The modern workforce is a global one, but the international expansion of your workforce can be a tricky endeavor. The laws that are in place to protect the rights of employees and contractors differ from country to country. In addition, there is much confusion about what constitutes an employee versus a contractor or gig worker. Different countries have different laws about how many hours people can work, when people must take breaks, and more.
In many countries, the penalties and fines for not operating compliantly can be in the thousands and even lead to imprisonment. If you wish to take advantage of international talent pools without running into legal liability issues later down the line, then consider all necessary steps early on.
This article will provide you with some helpful tips on how an EOR can help you stay compliant during international expansion.
What is compliance?
Compliance here refers to the adherence of worker classification and payroll laws. When it comes to compliance, ADP writes, “Payroll compliance means adhering to all federal, state and local regulations that govern how employees are paid. Employers that violate any of these laws may face penalties that could negatively affect their bottom line or even put them out of business.”
It’s the responsibility of employers to comply with federal, state, and local laws governing the payment of wages and overtime, Social Security, unemployment insurance, etc. Failure to comply with worker classification and basic wage payment requirements violates both federal law and often state laws as well.
Compliance with payroll laws in other countries
You may need to comply with the different legal requirements of various countries when hiring contractors. For example, some jurisdictions have laws about how long a contractor or employee can work in one day and what types of breaks they must take or give themselves during that time period.
Attorney Donald C. Dowling said to SHRM, that “most other countries, except possibly some oil-rich countries, have laws similar to those in the U.S. for reporting payroll. And just like in the U.S., in many countries there’s the potential for criminal liability, not to mention steep fines to collect lost revenues, for not reporting income.”
Managing the legal requirements of workers in one country is already tedious. Due to international expansion and globalization, managing the legal requirements of workers in multiple countries can be a nightmare. Before GreenLight created the world’s first AI-driven worker classification and workforce management engine, companies needed entire teams of experts to ensure compliance with payroll laws for their global workforce.
What are the benefits of a global workforce?
While talk of a global expansion strategy may send shivers down the spines of your HR department employees, the benefits of international expansion can greatly outweigh the costs.
- A Huge Pool of Candidates: The population of the United States is only 4.25% of the total world population. A wider pool of candidates will allow you to find the perfect person for your job.
- Increased Diversity: While cultural differences can be a challenge to overcome, there’s a lot to learn about different styles of work and time management. By exposing yourself to these differences in culture more often, it will become easier for you when interacting with someone who has a different cultural background than yours.
- Economic Opportunity: Due to different exchange rates and economies, there can be excellent fiscal advantages to hiring internationally. Your company can benefit immensely from hiring international workers and still spend less than if you hired domestic help.
What solutions exist for building global workforce compliance?
Whether you are planning on expanding into other countries or you are already hiring internationally, an EOR is the perfect solution for building a compliant global workforce. With an EOR, you can compliantly employ workers in new countries in a fraction of the time and cost compared to other solutions.
What is an EOR?
An Employer of Record, or EOR for short, is a company that employs your workers and takes over the legal responsibilities to help you out with HR functions. These companies typically have more experience in international markets so they can also make sure all their employees are paid properly without worrying about any quirks associated with paying people abroad. The best part? You don’t need to worry about labor laws because the EOR becomes responsible as soon as an employee starts working there.
If you sign up with an Employer of Record, or EOR, then they will become the primary legal caretaker over your employees to lessen these responsibilities so that it’s easier on both parties involved. Organizing global payroll and contract compliance is a daunting task easily outsourced to an EOR.
GreenLight is an EOR solution that uses the world’s first AI-driven classification engine for maximum efficiency and accuracy. Our innovative system uses all of the data and industry knowledge at our disposal in order to classify workers with an exceptionally high level of confidence.
We’re classification experts who rigorously update and maintain our systems in compliance with the most recent laws, mandates, and court rulings. Our AI determines the correct worker classification and your workers either become employees of GreenLight or we hire them as an approved contractor. Either way, you get any worker you want from almost anywhere in the world without having to worry about government agencies.
With GreenLight, all you have to do is find the right person for the job. We’ll handle the rest. Schedule a demo today.