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Hiring Global Employees | Legal |Payroll | US Guide

Mike Renaldi

24.10.25

Read time 5 minutes

The way US businesses grow has changed dramatically. Remote work and digital collaboration tools now allow even small companies to build international teams. Many entrepreneurs, expats and growing businesses hire global employees to help achieve their goals in a more sustainable way.

When a company decides to hire global employees, it opens the door to specialized skills, new markets and potential cost savings. At the same time, this process brings responsibilities: staying compliant with labor laws, handling payroll across borders, and protecting both the company and its employees.

This guide breaks down what US business owners need to know about legal requirements, payroll, compliance and risk. It also provides a step-by-step process to confidently start building a global team. We'll also talk about BatchTransfer, which can help your team send international business payments at low cost.

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Legal Considerations When Hiring Global Employees

One of the first questions US business owners face is whether they are hiring someone to physically work inside the United States or employing them abroad. The rules differ significantly.

If a foreign worker will be based in the US, employers must sponsor an appropriate visa. Common options include the H-1B visa for skilled professionals or the L-1 visa for intra-company transfers.^1,2 Sponsorship comes with strict eligibility requirements and annual quotas, making it better suited for larger companies with established immigration processes.

It’s more flexible to hire someone abroad, but still involves legal obligations. Businesses have three main options:

Hiring an employee abroad options
1. Set up a local entity in the country where the employee lives. This allows direct employment but requires registration, tax filings and ongoing administrative costs.
2. Partner with an Employer of Record (EOR) or Professional Employer Organization (PEO). These companies legally employ the worker on behalf of the US business, handling payroll and compliance.^3,4
3. Classify workers as independent contractors. While faster, this approach carries risks if the individual’s work arrangement meets the legal definition of employment under local law. Misclassification can lead to penalties, back taxes and fines.

For small US businesses, an EOR often strikes the best balance between cost, compliance and speed. It enables companies to test new markets without the expense of creating a foreign subsidiary.

Payroll and Benefits for Global Employees

Each country has its own rules for payroll, mandatory deductions and tax deadlines. US businesses must choose how to manage this complexity.

One option is to register for payroll in the employee’s country of residence. This requires establishing a local tax ID, filing reports with foreign authorities, and keeping up with annual changes to contribution rates. For example, many European Union (EU) countries require employers to deduct income tax and contribute to public health and pension funds.⁵ In Latin America, governments often mandate contributions to healthcare or social security systems.⁶
The alternative is outsourcing payroll to an EOR, which simplifies administration. An EOR ensures compliance with local tax laws and issues pay slips in the employee’s home currency. This can reduce the risk of errors and delays.

Beyond salary, benefits are a key part of employment. US businesses may be used to offering health insurance or 401(k) plans, but abroad, expectations differ. In countries with universal healthcare, supplemental coverage may not be necessary. Instead, employees may value meal vouchers, housing allowances or extended vacation leave. Providing benefits that match local standards helps retain talent and ensures fairness across the workforce.

A competitive benefits package also reflects positively on the company’s reputation. In tight labor markets, global employees often compare offers based not just on salary but also on family leave, wellness allowances and flexible schedules.

Compliance and Risk Management

Employment contracts must reflect local legal requirements, not just US standards. For example, probationary periods, working hours, and severance pay rules vary widely across jurisdictions.

Data protection is another area of concern. In Europe, the General Data Protection Regulation (GDPR) places strict obligations on how companies handle personal employee information.⁷ Non-compliance can lead to significant fines.

Termination rules also differ across borders. While most US states follow “at-will” employment, many countries require just cause for dismissal and mandate notice periods or severance packages. Failing to comply with these rules exposes businesses to lawsuits and financial liability.

To reduce risks, US employers should:

Consult with local legal or HR experts before finalizing contracts
Establish internal processes to track compliance requirements in each country
Regularly review labor law updates, especially in regions where the company employs multiple staff

A proactive approach ensures that small compliance mistakes do not grow into costly disputes.

Step-by-Step Guide to Hiring Global Employees	Description
Step 1: Identify Business Needs	Define the role clearly. Consider what skills are required, whether the position is remote-only, and how time zones may affect collaboration.
Step 2: Choose Hiring Method	Decide whether to create a local subsidiary, use an EOR, or classify the worker as a contractor. For many small businesses, the EOR model provides the fastest, most compliant option.
Step 3: Understand Local Laws	Before posting the job, research labor, tax and payroll regulations in the target country. Knowing the rules early avoids delays and missteps during onboarding.
Step 4: Draft a Compliant Contract	Customize contracts to reflect local standards. Include details about probation, paid leave, working hours and termination rights. This protects both the company and the employee.
Step 5: Set Up Payroll and Benefits	Choose whether to manage payroll directly or outsource it. Align the benefits package with local expectations, such as pension contributions, health care or meal allowances.
Step 6: Onboard and Integrate Employees	Provide the same training and cultural introduction that the US-based staff receive. Offer collaboration tools and schedule overlap hours to build connections across time zones.
Step 7: Monitor Compliance Continuously	Labor laws change frequently. Assign responsibility within the company or rely on an EOR to monitor new regulations and ensure contracts, payroll, and benefits remain compliant.

Following these steps gives US businesses a structured, reliable process for hiring global employees.

Final Thoughts

Hiring global employees gives US businesses access to specialized skills, flexible growth opportunities and potential cost advantages. At the same time, it requires careful attention to legal frameworks, payroll obligations and compliance risks.

By understanding these responsibilities and following a structured process, entrepreneurs and small companies can expand confidently into new markets. Global hiring is no longer limited to multinational corporations; it is an achievable strategy for US businesses that want to scale with confidence.

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Frequently Asked Questions

How to Legally Hire Foreign Workers?

If a worker will be based in the US, they require a valid visa such as an H-1B or L-1, and the employer must handle sponsorship. If the worker is based abroad, employers can use a local entity or an EOR to stay compliant.

What Companies Hire Foreign Employees?

Many US companies, from tech giants to small startups, hire globally. Technology, marketing, design and customer service are industries where remote international hiring is most common.

How Does Globally Hired Work?

Global hiring typically happens through three models: setting up a local subsidiary, working with an EOR, or engaging workers as contractors. Each model shifts responsibility differently for payroll and compliance.

What Is Global Staff Recruitment?

Global staff recruitment is the process of sourcing, interviewing, and onboarding employees abroad. It requires knowledge of local labor laws, payroll rules and cultural expectations.

Do I Need a Local Entity to Hire Abroad?

Not always. A local entity is required if you want to directly employ staff under your company’s name. However, using an EOR allows US businesses to hire abroad without registering a subsidiary.

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