Best Practices for Employer of Record (EOR) 2024

As a fundamental corporate function and a significant legal safeguard, maintaining accurate and well-organized personnel records is an essential component of human resources. A company may lose thousands of dollars as a result of HR compliance errors. For instance, companies may be fined up to $2,500 for each I-9 error; one company was recently fined more than $1.5 million.

HR problems can be caused by inadequate data and incompatible technology, which can also be detrimental to your company’s financial performance. In addition to recording significant employment interactions and decisions, personnel files, also known as employer of records, are crucial jobs that track your employers’ relationship with your organization throughout time. In addition, the many regions and legal obligations as well as the demands of your company will determine what information you gather.

How should employer records be kept up to date, particularly since hiring and firing employers generate a steady stream of data that needs to be managed? For what length of time must your company maintain documents to remain in compliance with the law?

So that you may concentrate on the people’s work rather than simply the paperwork, we have the answers to these crucial issues and will go over all you need to know to maintain accurate, current, and compliant employer records.

Here is a summary of the characteristics of employers of record

In a technical sense, they are your staff members whose administration is outsourced.
They are paid weekly, biweekly, or monthly and are employed under permanent contract terms.
Legally, both the employer and the EOR must adhere to the notice time for ending an employment contract.
They are entitled to paid time off, maternity leave, and sick leave.
Health insurance and social security taxes are paid for by the employer.
The EOR receives the necessary software and equipment from the middleman company or platform, along with additional benefits like team-building exercises, professional development chances, and gym membership.

Common Practices as Employment of Record

How Long to Keep Employee Files

The type of document and your state and local laws will determine how long you must keep personnel records on file. Since it usually covers state and federal standards, many firms follow the seven-year rule when discarding employer documents, according to SHRM. Note that greater periods apply to documents such as exposure reports, whereas shorter rules apply to company forms.

The duration of retention for personnel records varies by state and depending on the type of document. It’s crucial to confirm that you comprehend the laws that are relevant to your company and area by speaking with your legal team or a specialist. To get you started, consider these helpful guidelines:

Documents in the employer Personnel File: 2+ Years

Unless otherwise required by state law, retain all employment records, including interview notes, resumes, drug test results, and any other papers about the hiring decision for at least a year following the hire. Note that until your hiring choice is official (offer letter delivered and accepted), this year-long timer does not begin.

If questions come up later, keeping personnel records for at least this long will help your company demonstrate that your hiring procedure is impartial and fair (assuming it is both).

Records of performance or disciplinary actions must be preserved for a minimum of two years beyond the termination date, particularly in the event of an unemployment claim or legal action.

Any of the following documents may be included in employer personnel files:

Documents for Hiring and Applicant Monitoring

Description of the job
Application for a job and cover letter
Pre-employment examinations
Citations
Background investigation

Employer Personal Information

Name
Address
SSN
Contact details
Any paperwork that the worker has signed

Documents for Onboarding

Letter of offer
Noncompete agreements or other agreements
Dates of start and finish
Checklists for orientation
Receipt from the employer handbook

Records of Employer Performance

Finished training
Assessments of performance
Pay scales and adjustments
Position changes, promotions, or job titles
Absences from work
Changes
Disciplinary measures or grievances
Details of a layoff or termination

Documentation of Employment Eligibility: Three or more years

An employer’s Form I-9 should be retained by your organization for a minimum of one year following termination or for three years following the employer’s hire date, whichever comes first. These regulations are international law. On their website, Citizenship and Immigration Services provides a useful tool to assist you in determining how long you must maintain certain personnel data.

It is best to maintain these files apart from personnel files to guard against discrimination claims and to guarantee that they can be promptly accessible and shared upon request, as this form contains EEOC-protected personal information such as age and national origin.

Records of Payroll and Taxes: Four Years

Most businesses round up to seven years to more than meet most regulatory requirements because this is where keeping employment records may get a little complicated. Payroll is the subject of numerous documents and regulations. (We’ve created a whole essay on payroll records alone.) Here are some general figures, but it’s advisable to be safe and consult an expert when determining how long to preserve employer documents related to pay.

The Department of Labour states that businesses must maintain wage-related data for a minimum of two years, including:

Timesheets
Tickets for piece labor
Tables of wage rates
Schedules for work and time
Documentation of wage additions or deductions

The following records should be kept on file by businesses for a minimum of three years:

Payroll documentation
Agreements for collective bargaining
Purchase and sales records

Medical Records: Over 30 Years

Because medical files contain sensitive and private information, regulations mandate that they be maintained safely and kept apart from personnel files.

Public Agencies also protect genetic information, age, sex, handicap, and other personal information in medical records.

Workers’ Health
Benefits, options, and coverage for health
Requests for leave of absence due to illness
Applications, reports, documents and recommendations signed by physicians under the FMLA
Workplace accommodations or limitations related to medical conditions
Reports of accidents or injuries, worker’s compensation
Applications and forms for life insurance
Details on the beneficiaries

How to Keep and Preserve Personnel Documents

The next question is: How do you appropriately manage employer records so they’re accurate, secure, and well-organized? You now know which personnel records you must keep and for how long. We will offer you a brief overview of the three ways that employer records are kept.

Documents in Physical Form

Given how many records you need to store for extended periods, physical recordkeeping with paper forms and filing cabinets soon becomes out of control if your company is tiny and only has a few employees. In addition to requiring physical space, paper records are less secure and more likely to be misplaced or inadvertently destroyed.

Physical timekeeping is time-consuming to process and allows for too many mistakes. Fortunately, there are better choices!

Spreadsheets

Spreadsheets and digital documents are a step forward from physical records and can be accessed more quickly and easily than a stack of paper. Depending on how your computer is configured and who has access to the files, this technique might also provide an additional degree of protection. Even spreadsheets, meanwhile, have drawbacks, are challenging to reconcile, and soon become more confusing than useful—especially as your company expands.

How to Respond to Audits and Requests for Employee Records

Following the law, businesses must safely save employer records in case an employer exercises their right to access them or if a court or government agency demands or audits firm files to ensure compliance. HR managers must have a procedure in place for responding to requests for personnel records.

To protect sensitive data, employment records should only be accessible to authorized and qualified staff. It makes sense to proactively audit personnel records for compliance, correctness, security, and completeness.

Conclusion

The goal of hiring on-demand personnel, such as independent contractors or gig workers, is to create an efficient hybrid workforce rather than replace traditional full-time employers.

The article “How to make the staff leasing model a success for your company” is worth reading.

Let the data do the talking. According to a recent Forbes research, 63% of high-revenue growth organizations have used productivity anywhere staff leasing methods. Eighty-three percent of workers prefer a mixed strategy.

I think that in the post-COVID era, entrepreneurs and company managers should rethink their workforce strategy and create a new kind of workforce which is offshore staffing, where some jobs are better suited for employers of records, while other jobs and projects could be completed by independent contractors, freelancers, and other gig workers.

Why Choose Callhounds Global

At Callhounds Global, we are dedicated to offering specialized solutions that address your particular needs and we recognize the special issues that businesses confront.

This is the reason Callhounds Global is unique:

Skilled Experts
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Our dedication to proactive problem-solving and communication fosters a positive working environment that optimizes the advantages of hiring a virtual assistant.