An Employer of Record (EOR) helps companies avoid the risks associated with worker misclassification by ensuring employees and independent contractors are correctly categorized according to local laws. Misclassification can lead to severe penalties and legal disputes, but an EOR manages this process, ensuring all workers are properly classified and documented.
The EOR provides guidance on the differences between employees and contractors and ensures that appropriate contracts and agreements are in place. This proactive approach helps companies maintain compliance with local regulations and reduces the risk of costly legal issues related to misclassification.