A hiring manager sends HR a name. She worked with him at her last company, he's agreed to a six-month assignment, and the pay rate is already settled. One question is still open: who employs him? Route that name through a staffing supplier and the answer comes back as a bill rate with a recruiting fee folded in, for a search your manager had already finished.
Payrolling workers you already found is the cleaner path. The worker is yours: a referral, a former employee, a retiree you'd like back for a project. A legal employer puts that worker on its payroll, carries the compliance load, and bills you for the employment alone. It needs no new software and no new supplier panel, which makes it a good first stop for a program that's weighing a bigger rollout, or growing the EOR it already has.
What a Supplier Markup Pays For
A supplier's markup covers two different jobs. The first is employing the worker: the employer's half of Social Security and Medicare tax, which comes to 6.2% and 1.45%, or 7.65% of wages, along with state unemployment insurance, workers' compensation, and the payroll administration around all of it. The second job is finding the worker, and recruiters get paid for the sourcing, the screening, and the candidates who never get placed.
When your own manager did the second job, only the first is left to buy. So ask for the quote in that shape. If a supplier bundles both into one rate, you can't see how much of it is recruiting, and you're paying that portion either way.
A flat Employer of Record (EOR) rate works the other way around. One percentage covers payroll, taxes, benefits, and compliance, and nothing in it pays for a search, because an EOR doesn't recruit. The worker came from you.
Referrals: Keep the Working Relationship, Move the Employment
When a manager brings someone in from her own network, the working relationship already exists. What the program lacks is an employer, a start date, and a complete worker file. Put the referral on the EOR's payroll and the manager keeps the person she chose, while HR gets the same onboarding, I-9, and pay records it would get for any other worker.
And speed counts here as much as cost. A referral who sits in a supplier's onboarding queue is a referral your manager may stop waiting for, and that's how off-program hiring starts. A fast, sanctioned path keeps the hire inside the program where finance can see it.
Rehires: Same Person, Fresh Classification Question
Bringing back a former employee on a short assignment looks easy until someone asks how that person is classified. The IRS sorts its evidence into three categories: behavioral control, financial control, and the relationship of the parties. A written agreement counts as one piece of evidence within that third category.
Now picture the rehire. Same desk, same systems, same manager, and a different paperwork arrangement. Those facts make an independent-business argument hard to sustain, and an auditor will weigh how the work actually runs.
W-2 employment through an EOR settles the question before it's asked. The person is an employee, paid through payroll with taxes withheld, and your manager directs the work the way she would for anyone on assignment.
Retirees: Check the Pension Before the Start Date
Retirees are the workers managers most want back, and the group most likely to run into a rule nobody mentioned. Some public pension systems limit how soon a retiree can return to paid work for a covered employer, or how much they can earn when they do. Those limits come from the retirement plan, so the worker should confirm them with the plan before agreeing to a start date.
The classification pattern from rehires applies here too. A retiree placed back in the old role, doing the old duties, draws more scrutiny than one brought in for a defined project, so write the assignment around what you need done, with an end date.
How the Handoff Works
Once the manager confirms the name and the pay rate, the EOR becomes the worker's legal employer and runs the onboarding: the I-9, tax withholding, and pay setup. Your manager still assigns the work, sets the schedule, and decides when the assignment ends. HR doesn't have to build a new process for each name, because the same steps apply to a referral, a rehire, or a retiree.
The payoff shows up on the invoice. Instead of a different supplier rate for every worker, finance sees one rate and one line per person, which makes it easy to see what the program spends on employment alone. That clarity also gives HR a clean answer when someone asks who employs each worker, and a record to back it up.
What to Ask Before You Move Anyone
Start with the rate itself. Does one percentage cover payroll, taxes, benefits, and compliance, and can you see each piece on the invoice? Then ask how long a referral takes to start after you've confirmed the name, because a slow start sends managers back to their old workarounds. Last, ask who holds the worker file, since the answer decides who can produce it when someone requests it.
Pull last quarter's supplier invoices and circle the workers your own managers named. Each one carries a recruiting fee for a search that was already done. FoxHire prices those names on the employment cost alone, and you can book a demo and bring the list.
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FAQs
Find answers to common questions about our services and the contingent workforce management.
What does it mean to payroll workers you already found?
It means a legal employer puts a worker you identified, such as a referral, a former employee, or a retiree, on its payroll. The employer handles pay, taxes, benefits, and compliance while your manager directs the work.
Is payrolling cheaper than using a staffing supplier?
It can be, because nobody has to be paid for recruiting you already did. Compare quotes on the same basis, with the employer taxes, insurance, and administration shown line by line.
Can I payroll a former employee or a retiree?
Yes. Check two things first: how the person would be classified given the facts of the work, and whether a pension plan limits a retiree's return to paid work. W-2 employment through an EOR removes the classification question.
Does an EOR find the worker for me?
No. FoxHire doesn't source or recruit talent. You bring the worker, and FoxHire becomes the legal employer behind the scenes.
Do I need a VMS before I payroll workers this way?
For some programs, not yet. If your main pain is employment cost, start dates, and classification, a VMS may not be the first fix. The 14 questions before you buy a VMS help you decide.
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