16 min As businesses venture into the global market, they often encounter a maze of employment laws, regulations, and tax systems across various countries. This is where the Employer of Record (EOR) steps in, cutting through the complexity of int
A successful business needs to expand into new markets, but it comes with its own challenges. Businesses face a never-ending spiral of employment laws, payroll taxes, and compliance issues when hiring beyond borders. That’s where the Employer of Record (EOR) steps in.
So, what is an employer of record? To put it simply, it’s a trusted third-party organization that legally hires talent for your organization while you have day-to-day control over work. It’s one of the most efficient ways for businesses to expand without stumbling over lasers.
What Is an Employer of Record?
An employer of record is a global partner that acts as the legal employer for your international workforce. The EOR manages onboarding, payroll, taxes, and compliance, while you focus on expanding your business.
Think of it as hiring someone to do the HR and legal heavy lifting so you can concentrate on strategy, sales, and customer experience. For companies, especially those entering new markets, EOR reduces compliance risks while increasing speed.
One might think, “Why should I use an EOR instead of setting up my own entity?”. The answer is simple. Establishing a legal entity in another country takes a lot of paperwork, thousands of dollars, and endless legal resources. With Procloz, you skip this process and gain instant access to compliant hiring structures, saving both time and money.
The Demand for Global Talent
The modern workforce is no longer closed off to one place. Hybrid work culture, digital connectivity, and international collaborations have opened opportunities for businesses to hire the best talent worldwide.
In 2022, the global employer of record market was valued at USD $4.45 billion and is expected to reach USD $6.6 billion by 2029, growing at a CAGR of 6.8%
The main drivers of this growth include:
- A growing need for global expansion by startups and enterprises.
- Lower HR setup costs compared to incorporation or subsidiaries.
- Simplified immigration, payroll compliance, and employee onboarding.
- The ability to attract top professionals without being restricted by borders.
From tech companies hiring developers in Asia to consultants poaching specialists in Europe, what is an employer of record? EOR solutions are quickly becoming the go-to method for workforce management and international hiring. But what about American companies? For companies wondering what is an employer of record, it is essentially a calculated solution that allows them to hire abroad without establishing a local entity.
With Procloz, it’s simple. Instead of juggling multiple providers, you receive one consolidated invoice while we handle the rest. From paying employees across states or overseas in their local currency to managing federal and state taxes, Social Security, Medicare contributions, and employee benefits, Procloz ensures payroll runs accurately, compliantly, and on time. The result? A smooth, stress-free payroll experience for both you and your team.
How Does an Employer of Record Work in The USA?
The essence of an EOR lies in its simplicity. For companies still asking what is an employer of record, the answer is straightforward and easy to understand. An EOR like Procloz takes care of complicated local employment responsibilities in the US, while you remain in control of your team’s operational side.
Here’s how it works in practice for American businesses:
- Simplified Compliance – The US has a complex system of federal, state, and local labor laws covering minimum wage, overtime rules, tax obligations, healthcare, and retirement contributions. Procloz manages all of these regulations, preventing the risk of IRS penalties, Department of Labor violations, or state-level fines.
- Co-Employment Model – The EOR becomes the official legal employer in the US, while you continue to oversee the daily operations of your employees. This structure gives you full control while ensuring compliance from hiring to payroll.
From drafting compliant employment contracts, managing Form I-9 and W-4 requirements, handling healthcare enrollments, and ensuring proper visa sponsorship for foreign employees, Procloz makes onboarding seamless.
Risk Mitigation – Compliance risks in the US such as employee misclassification, wrongful termination claims, or wage-and-hour disputes, are minimized with the EOR structure.
Imagine you’re an India-based company hiring US employees. Without an EOR, you’d need to set up a US entity, hire employment lawyers, and manage payroll compliance with the IRS and state authorities, a process that can take months. With Procloz, you can employ skilled US professionals in a matter of weeks while staying 100% compliant.
Can an Employer of Record help with compliance in the US? The answer is yes. Compliance is one of the main components of what an EOR does. With Procloz, every employment contract, benefits package, and termination policy is aligned with US federal and state labor regulations helping you avoid disputes, penalties, and reputational risks.
Benefits of Partnering With an Employer of Record in the US
Partnering with an Employer of Record in the US provides a strong competitive edge for both local and global companies. Here’s why businesses across industries choose this model:
Faster Market Entry – Instead of waiting months to establish a US entity, foreign companies can hire local employees in weeks.
Cost Savings – Avoid expensive setup and administrative costs tied to registering with the IRS, state agencies, and healthcare compliance systems.
Scalability – Easily expand or reduce your workforce in response to market demands across the US’s dynamic industries like tech, healthcare, and finance.
Focus on Growth – Free your HR and legal teams from compliance headaches so they can focus on business expansion.
Expertise – With Procloz, you gain access to deep local knowledge of US employment laws, taxation systems, and labor market trends.
For businesses planning multi-country expansion with the US as a hub, these benefits multiply quickly—transforming a complex hiring process into an agile growth strategy. And for leaders still asking what is an employer of record, it is the bridge between hiring the right people in the US and maintaining full compliance while scaling globally.
