What Is an Employer of Record (EOR)? A Full Guide

A Guide to Global Hiring Without the Legal Headache

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Employer of Record (EOR):

What It Is, What It Does, and Why It Matters

An Employer of Record is a third-party organization that legally employs workers on behalf of another business. This arrangement allows companies to access talent in regions where they lack a legal entity while transferring the administrative and legal responsibilities of employment to the EOR. These responsibilities typically include payroll, tax withholding, benefits administration, compliance with local labor laws, and termination support.

In short, an EOR becomes the official employer for tax and legal purposes, while the client company directs the employee's day-to-day work.

A common question we get: Does an EOR have to be physically located in the same state or country as the employees/ companies it supports? 

The answer? No! An EOR does not need to be physically located in the same state or country as the employees it supports. If you're expanding into new geographies, navigating cross-border employment laws, or scaling your team fast, using an EOR solution is often faster and more cost-effective than opening a legal entity.

How EORs Enable Scalable Global Hiring

The most obvious benefit of an EOR is fast market entry. Instead of spending months and significant capital establishing a foreign subsidiary, businesses can tap into local talent in a matter of days. Eastridge, for example, has built an EOR infrastructure that supports hiring across all 50 U.S. states, Canadian provinces, and 80 countries globally. 

But the value of an EOR goes far beyond speed. The right partner brings proactive legal monitoring, in-country expertise, and technology platforms that reduce the risk of misclassification or noncompliance. Eastridge’s Talient platform, for instance, is a mobile-optimized system offering integrated timekeeping, onboarding, payroll, and benefits with automated compliance updates and SOC 2/ISO 27001 certification.

What Does an EOR Do? 

EOR providers vary widely in capability, but a full-service provider typically handles:

Global Employment Compliance

An EOR ensures that employment contracts, onboarding documents, and worker classification meet local legal standards in each country or U.S. state.

Global Payroll & Tax Filing

An EOR manages end-to-end payroll processing in local currencies, plus handles tax withholding and reporting obligations helping businesses stay audit-ready.

Benefits Administration

Top-tier EOR providers offer benefits packages like health insurance, 401(k), PTO, and even equity participation, tailored to local market expectations.

Onboarding & Offboarding

An EOR oversees onboarding and offboarding to ensure compliant, seamless transitions and consistent worker experiences across regions.

Why Compliance Is the Real ROI

Compliance isn’t just a box to check...it’s your defense against regulatory fines, lawsuits, and reputational damage. Unlike Professional Employer Organizations (PEOs), which share employer responsibility in a co-employment model, EORs assume full legal responsibility for employment. This structure limits exposure and simplifies liability for client companies. With regulations changing rapidly, especially in high-risk jurisdictions, choosing an EOR with real-time compliance monitoring and in-house legal teams is critical.

EOR vs. PEO vs. Staffing Agency: Know the Difference

While a staffing agency helps find talent and a PEO co-manages employment, an EOR is the legal employer. This distinction matters: a staffing agency might help fill a role, but it won’t shield you from employment law liabilities. A PEO might manage benefits, but it doesn’t take full accountability. Only an EOR provides the legal insulation needed to hire internationally or in jurisdictions where you’re not registered.

EOR Pricing: Beyond the Markup

A common misconception is that EOR pricing is all about the markup rate. In truth, buyers must look at total cost of ownership (TCO). With an EOR, clients can often save 15–25% versus managing employment internally, thanks to reduced overhead, risk mitigation, and operational efficiency. At Eastridge, our transparent markup includes all statutory taxes, insurance, compliance, and technology. No hidden fees. No surprise charges.

Who Should Use an EOR?

An EOR is ideal for companies expanding into new markets, hiring remote teams, or employing talent in locations without a local entity. It's also the right fit for organizations looking to reduce legal and compliance burdens without sacrificing workforce quality. Whether you're a high-growth startup or an established enterprise, a well-structured EOR solution offers both flexibility and control.

What Makes Eastridge Different?

At Eastridge, we’ve been delivering employer of record services since 2007 with a workforce heritage dating back to 1972. We combine local knowledge with global reach, serving clients in industries from MedTech to manufacturing, with dedicated support teams and 24/7 issue resolution. Our 90%+ client retention and Net Promoter Score of 90 speak volumes. 

Our EOR services don’t start and stop at payroll…they extend to benefits customization, compliance audits, multi-location tax handling, and predictive workforce analytics. That’s why enterprise clients trust us not just to hire globally, but to do it the right way.