What Is an AOR (Agency of Record)?
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.
What Are the Benefits of Using an AOR?
- Onboarding/offboarding documentation management;
- Enforcement of client policies regarding background checks, drug screens, NDAs, and more;
- Contract administration;
- Risk mitigation for IC compliance;
- State and Federal reporting requirements;
- Invoice management, expense reporting, and approval;
- SOW execution;
- End of year 1099 and other tax document delivery;
- Audit defense data maintenance;
- Single point of contact throughout assignment;
- Unburden and redeploy purchasing and Accounting personnel;
- Additional layer of insulation between company and potential audit.
How does nextSource Differentiate Among AOR Solution Providers?
- IC remediation — nextSource invests time and effort to help talent qualify as 1099.
- Integrated solution with EOR offering to ensure optimal and safe engagement of talent.
- Platform-based solution that dramatically reduces screening in onboarding cycle-time.
Why Might I Need an Agency of Record for My Organization?
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:
- Invoice processing and funding;
- Tax reporting and filings;
- Engagement/SOW contracts and paperwork;
- Maintaining Certificate of Insurance;
- Background checks and drug screenings;
- Contractor terminations;
- Contractor issues.
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.
