Contractor Tools Versus Employer of Record
Matt Redler, co-founder and CEO of Panther, on building a modern employer of record
The real split in global hiring is between software that helps manage a contractor relationship and a service that legally becomes the employer. In a contractor tool, the company still signs directly with the worker and still bears the risk if that person is really functioning like an employee. In an employer of record model, the platform employs the worker through its local entity, runs payroll, taxes, and benefits, and assumes the legal employer role.
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That is why pricing differs so much. Deel described its contractor product as a $50 per month legal and payments layer, while its employer of record product costs about $500 per month because it includes local setup and employer liability, not just paperwork and payout rails.
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The contractor category grew fast because it turned messy cross border invoices, tax forms, and payouts into a payroll like workflow. But the core agreement still often remains company to worker, which is very different from the employer of record model that inserts a local employer between the two sides.
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This distinction matters most when startups use contractors for core full time roles. The economics are attractive, but the more a worker looks managed, exclusive, and long term, the more the company is relying on a contractor label to do a job that only a true employment structure cleanly supports.
The market is moving toward offering both models in one system. The winners will be the platforms that let companies start with legitimate freelancers, switch core teammates into employer of record when needed, and keep payroll, contracts, and worker data in one place as global teams become more blended.