Contractor Management

The AOR Advantage: Risk Mitigation When Hiring Global Contractors

Discover how Agent of Record (AOR) services can safeguard your global contractor relationships and ensure compliance.

Table of contents

Key Takeaways

  1. Companies opt for skilled contractors for specialized expertise, high demand, and project urgency, often justifying premium rates.
  2. An Agent of Record (AOR) offers a comprehensive solution, ensuring 100% compliance, protection against misclassification, and peace of mind for companies engaging freelancers globally.
  3. Not all AORs provide the same level of service; key criteria include independent contractor verification, documentation collection, audit defense file creation, ongoing compliance reviews, and efficient invoice and payment management.

As opportunities for independent contractors across the globe continue to grow, more people are choosing the flexibility of short-term freelance work over the stability of full-time employment – including some of the most highly-skilled professionals on the market.

Companies looking to fill a short-term need for specialized knowledge or ability can contract a high-level specialist, usually at premium rates.

The arrangement provides maximum flexibility for the company and the contractor, allowing companies to access high-level talent without making a full-employment commitment while allowing contractors to earn more by taking on other clients simultaneously.

But hiring independent contractors, especially those working overseas, carries a certain amount of risk – such as misclassification and overall compliance. Companies paying especially high fees to high-level professionals need additional protection to ensure they are classifying their contractors correctly and not slipping into more formal employment arrangements.

The simple solution is to partner with an Agent of Record (AOR) which will assume full responsibility for the contractor’s compliance, including checks on proper classification and ensuring contracts are drafted in line with all local laws where the contractors are working.

Why Companies Pay High Fees for Skilled Contractors

There are numerous reasons for companies to choose contractors over regular, full-time, or part-time employees. Even at a premium price, hiring contractors is often a smart financial decision, avoiding the expenses associated with hiring and training employees, such as benefits, office space, and equipment.

Specialized Skills and Expertise

If a company needs specific skills, they are often willing to pay a premium for access to highly specialized skills and expertise in a particular niche, such as coders and developers that focus on specific technologies, platforms, or domains to become experts in their respective fields.

High Demand for the contractor’s Services

If a contractor has a strong reputation and a history of delivering high-quality work, they may be in high demand. In such cases, companies may need to offer competitive rates to attract and secure the services of these sought-after freelancers. Examples include artists contracted for highly stylized design work.

Project Urgency

Sometimes companies need to meet tight deadlines or have urgent projects that require immediate attention. In such cases, hiring a freelancer who can start working on the project right away and deliver results quickly may justify a higher price.

AOR Means Peace of Mind for Hiring Contractors

Ultimately, the decision to hire freelance talent depends on the specific needs, priorities, and budget constraints of the hiring company. Companies that prioritize quality over cost may be willing to pay a premium for freelancers who consistently produce outstanding results.

Once the decision is made, however, it’s essential to protect the investment.

The best way to do that is by partnering with an AOR to handle the administrative and legal aspects of hiring independent contractors, as well as invoicing and paying the contractors in their local currency.

An AOR takes responsibility for all compliance-related issues, providing a formal layer of protection. You are always 100% compliant in all locations, taking potential hazards such as misclassification off your list of concerns.

The best AORs carefully assess the entire relationship with the independent contractors you hire, ensuring that there is no room for claims of misclassification. For example, authorities in many regions become suspicious when contractors limit their engagement to only one company. The AOR vets the contractors to ensure they are either working with other clients or can take on additional work.

With an AOR in your corner, you can rest assured that you are fully compliant on all levels, and you have experts in your corner ensuring that your protection continues even if compliance regulations change.

Criteria for Choosing a Top AOR

Not all AORs are created equal. To ensure you benefit the most from your AOR partnership, look for the following services:

1. Independent contractor verification before onboarding

Your AOR validates the project structure to ensure that you’re on solid ground according to local regulations. If you need to restructure the relationship, the AOR should be able to guide you on what to change.

2. Collect all necessary documentation

The AOR knows which documents are needed from the contractor and collects the documents electronically.

3. Create audit defence file

As part of risk mitigation, the AOR maintains a file of all supporting compliance documents as a safeguard in the event of an audit or a complaint from the contractors themselves.

4. Ongoing Compliance

The AOR reviews all aspects of your contractor relationships across the globe multiple times a year to ensure ongoing compliance, even if regulations change.

5. Invoice and payment management

The AOR handles the invoice management and ensures accurate and on time cross-border payment delivery in local currency.

Get Stress Free Compliance and Full Protection

An AOR partnership makes it easy to manage all your contractors. But the benefit goes well beyond the service it provides. By ensuring full compliance and mitigating risk of misclassification, an AOR provides the peace of mind you need to pursue the highly skilled specialists you need.

To learn more about how an AOR can transform your contractor operations – from onboarding to payments in 160 countries – schedule a demo today, and never worry about contractor misclassification again.