Automattic "employees" outside of the US and Canada are contractors.
(I used to work at Automattic)
This is no longer accurate. Some remain "contractors" still officially due to regulatory issues, but we now have employees in multiple locations outside North America. And that list of locations is growing.
(I work at Automattic)
Figured this was the case but assumed it didn't changed the gist of the answer too much. tl;dr actually employing people in other countries is difficult
In my experience I have encountered several firms that use oDesk with VERY healthy hourly pay to make up for healthcare benefits, retirement, etc. Equity becomes a mess, but the folks I talked to were definitely not 'second class citizens' in the company, and were just as respected as any non-remote dev.