With factors like the recent labor shortage in the U.S., the rise of remote work, an increased interest in entrepreneurship, a desire for a more diverse team, and a need to manage costs, the number of small and mid-sized businesses that are looking to hire internationally is on the rise. Additionally, many companies seek a competitive edge by growing their products and services into the global market. For these businesses, there are distinct advantages to adding members to their teams who live and work in those other countries. 

However, just because a company is interested in hiring international employees doesn’t necessarily mean they will become a successful global employer.

One of the most important keys to successfully hiring at the global level is compliance. Being compliant, in terms of international hiring, means that companies must hire in a way that follows all relevant laws and regulations pertaining to employment in those other countries. 

If you’re new to the global hiring market—or even if you’ve hired at an international level before—it’s important to thoroughly understand what compliance entails.

Let’s look at the specific areas of international hiring compliance that your business should understand to successfully employ workers in other countries. 

Labor laws

In the United States, there are both state and federal labor laws that your business must already follow. You are likely very familiar with these rules and regulations related to fair employment and workplace safety.

Where you may not be as familiar, however, is the employment laws under which other countries and jurisdictions operate. This might be one of the most daunting parts of hiring international employees, but it is also an important place to start as you learn how to remain compliant when hiring globally.

The Society for Human Resource Management offers a number of interactive tools and guides for learning about international employment laws. You can easily find laws and rules pertaining to things like employment contracts, disciplining, and termination by individual countries.

It can be difficult to juggle multiple sets of employment laws and regulations, and your staff and HR experts must know where scrutiny is needed. The following areas covered in this article will give you a solid start toward international hiring compliance.


Rules and regulations concerning payroll and payroll taxes in the United States are made at the federal level and can also vary by state. If you’re like a lot of entrepreneurs and business executives who are still learning the ins and outs of all things payroll, you’re in luck—Gusto has already done a lot of this legwork for you. Check out Gusto’s free, state-by-state hourly and salary paycheck and payroll calculators to ensure you are compliant in your state.

If you’re interested in hiring at the global level, however, you must also be well-versed in the various rules and regulations concerning payroll on an international scale. Dealing with payroll across different countries can be one of the most complex issues from a global hiring perspective—and one of the most important when it comes to international hiring compliance.

There are many complex layers involved in understanding payroll compliance on a global scale. Specific factors that contribute to payroll compliance include payroll deductions, currency conversions, taxes, and other legal pay requirements—several of which we go into greater detail throughout this article. 


In addition to payroll compliance, there are issues concerning compliance with compensation rules and regulations that your team must be aware of as you begin to hire internationally.

To start, compensation will look different depending on where individuals are located. An area to consider is the cost of living expenses—such as housing, transportation, utilities, food, and childcare, to name a few—in the countries where you are hiring. It is important to use this information as a guide when creating compensation packages on a global level, while still being sure to offer a salary that’s competitive within the United States. 

One thing to keep in mind during the hiring process and as you’re offering compensation packages is that employees may do the same job and earn the same salary, but if they work in different jurisdictions, they are likely to have very different-looking paychecks. Their tax rates and payroll deductions—and, therefore, their net pay—will depend on the specific employment laws in their specific locations. 

When you’re considering hiring globally, one of the most important steps you can take is to develop an equitable and transparent compensation policy. Known as a Total Rewards Strategy, many companies are making a concerted effort to reward employees through compensation and other benefits (discussed in greater detail below) that meet or exceed industry standards in that country.


While salary is primarily top-of-mind, compensation also includes benefits—perks you offer to employees as a part of working for your company. Benefits can include bonuses, paid time off, sick days, and paid parental leave. Additionally, healthcare insurance, life insurance, 401(k) contributions, pensions, stock options, tuition reimbursement, and memberships all fall under the area of benefits.

In the United States, there’s a general consensus around what appropriate benefit options look like. Gusto even put together this comprehensive list of the best employee benefits companies should offer in order to attract and retain top talent, increase employee engagement, and improve overall company performance.

But, if you’re interested in becoming a global employer, have you considered what differences might exist on a global level when it comes to employee benefits? 

In Mexico, for example, there’s something called an Aguinaldo—an annual Christmas bonus of 15 days pay that businesses are legally required to provide to their employees. And while the United States does not require paid parental leave by law, most other countries do have a paid leave requirement. So, if you’re hiring globally, you will need to familiarize yourself with the paid leave laws—and any other laws pertaining to benefits—in those countries.

Each individual country has its own set of values and priorities that pertain to its culture and society. As a business operating on a global scale, it’s important to offer localized and diverse benefits that are both competitive and compliant—and to consider the varying needs and expectations of the areas in which you are hiring. 

Permanent establishment risk

While your company may enjoy the benefits of a global team, there are also potential risks involved in hiring internationally. 

An example of this is Permanent Establishment Risk. If your business has an ongoing or permanent presence in another country that creates revenue you may be subject to Permanent Establishment. This fixed presence in a country outside of your home can mean your company is required to pay corporate taxes and abide by other international compliance standards as indicated by that particular jurisdiction.

If your company were to mishandle its Permanent Establishment, you could face monetary risks such as increased taxes and tax audits, interest charges, fines, and penalties—as well as damage to your reputation and other consequences.

Specifically, it’s crucial to know and properly identify whether an individual classifies as a contractor or an employee of your company. While the hiring process itself can be similar, there are different laws and restrictions for contractors versus regular employees. In Canada, for example, there are strict penalties for misclassifying employees as contractors. Errors like this when employing Canadian residents can cost businesses anywhere from $50,000 to $500,000.

It’s, therefore, critical that during the hiring process, your business correctly classifies workers and thoroughly understands the tax laws and regulations in the countries where your global employees live. 

International hiring compliance best practices

Rules and regulations of individual countries and jurisdictions will dictate how you proceed in a number of areas pertaining to international hiring compliance. We also recommend following a few best practices that can benefit both you and the employees you hire beyond the United States borders.

  1. Enlist the help of a software program and a software company that is designed to best support international employees. 
  2. Consolidate and streamline your human resource programs and hiring processes to avoid confusion, redundancy, and errors.
  3. Be sure all of the programs and processes that you rely on for international hiring compliance are accompanied by significant cybersecurity protections.
  4. Do your research on the countries where your international employees reside—not just from a rules and regulations perspective but from a cultural perspective as well. This will help you establish a remote work environment that best supports employees working from all over the world.

A final word on international hiring compliance

Whether you are looking to hire your first international employee or you already have a solid global team in place, there is a lot to know when it comes to international hiring compliance. But you are not alone!

Gusto recently announced Gusto Global, which is powered by Remote—the HR platform for global businesses. Now available in Canada, Gusto Global will feature built-in compliance management, easy access to new countries, and a 100% owned-entity model for best-in-class service with localized expertise. Gusto Global will streamline hiring, onboarding, payroll, and management of international employees, all on the Gusto platform. 

Learn more about using this revolutionary feature that will improve the way you hire and conduct business globally.

Barbara Matthews is the Chief People Officer at Remote. She joined Remote in 2023 from Stripe, where she helped build the company’s global HR function as its International Head of HR, EMEA & APAC. She holds more than two decades of global HR experience and is based in Dublin, Ireland.
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