Common Myths About Employers of Record (EORs) Debunked

As more companies rely on independent talent, they face a broad range of legal and compliance challenges. Companies of all sizes must understand local labor laws to effectively manage their workforce across different locations. This requires staying on top of various rules and requirements to ensure compliance and avoid legal issues.

An Employer of Record (EOR) can be a valuable partner in modern hiring, acting as the official employer and simplifying talent engagement, regardless of where workers are located. We’ll clear up some of the myths surrounding EORs and share in more detail how their services can truly benefit your organization.

Myths About Employers of Record—and the Truth Behind Them

Myth #1: EORs Are Only for International Hiring

Reality: While global EORs excel at international expansion, they’re equally valuable for managing domestic teams across different regions. Their EOR services help organizations maintain compliance with local and federal labor laws while providing ongoing support for workforce management.

Check Out: What Are the Risks of Hiring Independent Contractors?

Myth #2: EORs Can’t Be Used for Independent Contractors or Other Contingent Workers

Reality: EOR companies support various worker types, including independent contractors and contingent workers. This flexibility is particularly valuable given the rise of independent work globally, with over 72 million people working independently, according to MBO’s State of Independence report.

Myth #3: EORs Are Too Expensive for Small and Medium-Sized Businesses

Reality: EORs offer cost-effective solutions for growing companies, particularly when expanding into new regions. Establishing legal entities in multiple locations can be costly and time-consuming, but EORs provide a flexible alternative. Their EOR services adapt to a company’s needs, providing a scalable solution that supports growth for small and mid-sized organizations.

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Myth #4: EORs Are Unable to Meet Industry-Specific Needs

Reality: EOR service providers are often seen as too generalized for industries like healthcare, finance, or technology. However, this isn’t always the case. Many EORs focus on specific sectors, and you can inquire about these areas of expertise during your initial conversations with them. They may be able to provide customized solutions that meet your industry’s unique regulatory requirements and compliance standards.

Myth #5: EORs Only Handle Payroll and Benefits

Reality: EORs ensure independent contractors are paid accurately and on time, while offering benefits and tax support that helps you attract and retain top talent. Beyond payroll and benefits services, they manage tasks like onboarding, worker classification, and labor law compliance. With these experts handling administrative duties, you can focus on your organization’s biggest goals.

Learn More: 9 Common Contractor Compliance Issues and How to Avoid Them

Myth #6: The EOR Is the Same as an Outsourced HR Department

Reality: EORs complement rather than replace traditional HR functions. They manage back-office employment responsibilities while your own HR team focuses on worker relations. EOR services can also support a positive workplace culture by offering resources for managing remote and distributed teams. A healthy environment is essential for encouraging teamwork, enhancing employee satisfaction, and keeping your best talent engaged.

Myth #7: An EOR Evaluates Worker Performance

Reality: EOR companies manage payroll, compliance, and taxes, but they don’t take over workforce development. Your organization maintains control over activities like goal-setting, performance management, and mentoring team members. In turn, you can develop a workforce with the skills, expertise, and motivation necessary for your company’s success.

Looking for Employer of Record Solutions? Start With MBO Partners

EOR services simplify your contingent workforce management efforts, offering the tools and support you need to build and manage a flexible workforce with confidence. Whether you’re hiring independent contractors or expanding into new markets, an EOR can help you develop a successful strategy for managing your contingent workforce while ensuring that your company stays compliant.

Learn more about MBO Partners and our Employer of Record solutions, tailored to fit your organization’s needs. If you’re ready to build a workforce for the future, reach out to our team today.