5 ms·

As a side note > Hiring and working from all over the world instead of from a central location. Am I naive to think that the legal requirements of complying w

As a side note > Hiring and working from all over the world instead of from a central location. Am I naive to think that the legal requirements of complying with all of the world's labor laws and tax reporting (w.r.t to income) would outweigh any benefit of the increased productivity of remote work? I could see this crippling any fledgling startup attempting to bootstrap, and only see those backed with massive VC cash being able to do this.

forgingahead 7y ago
> Hiring and working from all over the world instead of from a central location. *Except Russia and China
GoToRO 7y ago
You don't. You make a business to business contract. So it's not really employment.
- ska 7y ago
  It's not enough to contract it that way, you have to actually have a business to business relationship. If the company can set your hours and deeply control how/when you do the work, you may both have a nasty surprise from the IRS
  - em-bee 7y ago
    see my comment above, when employer and "employee" are in two different countries then contracting is the only option, lest the company opens a subsidiary in that country.
    - ska 7y ago
      True, but you can still get in trouble with this if the relationship is too employment like, just now you have two revenue agencies to deal with, so your particular situation will very much depend on those two countries and treaties between them.
      - em-bee 7y ago
        i don't want to dispute your statement as i simply don't know, but i'd be interested to see how that would look like. sure, if the countries have treaties that cover this particular case, then those apply. but if they don't then i can't imagine what might happen.
        ska 7y ago
        Contracts are a matter of contract law, but your relationship with the revenue agency is not bound by that contract. I am not a lawyer but I do have some experience in this. So, as I understand it if one or both country's agencies decide it is actually an employer/employment relationship they may decide withholding was done/not done in the wrong place, or invalid tax credits etc. were claimed and may assess penalties for that on top of wanting the amounts back. It can also complicate things like VAT collection, etc.
        em-bee 7y ago
        (i appreciate your response, and i do not want to appear to pick your statement apart for the sake of arguing. if anything it's my ignorance showing in this matter. apologies for that) but doesn't any of what you say imply a treaty between those two countries? this is getting of course country specific, but my company has hired people in other countries before. and the problem is not trying to get around employment law, but rather that i don't see any options to treat that person as an employee. we can not employ anyone unless they have the legal right to work in the country of employment. to be an employee in a US company, i need to have a work visa for the US. i do not see any other option there. for this to work without a visa, there would have to be a category of foreign remote employees. i have never heard about any such thing. in other words, without a treaty between the respective countries, an employer/employee relationship is not legally possible. how would you pay my social security or insurance? without a treaty that defines this, you can't. you have to give me the cash and let me pay by myself.
        ska 7y ago
        I probably wasn't clear enough. Lots of countries have laws constructed so can't have an end run around entitlements, etc. So tse your example you are quite right that you don't have an option to hire someone as an employee without a work visa, for example. But that doesn't mean that your working arrangement is legal if you have them as a non-resident contractor. Some of the things you may could run you afoul of employment law; for example if your contractor visits you performs work you may be in violation. Or they may have thus created a tax presence in your country as a non-resident that you are responsible to withold even though you are not employing them directly, etc (i.e. without a zero-rating treaty). Finally some of your contract terms may just be uninforceable but that is less of an issue. In general this stuff is tricky and very much dependent on the countries involved, the nature of the work being done, and the physical locations it is done in (and probably more things). Again, IANAL.
markbnj 7y ago
Smaller companies often use PEOs, which are the actual employer of record and handle all the book keeping chores. Larger companies can afford to perform these functions themselves.
Spooky23 7y ago
No, you are not naive. The hand-wavy way that this gets done is that everyone is a 1099 contractor or owns their own "business". That's great for the company, as it pushes alot of bullshit to the employee (payroll tax, benefits, etc). It's great, that is, until it isn't because many of these independent contractors aren't really independent at all, and the tax and labor authorities will be less than amused.
- Crinus 7y ago
  Can you elaborate on that last part?
  - taftster 7y ago
    For example, in the United States, the IRS applies a set of tests to determine if a person can be considered a 1099 contractor or a W2 employee. In the US, the primary determination is if the contractor can set their own schedule and client list. Also if the contractor can determine the best way to perform a task or get to a result. It's an interesting take in the context of remote work, for sure. I couldn't find the direct IRS link, but this looks official enough to reference: https://galachoruses.org/sites/default/files/IRS-20-questions-W2-vs-1099.pdf https://galachoruses.org/sites/default/files/IRS-20-question...
    - Spooky23 7y ago
      This is a big one, but don't forget about Worker's Compensation. When your "contractor" gets hurt when working/travelling/etc at your direction, the "contractor"'s health or auto insurer will likely figure out that the contractor meets the test to be an employee and will pursue action against the company.
  - paulmd 7y ago
    Contractors essentially need to be entirely piecework - I am paying you to accomplish this task, by this date, end of story. If the employer attempts to impose conditions on how the work is done, or when it is done (in terms of working hours, etc) then those are characteristics which point towards the contractor actually being an employee of the company.
em-bee 7y ago
when a company hires an independent contractor, then the onus of dealing with all that is on the contractor. so it's not really a problem for the company.

