With an increasingly global workforce, seeking qualified workers internationally can open the talent pool and reduce company costs. The question: “How to hire international employees?” is not always as simple a question as “How to hire domestic employees?” For that reason, your company will need to consider laws, regulations, and cultural differences carefully. With proactive planning, businesses can make the most of a highly talented global workforce.
Can a You Hire a Foreign Employee in Another Country?
In short, yes! US companies have the option to hire foreign workers either as full-time employees or as independent contractors. However, you’ll need to check the regulations in both the US and the employees’ country of origin. When hiring foreign workers, there’s the option to have them work remotely from their home country or relocate to the US with the relevant visa and labor certification.
In addition, you’ll need to check the regulations in their home country. While international freelance contractors are often easier to hire than employees, still, you may run into required PTO according to a particular country’s regulations.
3 Options for Hiring an Employee From Another Country
To effectively hire overseas employees, you’ll need to determine the type of worker you need, set up the legal structures for hire, or partner with a global employer. Following are three ways through which you can hire an employee from another country:
1. Set Up a Legal Entity
The first option for hiring foreign employees is to set up a legal entity as a company subsidiary in the target country. This foreign subsidiary is a legally independent business entity under the holding company’s control. This is also sometimes called a daughter company.
The subsidiary must operate according to its location’s laws and tax liabilities. The advantage of a legal entity is that you can legally hire employees in that country. This makes sense for companies that plan to make multiple international hires from the same country. If you plan to hire from additional countries, you’ll have to repeat the process for each country.
2. Partner With a Global Employer of Record
Partnering with a global employer of record means you don’t have to set up a legal entity in the country to hire employees. Instead, the employer on record (EOR) or international professional employer organization (PEO) hires and pays employees to provide their services to another company. The EOR enables companies to hire international employees legally without setting up an office in that country or region.
Many EORs set up local entities in countries worldwide so they can engage with anyone, anywhere. The biggest advantage of using an EOR is that you can easily make hires with minimal additional legal paperwork as you also don’t need to relocate your employees.
EORs are responsible for complying with local tax regulations, labor laws, and payroll, freeing up your time to focus on finding and growing great talent for your company. EORs give you access to a vast talent pool in almost any country. Therefore, working with an EOR is a fast, effective, and legal option for hiring international employees.
3. Hire and Engage Contractors
You can also hire and engage international contractors directly. Contractors won’t be company employees, so you cannot set their work schedule or requirements around their time, tell them what to work on, or supervise their work other than offering feedback on the final deliverables.
Hiring international independent contractors has significant benefits like simplifying the hiring process, especially for smaller companies without the resources to set up international subsidiaries. Independent contractors are responsible for reporting their income to their government. As a company, you pay them, and they handle the rest under their home country’s laws, simplifying the process for your company.
How to Hire International Employees in 5 Steps?
If you’re ready to hire international employees, follow these five simple steps.
1. Understand Your Hiring Options
Employment-based visas and other visas that allow the employed to work in the US depend on the type of work and whether the worker is temporary or permanent.
According to the US social security website, these visas are:
- E1, E2 Treaty trader or treaty investor
- F-1 Foreign academic student, when certain conditions are met
- H-1B, H-1C, H-2A, H-2B, H-3 Temporary worker
- I Foreign information media representative
- J-1 Exchange visitor when certain conditions are met
- K-1 Fiancé of a U.S. citizen
- L-1 Intra-company transferee
- M-1 Foreign vocational student
- O-1, O-2 Temporary worker in the sciences
- P-1, P-2, P-3 Temporary worker in the arts, athletics in an exchange or cultural program
- Q-1, Q-2 Cultural exchange visitor
- R-1 Temporary religious worker with a nonprofit organization
- TC Professional business worker admitted under U.S. Canada Free Trade Act (NAFTA)
- TN Professional business worker admitted under NAFTA
In addition, workers may qualify for employment-based visas:
- EB-1 Visa/Green Card: Exceptional Ability
- EB-2 Visa/Green Card: Advanced Degree or Exceptional Ability
- EB-3 Visa/Green Card: Skilled, Professional, or Other Workers
- EB-4 Visa/Green Card: Special Immigrants
- EB-5 Visa/Green Card: Investors
See also work visa options for international startup founders.
