Remote Work & International Hiring: Legal Considerations

Hiring remote and international employees opens talent access but adds legal complexity. From labor laws to tax implications, compliance must be handled country by country.

Why it Matters

Remote work opens global talent pools — but also creates legal complexity. Hiring across borders without understanding employment laws, tax obligations, and compliance requirements can lead to misclassification penalties, unexpected tax liabilities, and legal disputes that distract from building your product.

Founders Checklist

Determine whether to use contractors, employees, or an Employer of Record (EOR)
Research country-specific employment laws before making offers
Create compliant work agreements for each jurisdiction
Understand tax obligations (both company and employee/contractor)
Set up proper payroll and benefits administration for each location
Document remote work policies, including hours, equipment, and security
Consider data privacy regulations that apply to remote workers

Founder Fails

Hired international team as contractors > triggered permanent establishment
Ignored local notice periods > faced wrongful termination lawsuit
Didn't research mandatory benefits > unexpected costs doubled compensation
Used US employment agreement globally > unenforceable terms in key markets

When to ask for Help

Before hiring across state or national lines
When choosing between contractors vs employees internationally
If unsure about local tax withholding or benefits laws
To navigate cross-border payroll solutions
When building a distributed team for the first time

Frequently Asked Questions

Q: What's the difference between an EOR and a PEO?

A: An Employer of Record (EOR) becomes the legal employer in countries where you don't have an entity. A Professional Employer Organization (PEO) co-employs workers where you already have a legal entity. For most startups, an EOR (like Deel, Remote.com, or Oyster) is simpler for international hiring.

Q: Can I just hire everyone as contractors?

A: No. Misclassification is a global risk. Most countries have their own tests for contractor vs. employee status — and many are stricter than the US. If someone works exclusively for you with set hours and direction, they're likely an employee under local law.

Q: What about tax implications?

A: Having workers in a country can create "permanent establishment" risk, potentially subjecting your company to corporate taxes there. Each country has different thresholds and rules. This is why many startups use EORs for their first international hires.

Q: Do we need to comply with local employment laws?

A: Yes. Workers are generally protected by the laws where they physically work, regardless of your company's location. This includes minimum wage, overtime, termination notice, severance, and mandatory benefits.