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Comment by bitL | Hacker News Reader

You don't have to. Your foreign workers can be independent consultants receiving money from you, paying their own taxes. You just need their W-8BEN every year.

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That still means you negociate and maintain individual contracts with each of them, and have to deal with what happens when conflicts arise (let's say one of them disappears with a client's confidential info in the middle of a critical project. Your only reasonable action is to cut the losses, short of trying to go sue them in Zimbabwe's court)

Or more interestingly, I'd assume an independant consulting contract could be void in many legislations if it happens that their work should be reclassified as employment under some specific rules (e.g. you dictate their working hours etc.)

Basically, is the contract valid under the worker's country laws is a question you won't be able to ignore I guess ?

That makes them compliant with American law. Your company may still not be in compliance with local law (which can differ significantly in the liberal interpretation of what the us thinks a contractor is), and that can cause serious issues.

Earnest question: what serious issues do you envision if the company doesn't physically operate in that country?

The employee may find themselves in hot water or facing some serious tax implications, the company may find that they are no longer able to do business there, the executives of the company may find that they have trouble at the border.

Depending on treaties, not having a formal business entity in a country doesn’t make you immune to their laws and taxes (not a lawyer, but it is totally possible to collect foreign debts in the US for example), if you’re publicly traded, breaking foreign laws intentionally is a BAD idea. On top of all that most companies strive to stay on the right side of the law regardless of the ability to get away with it.

Not an exact parallel, but see the saga of the Huawei exec who was arrested in Canada on behalf of the US for a business deal made by a Chinese company with Iran.

Are you probably going to get away with it? Yes, if you aren’t a very big fish. But what if you don’t.

In my experience, there is nothing an employer hates more than the idea of letting employees become contractors.

They love having contractors, what they hate is having contractors and the IRS later telling them "no, they are employees, and you owe payroll taxes and penalties for the last 5 years"

That risk is eliminated with foreign contractors. It's import/export of services.

On an individual basis that makes sense (in particular if you really handle it like a service exchange contract, with little to no management on how the person do their work)

In this day and age though, I wonder how much it actually works . For instance if one of your contractor does something completely illegal in your country and you get media backlash for it, you're in a tight position if that thing was perfectly legal on their side, and wasn't covered by the contract as you had your own country's law in mind.

I'm not sure you could push your country's law on them, nor that it would help your situation as your company is still fronting the backlash.

That seems so rare it is not worth worrying about

In the grand scheme, having remote workers not handled by a proxy company is also extremely rare.

And even in that setup, we all remember Nike and many other apparel makers stuck with the "child worker in a factory" image basically forever. Or Apple being questionned about FoxConn's working conditions, or the environmental impact.

When it comes to PR, pushing the responsibility to the foreign contractor doesn't looks like a good working strategy IMHO.

It’s actually made substantially worse by the fact that every jurisdiction that you “hire” a remote worker in is another jurisdiction whose laws you have to comply with. An American contractor suing an American company in a Californian court is at least a risk their legal department should know how to manage. An Australian contractor suing an American company in an Australian court, followed up by an Australian labor authority taking action against them for say not paying proper sick leave entitlements, is something they’d be much less equipped to handle. Then just multiply that by the number of jurisdictions they hire these remote workers in, which is information they might not even have.

> An Australian contractor suing an American company in an Australian court, followed up by an Australian labor authority taking action against them for say not paying proper sick leave entitlements

Does "contractor" mean something different to you than it does to everyone else? This would be like me buying an iPhone and then Apple suing me for not paying proper sick leave entitlements.

It means something different in every location, and I’m just using Australia as a random example. The fact is that channeling your payroll through an offshore company doesn’t allow you to skirt local labor laws. It would be more like you selling me a faulty iPhone, then after realising that my country had consumer protection laws, you were forced to fix it.

You're talking about one company suing a second company for not meeting the first company's legal obligations. This is gibberish.

The risk of “misclassification” where an independent contractor sues to be classified as an employee, or where some labor or tax authority takes legal action to have a contractor reclassified (with or without the consent of the contractor/employee) exists in basically every jurisdiction. The only thing that changes if you move your contractors overseas is the jurisdiction where that dispute will be heard, because it will happen in the jurisdiction where the contractor/employee is located. Even if you put aside the mischaracterisation risks, each jurisdiction is likely to have different worker safety, entitlements, tax… obligations, even for contractors. If any disputes arise relating to those, they’re also going to be heard in the jurisdiction of the contractor/employee.

I can understand where your misunderstanding comes from, thinking they’re all just businesses providing services to other businesses. But this interpretation is very naive, and the legal reality is massively more complicated than you’re making it sound. Governments really don’t like independent contractors, they’re subject to far more restrictions than ordinary businesses, and companies employing their services are usually exposed to risks that they don’t have when dealing with ordinary businesses.

In many jurisdictions, the US included, whether or not you are a contractor is not up to you and the company you do the work for. E.g. even if both parties think it’s a contracting relationship, the IRS can decide otherwise.

The nature of the relationship, and the work you are doing determines whether your employer is a regular employer and what taxes they have to pay. In Canada, for example, certain taxes (GST) are applied to the contractor relationship based on whether the product the company sells is available within the country, and the distinction between contractor and employee is much less fuzzy than it is in the US (if you have to ask, the person is almost certainly an employee).

It gets complicated quick

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