What is a Contractor of Record (COR)?

A Contractor of Record (COR) is a third-party service that acts as an intermediary between your business and independent contractors. Unlike an Employer of Record (EOR), which becomes the legal employer of full-time employees, a COR facilitates relationships with contractors who remain self-employed.

The COR handles administrative tasks like contract generation, payment processing, compliance documentation, and sometimes classification risk assessment. The contractor still works independently, invoices for their services, and handles their own taxes—but the COR manages the paperwork and coordination.

Think of it as outsourced contractor administration. Instead of managing contracts, invoices, and payments yourself, you use a COR to handle the operational details while you focus on the work relationship.

How it works

The COR model is straightforward. You identify a contractor you want to work with. Instead of managing the relationship directly, you engage a COR. The COR creates a service agreement with the contractor, defining scope, deliverables, payment terms, and IP ownership. You sign a separate agreement with the COR, giving them authority to manage the contractor relationship on your behalf.

When work is complete, the contractor submits an invoice to the COR. The COR reviews it, confirms deliverables, and processes payment. You pay the COR, they pay the contractor. The COR maintains records of all contracts, invoices, and payments for compliance and tax purposes.

Some CORs also provide classification risk assessment, ensuring contractors meet the legal definition of independent contractors in relevant jurisdictions. This can reduce your risk of misclassification penalties.

COR vs EOR vs PEO

The terminology can be confusing. Here's how these models differ:

COR is for independent contractors. The contractor remains self-employed, works for multiple clients, and handles their own taxes. The COR manages administrative tasks but doesn't employ anyone.

EOR is for full-time employees in countries where you have no legal entity. The EOR becomes the legal employer, handles payroll and benefits, and ensures compliance with local employment law.

PEO is for existing employees where you already have an entity. The PEO co-employs your staff, sharing HR responsibilities and providing access to better benefits through their larger risk pool.

When COR makes sense

COR services are useful in specific scenarios. You're working with many contractors (20+) and want to standardize processes. You're concerned about classification risk and want expert review. You're in a regulated industry with strict compliance requirements. You want to offload administrative work entirely.

The classic use case: a staffing agency placing contractors at client sites. The agency uses a COR to manage contracts, payments, and compliance for hundreds of contractors. The COR handles the paperwork, the agency focuses on matching talent to opportunities.

CORs are also useful for companies in highly regulated industries (healthcare, finance) where contractor compliance documentation must be perfect, or for businesses expanding internationally who want local expertise on contractor regulations.

Costs and considerations

COR pricing varies widely. Some charge flat monthly fees per contractor ($5-50/month). Others charge percentage-based fees (3-5% of contractor payments). Some combine both models. For 10 contractors, expect $50-500/month in COR fees, depending on the provider and services included.

Beyond fees, consider control and flexibility. When you use a COR, you're adding a layer between you and your contractors. Payment timing depends on the COR's processes. Contract terms may be standardized rather than customized. You're dependent on the COR's systems and support.

Classification risk is another consideration. While CORs can help assess whether workers are properly classified as contractors, they don't eliminate the risk. If a contractor should actually be an employee, using a COR doesn't protect you from misclassification penalties.

The direct management alternative

For many businesses, a COR is unnecessary. If you're working with 5-25 contractors and comfortable managing relationships directly, contractor management software is often a better fit.

With contractor management software, you maintain direct relationships with contractors. You create contracts, track milestones, approve invoices, and coordinate payments through your existing payment accounts (Wise, PayPal, Payoneer). The software provides organization and documentation without adding a middleman.

This approach costs less ($99/month for up to 25 contractors vs $50-500/month for COR services), gives you more control (direct relationships, custom contracts, flexible payment timing), and maintains simplicity (fewer parties involved, clearer communication).

The trade-off is that you handle more of the administration yourself. But for most small to mid-sized businesses, the time investment is minimal compared to the cost savings and increased control.

Common questions

Does a COR protect me from misclassification risk? Not entirely. A COR can help assess whether workers are properly classified and provide documentation to support contractor status, but they don't eliminate the risk. If a worker should be an employee, you're still liable.

Can I use a COR for international contractors? Yes, some CORs operate globally and can manage contractors in multiple countries. They handle local compliance requirements and payment processing in local currencies.

What's the difference between a COR and a staffing agency? A staffing agency recruits and places workers. A COR manages the administrative relationship with contractors you've already identified. Some staffing agencies also offer COR services.

How long does COR setup take? Most CORs can onboard a contractor in 1-2 weeks, depending on how quickly the contractor provides required documents and completes onboarding steps.

The bottom line

COR services are valuable for businesses with large contractor networks (20+), complex compliance requirements, or a need to fully outsource contractor administration. They provide standardization, documentation, and risk assessment.

But for most small to mid-sized businesses working with 5-25 contractors, direct management with contractor management software is simpler, cheaper, and gives you more control. You maintain direct relationships, use your own payment accounts, and avoid adding a middleman.

Know your needs. If you need full outsourcing and have the budget, a COR makes sense. If you want organization without losing control, contractor management software is the better choice.