An AOR, or “Agency of Record,” is a third-party entity providing compliant workforce administration for independent contractors. An AOR company assumes responsibility for ensuring your contractors are paid compliantly with all applicable regulatory and tax considerations wherever they are assigned. Workforce management leaders leverage AORs to ensure thorough, ongoing IC compliance and to mitigate the risks of misclassification. An AOR also saves time for workforce management by managing IC invoicing and payment processes.
It is fairly simple to determine if your organization can benefit from an AOR arrangement to manage contract staffing. Particularly, if your organization intends to ramp up usage of contract workers—particularly independent contractors, freelancers, or SOW project workers—but doesn’t have the bandwidth to adequately manage the following HR-related tasks for the influx of new contractors, the use of an AOR can help ensure compliance with all required regulatory compliance, worker classification, tax, and business-rules-based concerns. These things are critically important to a successful contract worker program:
Adding to HR headcount in order to manage a newly expanded contract workforce can add significant costs to an HR department. And if cost savings and efficiencies are among the reasons why you may be considering adding contract workers to your workforce mix, then it seems counterproductive to add full-time resources to HR. In these cases, the AOR is definitely worth consideration.
Contact nextSource to learn more about leveraging an Agency of Record for your business.