How Does an EOR Help With US Compliance?
What is an employer of record (EOR)?
An employer of record (EOR) is a third-party company that acts as the legal employer for a worker, handling tasks such as payroll, taxes, and compliance.
Why work with an EOR for US compliance?
A capable EOR eases the burden of compliance and is an asset for international recruitment companies looking to expand their global reach and avoid legal risk. Working with an EOR allows recruitment agencies to focus on finding and placing the best talent for their clients, while having the peace of mind that their legal and compliance requirements are met.
When it comes to US compliance, there’s a lot that recruitment companies need to consider and keep on top of; from local labor laws and taxes, to legal forms, benefits and payroll. For international recruitment companies looking to scale their operations in the states, the US compliance landscape can be especially challenging due to varying laws from state-to-state.
In the US, there are some employment laws set at the federal level, as well as unique employment laws that apply to individual states. One of the most significant areas of variation among state laws is minimum wage. The federal minimum wage is currently set at $7.25 per hour, but many individual states and municipalities in the US have their own minimum wage laws that are set at a much higher rate and continue to evolve with time. An EOR can offer guidance to ensure an agency’s US workforce is meeting these requirements.
Employers must also comply with a host of other employment laws at the state level, such as worker’s compensation laws, wage transparency laws, discrimination laws, unemployment insurance laws, and occupational safety and health laws. Worrying about what benefits need to be provided to a specific employee and keeping up with the ins and outs of local employment laws in the US can require a lot of time and energy.
Recruitment companies can opt out of the guesswork and ensure compliance, all while saving valuable time, by working with an EOR. An EOR operates in accordance with all laws and is a valuable resource when it comes to offering guidance on complying with US local laws on a state or federal level.
In addition to having the expertise necessary to understand ever-changing US employment laws, an EOR can offer insight on the topic of worker classification. The federal government and many individual states have different laws that determine whether a worker is an employee or an independent contractor.
Worker classification is a crucial part of the process of recruiting and hiring talent in the US because a worker’s classification can affect the employer’s legal obligations, such as the payment of taxes and compliance with labor laws.
US compliance can be a headache for international recruitment companies looking to expand their global reach into the states, but it doesn’t have to be. An EOR can take the legal burden of employing US workers off a company’s shoulders and act as a guide every step of the way.
How does an EOR ensure US compliance?
An EOR will handle all necessary paperwork, ensuring US contractors and employees are properly classified and paid in accordance with all US local laws. Working with an EOR can be especially beneficial for international recruitment companies operating in the US because the legal forms that are required for US workers can be complex, and the requirements are always evolving.
When bringing on a new hire, international recruitment companies can expect an EOR to handle the preparation and submission of new hire paperwork. This can include legal forms such as the I-9 Employment Eligibility Verification, W-4 Employee’s Withholding Allowance Certificate, and state-specific new hire forms. EOR’s ensure a compliant and efficient onboarding process by handling all necessary paperwork for new hires.
Another important task EOR’s handle is the administration of employee benefits. Some examples of what an EOR can do are enroll employees in benefits plans, such as health insurance and retirement plans, and handle the associated paperwork. This is just another way that EOR’s create a compliant onboarding, while taking the administrative burden off the recruitment company.
Another crucial aspect of hiring compliantly in the US is adhering to laws regarding payroll and taxes. EOR’s handle the preparation and submission of payroll tax forms such as W-2’s, 1099’s and more. EOR’s save recruitment companies money by completing these otherwise time-consuming tasks, while also eliminating the potential legal risk associated with hiring and paying independent contractors and employees in the US.
What else does an EOR do?
In addition to helping with US compliance and mitigating legal risk, an EOR provides many other benefits for international recruitment companies looking to scale their operations across borders.
An EOR can provide a streamlined onboarding and payroll process, saving a recruitment company countless hours of administrative work. A consistent, seamless onboarding process and reliable, accurate payments for contractors and internal employees can help international recruitment companies build a reputation in the US as a dependable and compliant employer.
An EOR can also act as a guide to US expansion; providing ongoing support and advice on operating in compliance with local employment laws while scaling US operations.
Learn about the benefits of working with an EOR
Disclaimer: This post is provided for informational purposes and should not be considered legal advice, the final word on this topic or a political opinion.