Employer of Record (EOR)

Definition

An Employer of Record (EOR) is a service provider that legally employs workers on behalf of a client business, handling all employment-related obligations: tax registration, payroll, benefits, compliance, and termination. The client directs the work; the EOR is the official employer.

EORs are most commonly used for cross-border hiring (e.g., a US company hiring an employee in Germany without setting up a German entity) or for converting 1099 contractors to W-2 employees without onboarding them through your own payroll. Domestic EORs are increasingly common for companies that want full HR offload without entering a multi-client PEO pool.

The line between EOR and PEO has blurred. The functional distinction: PEOs typically operate co-employment in the US under specific PEO statutes; EORs typically operate sole employer of record arrangements internationally or in domestic single-client structures. For US-only buyers, PEO is usually the natural fit unless international expansion is a near-term need.

Common questions about Employer of Record (EOR)

Related terms

• Professional Employer Organization (PEO) — A company that enters into a co-employment relationship with a client business to handle payroll, benefits, workers comp, and HR compliance.
• Co-employment — A legal arrangement where a PEO and a client business share specific employer responsibilities for the same workforce.
• Administrative Services Organization (ASO) — A service model where a provider handles HR administration without entering co-employment — the client remains the sole legal employer.

Browse the full PEO glossary

This is one entry from our PEO glossary covering payroll, benefits, workers comp, HR compliance, and PEO mechanics. Browse all terms.