2. Obtain the Necessary Certification
You have diverse options for hiring international employees, including five programs from the Department of Labor’s labor certifications for permanent and temporary employment. Once you’ve determined the type of employment required, you must apply for the appropriate labor certifications. The options are:
- Permanent Labor Certification
- H-1B Specialty (Professional) Workers
- H-2A Temporary Labor Certification (Seasonal Agricultural)
- H-2B Temporary Labor Certification (Non-agricultural)
- D-1 Crewmembers Certification
- CW-1 Nonimmigrant Visa Program
3. Interview Prospective Foreign Workers
Finding, interviewing, and hiring prospective foreign workers involves similar steps to domestic hires. You’ll need to:
- Classify the talent you’re looking for and define the scope of the position.
- Post the job listing on LinkedIn and international job search sites like CoolWorks, Indeed, and Monster, or contact recruiters.
- Review the candidates’ CVs, cover letters, and background.
- Interview the top prospects and decide on the top candidate to begin the visa process.
4. Apply for a Work Visa from U.S. Citizenship and Immigration Services
To apply for a work visa for a prospective employee, you must follow the steps of the visa process outlined by the US Department of State. These include submitting a petition, paying fees, and providing an affidavit of support and financial documents with an online application. The applicant must submit civil documents and attend an interview before final visa approval.
For a temporary work visa, the prospective employee will need to apply for the visa online, gather relevant documents, including a passport, and attend an interview with the visa consular service. For temporary work visas, the applicant must demonstrate economic or family ties for which they will need to return to their home country.
5. Comply with Tax Regulations
In general, you will need to pay Social Security and Medicare (FICA) taxes along with salary or wage payments to all foreign employees, just as you would for domestic employees. Some individuals may qualify for an exemption, but you will need to check applicable state and federal tax laws.
The employees will also need to comply with tax regulations in their home country. Speak with a certified public accountant specializing in international employees to confirm your company’s individual tax obligations.
Benefits of Hiring International Employees
There are many benefits to hiring international employees for companies, including lower costs and a large talent pool. Some of the benefits are listed below:
1. Cost Effectiveness
International hires may accept lower salaries or compensation packages than domestic hires. This is especially true of independent contractors who can live in their home country, where the cost of living may be lower relative to the US.
2. Access a larger pool of candidates
With an increasingly educated, highly qualified international talent pool, US companies can compete in a global marketplace by recruiting and retaining top international talent. Especially for companies that require highly specialized skills without much US talent, reaching international talent can drive down costs and ensure the best fit for the company.
3. Enter New International Markets
As companies open international subsidiaries, it offers international expansion and growth opportunities to build a global brand presence. Some of the largest growth markets in the world today are outside of the US, in places like India, Latin America, and Africa. With international expansion, companies can capture market share and build an international brand.
Support for International Expansion With Doola
Whether you’re a large corporation or a small LLC hiring international employees or independent contractors, hiring international employees requires additional paperwork and legal verification but can significantly boost business growth.
Reach out to Doola for the resources to build and expand your business. Learn how to fill out the SS4 form for LLC, how to open a business bank account, a US PayPal account, or a US Stripe account, and the pros and cons of Stripe vs. Clerky.
Doola offers a suite of resources and tools to build your brand and make international expansion simpler. Doola virtual bookkeeping services make managing payroll and accounting easier for companies of all sizes. Get Doola bookkeeping services and see how much more time you have to focus on business expansion and growth.
Should you hire international employees?
Hiring international employees can make sense if you’re searching for a more diverse talent pool or lower costs. However, you’ll need to weigh international hiring with current business plans for expansion and domestic opportunities.
How much does it cost to hire international employees?
The cost to hire international employees depends on the type of hire, visa, and any moving compensation package. Taken together, it could cost a company $50,000 or more.
The filing fees to sponsor an H-1B employee are $1,200 to $4,500. You will need to pay additional attorney fees, which can be another couple of thousand dollars.
Can companies sponsor foreign workers?
Yes, companies can sponsor foreign workers in the US.
Where can I find international employees?
You can find international employees by using an international recruiter, partnering with an employer on record (EOR), or searching top international job boards like U Sponsor Me, CoolWorks, Indeed, and Monster.
What are the consequences of hiring a foreign worker illegally?
It is illegal to hire foreign workers without proper visas and labor certification. If you hire foreign workers illegally, you could face fines or prison time. The fines and imprisonment depend on the type of violation and employee. Check legal advice for small businesses to understand your options.