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Employer of Record Payroll: The Basics Explained

Original publish date: February 2, 2023

If you’re an independent filmmaker or producer, you want to do everything you can to minimize unnecessary burdens on your production. There’s nothing more frustrating than incurring penalties that strain a rigid budget. With so many moving pieces and changing locations, a production’s payment infrastructure can be a confounding thing, especially for filmmakers without the resources of a big studio. Fortunately, there’s a way to free up your valuable time so you can focus on more pressing issues by simply streamlining the process of getting your crew paid in a timely and accurate way.  

Enter: employers of record

If you’re running a small or independent production, there’s a good chance that hiring one would save you time, money, and hassle. So, how do you know if it’s worth adding another element to your growing team? That depends on a few factors. 

The purpose of an employer of record 

First off, it’s important to understand what an employer of record (or “EOR”) truly is. An EOR is generally an organization (like a production payroll company, for instance) that acts as the “statutory employer” for employees working on a project or at a different company. This is done for a variety of reasons, such as for tax purposes or to take the burden of liability off a production on the state and federal levels. By hiring an EOR service, filmmakers can unload many of the tasks that normally eat up their valuable time, such as: 

How it works 

In the entertainment space, an EOR is hired by a production to technically employ its crew members, assuming all payroll liabilities and using its own federal employer identification number (FEIN). In this way, the EOR is then responsible for compliance with all relevant labor laws and regulations. EORs simplify the workload, making it easy for a production to pay its employees while maintaining ownership of the decision-making process. Utilizing an employer of record is as simple as filling out some paperwork; the perks start right away. Some of those benefits include: 

When pay day comes around, EORs can even get crew people their money faster with the use of simple direct deposit forms and resources. But before a crew is paid, their timecards must be accurate. While a production’s accountants and line producers are still responsible for the collection, submission, and approval of these cards, EORs help ensure that hours, breaks, and rates are recorded accurately. (Check out our Hours-to-Gross timecard software for more.) They will also process, send edits, and ensure that their employees are paid, maintaining additional responsibilities for things like timecard ingestion, tax withholding, government and union fringes, and insurance. 

Who needs an employer of record? 

Whether or not you’re working with the advantage of studio resources, hiring an EOR is an affordable and effective option that should certainly be considered. Anyone with a small enterprise or one-off production would benefit from the simplicity EORs provide as projects seek to legally employ both cast and crew people while abiding by local and federal labor laws.

An employer of record’s expertise can make it easy to effectively handle liabilities. For example, California Assembly Bill 5 (AB5) extends employee classification status to some gig workers, and that means it’s almost always safer to hire crew people as employees rather than independent contractors (whose needs can be deftly handled by an EOR). And for those smaller enterprises working on a project-by-project basis with a rotating set of crew people, EORs absorb the hassle of legal employee administration. 

For producers who might be new to a state, hiring an established EOR saves overhead and administrative costs; there’s no need to form an LLC in every state a production touches. They also provide a single point of contact for all location reporting, circumventing the headache of managing complicated details.

Just ask anyone who’s had to navigate guild requirements for the first time—there are headaches you don’t even know to expect when you start. Fortunately, Media Services has built longstanding relationships with these entertainment guilds, allowing us to help navigate the complex web of compliance. By outsourcing these tasks to an EOR on a project-by-project basis, filmmakers can save resources and avoid stress. 

Now that you have a better understanding of what an employer of record is, how do they work? Read our summary of the specific benefits and services an employer of record has to offer.

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