Ask HN: What is the cost/risk for US companies hire remote outside US? | Hacker News Reader

Ask HN: What is the cost/risk for US companies hire remote outside US?

6 pointssoneca5 comments

These days most companies are hiring remote (at least in some bubbles, like the “Who is hiring” thread). But most of those that are US companies are ”Remote US only”. Why?

I understand that if those companies were to hire people outside the US as FTE it would require them to establish a presence in that country. But why not hire remote outside the US as contractors?

I am lucky to be hired as a contractor by a US company living outside of US. The process is very straightforward forward. I signed a contract and I send my invoice every month, along with a US bank account where they can deposit my salary (myself I use Payoneer, as I don’t have a US bank account). It ends up being a less bureaucratic process for the company, not more.

In my case I am treated as a FTE (a permanent employee, part of team, part of the decisions, the whole thing), only happens that my contract is of a contractor. I don’t have any benefits, but, in my case, the salary arbitrage to the cost of living in my city more that compensates that.

I would like to know why those company that hire “remote US only” are not open to that. Which risks/cost I am not seeing?

* international law is expensive and time-consuming to get results from; if there's a dispute over wages / IP / etc it will be a serious hassle for everyone involved.

* in the US, being a "contractor" is a specific legal status with requirements around independent work and so on; misclassifying full-time employees as contractors can trigger litigation from various tax authorities. Your country may have additional thoughts on the matter - and see above, solving this means lots of lawyer bills.

Would "hiring" someone over Upwork or Toptal solve that problem since they would take care of the legal aspects?

Quite a few countries have strong workers protection laws like France and Brazil, favoring FTE as those get additional benefits and social protections. Misclassifying full time employees as contractors may get company in a lengthy cross border disputes. There are a few EOR (employer of record) providers, who can act on hiring company behalf and hire a worker directly in a different country using their entity.

It’s not trivial to setup a presence in another country. You have to understand and follow their unique labor laws, find legal representation/advice, conform to tax laws, find a way to equitably pay employees compared to peers outside the country. You have to figure out how you account for profits between the entities (they are legally different countries in different companies). What does it mean too off you have any kind of profit sharing or equity that employees hold? How is that accounted for across N countries employment and tax laws? In a fair way?

There’s a lot of voodoo too you have to figure out. Lots goes unspoken about how exactly you do these things people are too afraid to write down given legal liabilities. Or it’s just assumed to be common knowledge that nobody has to explain. Sadly you have to find someone “in the know” who can sort of nod and wink at you what to do. An example of this is setting up a bank account when you can’t easily show up in person…

It took my last company about a year to setup a UK subsidiary. It took 3-6 months to do the same in Germany. It occupied some of the smartest people in HR and operations, distracting them from other priorities.

Why not a contractor?

Well yes, this is obviously the easiest solution. But it’s dangerous if you intend to treat them as employees. The IRS in the US gives you some guidance[1]. Contractor route can mean they have to spend months without a contract, that they can’t participate in any equity arrangements, you can’t provide benefits like vacation. It might not be very appealing to many…

1 - https://www.irs.gov/taxtopics/tc762

Having been working as contractor for remote US company it means basically two things:

1. Lack of understanding: They don't need to setup a foreign presence in your country, they don't need to do special tax efforts. The only thing they need from you is a contract and W8BEN or the right IRS tax form.

2. Fear: We gonna hire this guy from <stereotype country>.. What are reactions:

"Nice beaches on that place.." "Do they have reliable internet?" "what if he rans away with our money?"

This is a normal and humane reaction.

When people complaint about this stereotypical thinking I like to ask them:

"When I say Italy what you think first?"

And same answers usually appear.

My suggestion is to focus on companies that accept as the ones that not accept now will do as labor shortage increases.

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