Hiring Internationally: Benefits, Risks, and How to Stay Compliant

Note from Donna…This is the last in a series that Larissa Summer’s is writing for me. I hope you enjoyed reading someone else’s style and that the subjects were different than I normally put out. I thought this article was great timing as I just had two clients ask me about hiring someone in Canada. Bottom line… it can be done, but you have to follow the rules. It’s costly if you don’t.

Hiring Foreign Employees and Independent Contractors

Outsourcing jobs usually comes up in sentences referring to monolithic corporations, but hiring foreign workers isn’t limited to those companies. While the process is complicated that doesn’t mean small businesses can’t weigh the pros and cons of hiring internationally. On one hand, a business owner can face large fines and possible jail time for mishandling foreign employment. On the other hand, foreign workers can improve diversity, broaden your scope of influence, and increase your capacity for work. Let’s investigate the risks and benefits of hiring foreign workers.

Fines....

Let’s talk about the fines first, according to Legalmatch the first time you are discovered hiring a foreign worker you can be fined up to $2000. The second time you can be fined $6500, and the third time can result in both a fine of $20,000- and 6-months jail time. Harboring 10 foreign workers can result in jail time of 10 years or more. The penalties for hiring foreign remote workers have less concrete information because the law hasn’t caught up to the realities of the modern workplace. As a baseline though, you need authorization from the government before hiring a foreign remote worker or you may face legal repercussions. However, despite the legal trouble, there is still a reason to hire foreign workers, and there are methods to avoid the penalties.

Flexibility....

By far the biggest advantage of hiring foreign workers is having the flexibility to schedule workers around the clock. If you have clients in other countries, you can have someone on your staff that can sort out issues in the proper time zone. More importantly, foreign workers bring a greater diversity to your business. Diversity is found to help companies grow, evolve, garner employee engagement, and help businesses be more efficient. Foreign employment can help you carve out your own niche in the market. Finally, foreign workers are subject to different laws and payroll than your domestic workers, which gives you greater flexibility to achieve your goals.

Options...

So, if hiring a foreign worker can be so beneficial how would you go about doing that while avoiding the penalties? There are a few options to be considered, but the two I will be discussing are PEOs (professional employer organizations) and EORs (employers of record). These entities handle the payroll for you, rendering foreign employment into a simple business to business transaction. Purchasing services internationally is not illegal and removes the possibility of business owners being liable for fines and legal repercussions. A PEO requires the business owner to own a local entity and enter a co-employment agreement. This agreement means they have control over their employees and handle your work at their discretion. PEOs are beneficial in certain circumstances, but if you do not own a local entity then an EOR is likely easier and more affordable. An EOR does not require a local entity, nor a co-employment agreement and the business owner interacts with the foreign employees in the same manner they interact with domestic employees. Both options are the best choice for small businesses looking to hire internationally for their sheer simplicity. However, it is best to consult with your attorney and accountant before engaging a PEO or EOR for international hiring.

As I have previously stated, hiring internationally can be an incredible lucrative opportunity, and can even be easier than hiring domestic workers. There are a lot of cultures outside of the US that instill desirable work ethics into their people. There is no reason for you to have a perfect candidate for a job and be unable to hire them because of their nationality. If you have the perfect person, research your options, and consult your attorney on how to safely move forward.

Written by Larissa Summers