By Jordan Kirshner, Finance & Operations at Worksuite
As more companies rely on freelancers and independent contractors to scale quickly, the question isn’t whether to use flexible talent — it’s how to do it without creating compliance, cost, and operational risk.
That’s where the Agent of Record (AOR) model comes in. It’s also where a lot of confusion starts.
I’ve seen teams assume AOR means “we’re covered for everything.” Others dismiss it entirely because they think it’s just EOR-lite. Both are wrong.
This article breaks down, in plain language:
No legal jargon. No vendor fluff. Just the decision framework teams actually need.
An Agent of Record (AOR) is a compliance and engagement model used to support independent contractor relationships at scale.
In an AOR setup, the company continues to source and manage the contractor directly, while the AOR takes responsibility for ensuring the engagement is structured correctly from a compliance standpoint.
Practically, this means the AOR is responsible for:
The contractor remains an independent business, and the company retains day-to-day control over the work being performed.
AOR Covers:
As with any workforce model, compliance outcomes depend on how the engagement is structured and operated in practice.
AOR Does Not Replace:
If your team wants full employment coverage, benefits, and statutory protections — that’s EOR. Different tool. Different cost. Different implications.
Below is a simplified comparison of the four most common engagement models companies use globally. This avoids U.S.-specific terms and focuses on responsibilities that apply across regions.
| Engagement Model | Worker Status | Who Holds the Contract | Who Determines Classification | Compliance Responsibility | Best Used When |
|---|---|---|---|---|---|
| Direct Contractor Engagement | Independent contractor | Company | Company | Company retains full risk | Small scale, low complexity |
| Agent of Record (AOR) | Independent contractor | Company or AOR-supported | AOR | AOR manages and supports classification compliance | Scaling contractors compliantly |
| Employer of Record (EOR) | Employee | EOR | EOR | EOR manages employment compliance | Full-time, ongoing roles |
| Direct Employment | Employee | Company | Company | Company retains full risk | Core internal roles |
The key takeaway: AOR helps organizations manage classification complexity without forcing employment.
Classification errors cut both ways.
If someone is working like an independent contractor but is treated as an employee, companies often overpay.
Between benefits, payroll taxes, and overhead, properly classifying a role as a contractor instead of an employee can reduce total cost by up to 20% per worker when the work truly qualifies as independent.
The opposite mistake is far more dangerous.
Misclassifying someone as a contractor to avoid taxes or benefits can lead to:
This is why AOR exists in the first place. Not to cut corners — but to create a defensible line between flexibility and abuse.
Worksuite’s core strength is managing the entire freelancer lifecycle, regardless of whether you’re engaging contractors directly or through an AOR model.
That includes:
Our sweet spot is supporting:
When a role truly needs to be an employee, we support Employer of Record (EOR) through a third-party integration — without forcing you to rebuild your entire system.
That modularity matters. Growth rarely happens all at once. Your workforce model shouldn’t have to either.
Ask yourself:
If the answer is yes to all three, AOR is likely the right model.
If the role looks, acts, and operates like an employee — skip the gray area and use EOR or direct employment.
The goal isn’t to push everything into one bucket. It’s to use the right structure for the work being done.
If you want to go deeper on specific aspects of contractor compliance, classification, and operating models, these are some of the most well‑referenced resources teams use when designing their approach:
Most compliance failures don’t happen because teams are reckless. They happen because systems lag behind growth.
AOR isn’t a loophole. It’s a guardrail.
Used correctly, it lets companies scale flexible talent while keeping classification decisions consistent, documented, and defensible — without turning every contractor into an employee by default.
Jordan Kirshner helps global teams turn messy contractor operations into workflows that actually run across onboarding, approvals, compliance, and payments.
He works at the intersection of two worlds. The technical reality of how platforms, integrations, and data flows work, and the practical reality of how HR, Legal, Finance, and Ops teams operate day to day. His focus is simple. Bridge the gap between complex systems and usable processes so companies can scale external talent without scaling chaos.