forgingahead 7y ago

> Hiring and working from all over the world instead of from a central location. *Except Russia and China

GoToRO 7y ago

You don't. You make a business to business contract. So it's not really employment.

ska 7y ago
It's not enough to contract it that way, you have to actually have a business to business relationship. If the company can set your hours and deeply control how/when you do the work, you may both have a nasty surprise from the IRS
- em-bee 7y ago
  see my comment above, when employer and "employee" are in two different countries then contracting is the only option, lest the company opens a subsidiary in that country.
  - ska 7y ago
    True, but you can still get in trouble with this if the relationship is too employment like, just now you have two revenue agencies to deal with, so your particular situation will very much depend on those two countries and treaties between them.
    - em-bee 7y ago
      i don't want to dispute your statement as i simply don't know, but i'd be interested to see how that would look like. sure, if the countries have treaties that cover this particular case, then those apply. but if they don't then i can't imagine what might happen.
      - ska 7y ago
        Contracts are a matter of contract law, but your relationship with the revenue agency is not bound by that contract. I am not a lawyer but I do have some experience in this. So, as I understand it if one or both country's agencies decide it is actually an employer/employment relationship they may decide withholding was done/not done in the wrong place, or invalid tax credits etc. were claimed and may assess penalties for that on top of wanting the amounts back. It can also complicate things like VAT collection, etc.
        em-bee 7y ago
        (i appreciate your response, and i do not want to appear to pick your statement apart for the sake of arguing. if anything it's my ignorance showing in this matter. apologies for that) but doesn't any of what you say imply a treaty between those two countries? this is getting of course country specific, but my company has hired people in other countries before. and the problem is not trying to get around employment law, but rather that i don't see any options to treat that person as an employee. we can not employ anyone unless they have the legal right to work in the country of employment. to be an employee in a US company, i need to have a work visa for the US. i do not see any other option there. for this to work without a visa, there would have to be a category of foreign remote employees. i have never heard about any such thing. in other words, without a treaty between the respective countries, an employer/employee relationship is not legally possible. how would you pay my social security or insurance? without a treaty that defines this, you can't. you have to give me the cash and let me pay by myself.
        ska 7y ago
        I probably wasn't clear enough. Lots of countries have laws constructed so can't have an end run around entitlements, etc. So tse your example you are quite right that you don't have an option to hire someone as an employee without a work visa, for example. But that doesn't mean that your working arrangement is legal if you have them as a non-resident contractor. Some of the things you may could run you afoul of employment law; for example if your contractor visits you performs work you may be in violation. Or they may have thus created a tax presence in your country as a non-resident that you are responsible to withold even though you are not employing them directly, etc (i.e. without a zero-rating treaty). Finally some of your contract terms may just be uninforceable but that is less of an issue. In general this stuff is tricky and very much dependent on the countries involved, the nature of the work being done, and the physical locations it is done in (and probably more things). Again, IANAL.

markbnj 7y ago

Smaller companies often use PEOs, which are the actual employer of record and handle all the book keeping chores. Larger companies can afford to perform these functions themselves.

Spooky23 7y ago

No, you are not naive. The hand-wavy way that this gets done is that everyone is a 1099 contractor or owns their own "business". That's great for the company, as it pushes alot of bullshit to the employee (payroll tax, benefits, etc). It's great, that is, until it isn't because many of these independent contractors aren't really independent at all, and the tax and labor authorities will be less than amused.

Crinus 7y ago
Can you elaborate on that last part?
- taftster 7y ago
  For example, in the United States, the IRS applies a set of tests to determine if a person can be considered a 1099 contractor or a W2 employee. In the US, the primary determination is if the contractor can set their own schedule and client list. Also if the contractor can determine the best way to perform a task or get to a result. It's an interesting take in the context of remote work, for sure. I couldn't find the direct IRS link, but this looks official enough to reference: https://galachoruses.org/sites/default/files/IRS-20-questions-W2-vs-1099.pdf https://galachoruses.org/sites/default/files/IRS-20-question...
  - Spooky23 7y ago
    This is a big one, but don't forget about Worker's Compensation. When your "contractor" gets hurt when working/travelling/etc at your direction, the "contractor"'s health or auto insurer will likely figure out that the contractor meets the test to be an employee and will pursue action against the company.
- paulmd 7y ago
  Contractors essentially need to be entirely piecework - I am paying you to accomplish this task, by this date, end of story. If the employer attempts to impose conditions on how the work is done, or when it is done (in terms of working hours, etc) then those are characteristics which point towards the contractor actually being an employee of the company.

em-bee 7y ago

when a company hires an independent contractor, then the onus of dealing with all that is on the contractor. so it's not really a problem for the company.