Final Thoughts
Now that you know what is an employer of record and specifically how it works in the US, the next step is choosing the right partner.
By working with Procloz, businesses get a seamless way to hire across borders without creating a local presence. That means faster entry into the global markets, fewer delays, and a smoother experience for employees.
At Procloz, we combine expertise, local knowledge, and proven processes to help businesses expand confidently in the US and beyond. Our solutions cover everything from payroll to compliance, making us a trusted partner in business process outsourcing and global hiring.
Whether you’re a startup looking to enter the US market or an established enterprise scaling internationally with US operations, Procloz ensures you can hire the best talent anywhere, anytime.
Ready to tap into global talent with a trusted Employer of Record in the US? Procloz is here to help. Contact us today to learn more.
ernational hiring and giving companies seamless access to global talent. Curious about what an EOR actually is and how it works? Let’s break it down and dive into this game-changing solution for workforce management.
What is an Employer of Record?
An Employer of Record (EOR) is a third-party service that officially employs a company’s international workforce. By handling everything from onboarding and payroll to ensuring compliance with local labor laws, the EOR takes the legal and administrative load off the client’s shoulders—so the business can focus on what really matters: its core operations.
Demand for Global Talent
According to a report by Valuates, the global Employer of Record (EOR) Platform market was valued at US $4.45 billion in 2022 and is projected to reach US $6.6 billion by 2029, exhibiting a compound annual growth rate (CAGR) of 6.8% during the forecast period of 2023-2029.
Considering the economic impact of the COVID-19 pandemic, the Aggregator Model accounted for 67.55% of the global EOR market in 2021 and is expected to be worth US $4.62 billion by 2028, growing at a revised CAGR of 7.31% in the post-pandemic period (2022-2028). EOR customers include small and medium-sized enterprises (SMEs) and large enterprises. SMEs accounted for 69.75% of the market share in terms of revenue in 2021.
The growing appeal of the Employer of Record (EOR) market is fueled by several factors: the ease of expanding into international markets, reduced HR costs, no need for local incorporation, support with immigration compliance, guaranteed adherence to local laws, and freedom from additional payroll tax burdens. All of these advantages are expected to drive the continued rise of EOR solutions.
How Does an Employer of Record Work?
An Employer of Record (EOR) sets up legal entities worldwide to hire employees on behalf of client companies. The EOR manages local compliance, payroll, taxes, and HR administration, while the client retains full operational control. This co-employment approach allows businesses to quickly onboard international talent without needing to establish their own local entities.
Under this arrangement, the employer of record takes on several key responsibilities. The employer of record performs the following functions:
- Simplifying Compliance: An EOR ensures compliance with local employment laws, tax regulations, and statutory requirements in each country where the client company has employees. This includes handling payroll, insurance, benefits, and termination processes.
- Co-employment Model: The EOR becomes the legal employer of the client’s international workforce, while the client company maintains operational control over the employees. This co-employment model allows businesses to expand their global reach without setting up local entities.
- Streamlined Onboarding: The EOR handles the recruitment, onboarding, and offboarding of international employees, providing a seamless experience for both the client company and the employees.
- Mitigating Risk: By taking on the legal responsibilities of employment, an EOR helps businesses mitigate risks associated with non-compliance, misclassification of employees, and other legal issues that can arise when hiring globally.
This comprehensive approach, addressing regulatory compliance and operational efficiency, highlights the significant advantages of partnering with an Employer of Record.
Benefits of Partnering with an Employer of Record
Partnering with an experienced EOR offers several advantages for businesses seeking global expansion. Some of them are as follows.
- Faster Market Entry: EORs facilitate rapid entry into new markets, enabling companies to hire and onboard international talent without the need to establish legal entities in each country.
- Cost Savings: Outsourcing employment responsibilities to an EOR can be more cost-effective than setting up local entities or navigating complex regulations.
- Scalability: With an EOR, businesses can scale their global workforce up or down as needed, providing flexibility to adapt to changing market conditions, a key aspect of business process outsourcing strategies.
- Expertise and Local Knowledge: EORs bring extensive expertise in global employment regulations and local labor market knowledge, helping companies navigate the complexities of international hiring.
As the demand for global talent continues to rise, the role of employer of record benefits becomes increasingly crucial. By understanding what an EOR is and how it works, businesses can leverage this solution to expand their global reach, access top talent, and stay competitive in the international marketplace.
Tap into Global Talent Pools with an Employer of Record Solution
Expanding into international markets can be a daunting challenge, but with the right partner by your side, it doesn’t have to be. Enter Procloz—your trusted EOR partner. Our advanced payroll solutions combine the power of business automation and the expertise of Employer of Record services. With a global presence, including specialized Australian payroll services, we ensure accurate and compliant payroll processing, tax filings, and employee benefits administration. Bid adieu to complex payroll processes and welcome streamlined efficiency with Procloz handling your payroll needs.
