An Employer of Record (EOR) is a third-party company that legally employs a worker on your behalf in a state or country where you don't have a registered legal entity — handling compliance, tax withholding, and local employment law so you don't have to become an expert in it yourself.
Setting up a legal business entity in another state or country just to hire one person is expensive, slow, and often not worth it for a single hire. An EOR removes that requirement — you pay a monthly per-employee fee, and the EOR becomes the legal employer on paper while the person works for you day to day.
A contractor is self-employed and responsible for their own taxes; there's no employer-employee relationship. An EOR arrangement makes the worker a legal employee, with the EOR company handling payroll tax withholding, benefits administration, and compliance — which carries different legal protections than contractor status, and matters especially for misclassification risk.
Our vetted pick, Deel, offers EOR services alongside contractor management and global payroll. See our guide to hiring your first team member for a full walkthrough of when EOR makes sense versus a simpler contractor arrangement.
A third-party company that legally employs a worker on your behalf in a location where you don't have a registered entity, handling compliance and payroll tax.
Setting up a legal entity elsewhere is expensive and slow. An EOR lets you hire compliantly there for a monthly per-employee fee instead.
No — a contractor is self-employed. An EOR arrangement makes the worker a legal employee with different protections and obligations.
