Managed Service Providers: Not All EOR Partners Are Created Equal

When it comes to choosing a managed service provider for staffing needs, one of the most important things to look at is whether a potential partner provides employer of record (EOR) services.

In an increasingly complex work environment that sees businesses relying on a mix of both full-time staff and independent contractors, engaging with an EOR partner is more important than ever for successfully growing and managing your team.

By essentially outsourcing onboarding, invoicing, payroll and compliance administration, your team is better equipped to focus on activities that grow the business, rather than worrying about staying in line with employment regulations.

However, not all EOR partners are created equal. Understanding the aspects of a quality EOR partner will prove essential for your own business’s lasting success.

Quality Outcomes With EOR Basics

First and foremost, you must have confidence that an EOR partner has the capabilities to deliver quality outcomes for its essential services. By serving as an individual’s employer of record for tax purposes, an EOR partner assumes all tasks and liabilities associated with employment.

This includes screening, managing employee onboarding and payroll processing, handling compliance costs, ensuring proper classification of independent contractors, tax withholding and deposits and even administration of employee health benefits (when applicable).

A quality EOR partner will also stay up-to-date on changes in employment law that could affect compliance to prevent any liability issues that could affect their clients.

For companies that use an EOR partner, this ensures that they don’t have to worry about the back office responsibilities and liabilities associated with employment and HR. This can significantly lower expenses for the business by reducing its own hiring needs and protecting it against IRS penalties stemming from employee misclassification.

With these essential tasks covered by an EOR, businesses will no longer struggle with common employment and payroll liability challenges, such as tax and risk burdens, liability for freelancers, vendor requirements, turnover costs and so on.

The reduced administrative burden enables employers to focus on delivering a quality work experience that engages top talent and makes them more likely to want to work with them again in the future. An EOR that sponsors benefits such as PTO eligibility and health insurance options can also provide a significant competitive advantage when competing for top talent.

Digital Relationship Management

These days, the vast majority of independent contractors handle their business efforts online — so why shouldn’t your EOR? Ideally, your EOR should provide a secure, cloud-based system that lets you log in and manage your account at any time. You will always have a full picture of where things stand.

This can be especially important for managing your own cash flow concerns. Digitally backed systems facilitate end-to-end funding models that help eliminate cash flow concerns. In this upfront profit model, you can get paid yourself and pay your contingent workers all in the same week.

With a digital management system, an EOR will be better equipped to meet the urgency of your daily operations in regards to employment liability, tax reporting, claim management, benefits administration and so forth. This results in a true turnkey solution that can be easily integrated into your currently existing processes.

Of course, this should all be backed by world-class care that focuses specifically on your company’s unique needs. An EOR should view itself as a dedicated success partner — meaning they view your success as their success. This occurs when the organization has a sense of urgency and an ownership culture with its clients. Readily available in-house practical expertise and partnership guidance help you manage vital contractor relationships.

High-Level Security

While an EOR that fully embraces today’s technology tools can go a long way in facilitating successful relationships with independent contractors, there is no denying that there are potential pitfalls associated with a tech-heavy system. To function effectively, EORs make use of client data — and that could make them a target.

Notably, a report from Kaspersky found that, “In 2021, incidents involving shared data with suppliers was the costliest breach for enterprises ($1.4 million) […] For SMBs, incidents affecting suppliers were the costliest form of all cybersecurity incidents (not just data breaches), costing SMBs $212,000.”

An EOR partner that doesn’t prioritize digital security with its tech-based offerings puts its clients’ data at risk, as well as the personal information of the independent contractors it works with. A data breach could prove truly devastating for all involved.

Because of this, quality EOR partners must clear demonstrate their commitment to data security. For example, hosting on AWS ensures physical data security and uptime, while OAuth2 implementation enables secure integration with cloud and SaaS services without storing clients’ usernames or passwords. EOR partners should also encrypt their data with SSL — ideally with 256-bit AES encryption.

Other best practices include the client retaining full data ownership, and the use of established governance policies with role-based permissions. Your data should never be accessed without your permission or sold for advertising purposes.

An EOR partner that follows these data security principles ensures that using such technology will only benefit your business in its efforts to engage with independent contractors.

Make myBasePay Your EOR Partner of Choice

When it comes to reliable EOR services, look no further than myBasePay. Our turnkey EOR provides a fully-qualified on-demand employer and payroll platform for the contingent workforce. myBasePay takes true ownership of these processes, assisting with everything from onboarding and payroll processing to worker classification, tax withholding and more.

In addition to providing world-class, client-first care that improves your back office efficiency and recruiting processes, myBasePay puts security first. You maintain full ownership of your data, which is kept private and never used for advertising. myBasePay data is hosted on AWS and fully encrypted, so you can trust that essential data related to your hiring efforts is kept safe.

By fully embracing today’s technology, myBasePay aims to deliver a more efficient and reliable EOR experience than ever before. With full-service back-office solutions that manage contingent worker relationships from start to finish, you can focus on high-level activities that will have the biggest impact on your company’s growth.

 

Author: Cesar Jimenez, myBasePay CEO
Cesar A. Jimenez is an entrepreneur, investor, and military veteran with over 25 years of staffing industry expertise successfully leading technology staffing organizations. His expertise in the IT industry allows him to use his experience as a thought leader for talent acquisition, staffing, IT, and recruitment technologies with a passion for contingent workforce solutions. Cesar has held various leadership roles for both a global staffing organization and technology solutions companies. This expertise has enabled him to develop alternative workforce models that provide the agility for organizations to be competitive in today’s marketplace. In his spare time, he enjoys spending time with hisfamily, working out, and coaching high school baseball players.