Let’s explore how these models stack up for recruitment agencies and subtly highlight why EORs often come out on top. 

Which one is right for you?  

EOR (Employer of Record) – Ideal for firms hiring in jurisdictions where you do not have a legal entity – perfect for international or cross-state placements. It is ideal for recruitment agencies, staffing firms, and franchise networks with contractor-based workforces. Some EORs such as Lead & Gain can onboard and manage every worker type.  

What services can an EOR provide? 

PEO (Professional Employer Organization) – Best for companies with an existing entity who want to outsource many of the compliance and HR related tasks while also gaining access to insurance and benefits through a PEO. It is typically most suitable for your internal hiring needs. 

Payroll Provider – Suitable for companies with an existing entity that only need a software solution to help run payroll and onboarding processes themselves. 

Who’s the Legal Employer? 

• EOR: Acts as the full legal employer, assuming all employment risks. 
• PEO: Shares employer responsibilities (co-employment model), but the client still holds risk and must operate a legal entity. 
• Payroll Provider: Does not act as the employer – clients must manage all legal and compliance obligations. 

Contractor & Employee Management 

• EOR: Manages onboarding, contracts, HR support, and offboarding entirely – it’s ideal for contractor placements in new markets. 
• PEO: Supports some HR tasks but depends on the client having their own HR team and systems in place. 
• Payroll Provider: Offers no contractor or HR management beyond providing tools to help manage these processes. 

Compliance Handling 

• EOR: Handles all local employment laws, employment type, and international compliance. 
• PEO: Offers limited compliance support within the U.S.; clients retain significant responsibility. 
• Payroll Provider: Provides tools to help manage compliance. Most payroll providers will do tax filings and gov’t reporting associated with payroll. 

Understanding Employment Taxes in the U.S. 

Benefits & Perks 

• EOR: Offers locally compliant benefits such as health insurance, retirement plans, statutory benefits – tailored to the employee’s jurisdiction (state or country). Useful for international or multi-state hiring, where clients don’t have a local entity. The benefits are standardized and managed by the EOR, making them easy to roll out quickly across geographies. It allows recruitment firms to offer competitive packages to global talent without managing vendor relationships or legal risk. 
• PEO: Employees are added to the PEO’s group benefit plan – often providing better rates and coverage than the client could get alone. Benefits are usually limited to U.S. employees only; international or remote workers often fall outside the PEO’s coverage. However, the client shares responsibilities for benefits selection, management, and compliance. 
• Payroll Provider: Some can provide tools for benefits management, but your business will still need to procure benefits packages. 

Legal Paperwork & Contracts 

• EOR: Takes care of all legal employment contracts, offer letters, termination documentation, and tax forms. 
• PEO: Shares the responsibility – clients must still draft and manage some documentation with the PEO providing supplemental co-employment related documents. 
• Payroll Provider: Clients handle all documentation themselves. 

Payroll & Tax Filing 

• EOR: Fully manages payroll, withholdings, and tax filings across borders and states. 
• PEO: Payroll is initiated and submitted by you. PEO typically handles tax filing within the U.S. and handles W-2s for employees under co-employment. 
• Payroll Provider: Manages basic payroll and tax submission but may not handle employment-related filings. 

Tech Platform & Usability 

• EOR: Often includes a comprehensive dashboard with onboarding, HRIS, reporting, and payroll – all in one platform. 
• PEO: Varies in quality and usability; generally focused on domestic needs. 
• Payroll Provider: Usually offers a simple interface for basic payroll tasks — various other tools are provided by some payroll providers as add-ons for additional costs. 

Pricing and Value 

• EOR: Charges a per-employee monthly fee, typically as a management fee as a percentage of payroll/payments, that includes all services—ideal for clients who want end-to-end coverage without setting up an entity. 
• PEO: Lower per-head cost, but clients must invest in entity setup and internal HR support. 
• Payroll Provider: Lowest cost but only covers salary processing—not compliance or legal risk. 

Why EORs Fit Recruitment Firms Best 

As a recruitment firm placing talent across borders – or even across U.S. states – you need a solution that minimizes friction, mitigates risk, and gets talent to work fast. 

EORs such as Lead and Gain offer: 

• Fast employment without entity setup 
• Full legal and tax compliance in unfamiliar jurisdictions 
• Streamlined onboarding and offboarding for every worker type 
• Localized benefits packages to boost candidate acceptance 
• Complete HR, payroll, and documentation support 
• Tech systems tailored to best respond to the needs of recruitment firms 
• Separation of temp workers from internal employees for benefits purposes, eliminating the need to legally offer temp workers the same benefits as internal staff 

Lead & Gain offers customized contractor workforce onboarding, timesheet management, compliance and payment solutions to domestic and international staffing firms. If you’re ready to scale with us, get in touch with our team today.