Depending on the circumstances, one of the reasons why may come down to certain regulations outlined by CIFUS[1] or similar inter-government agencies.
I realize you're talking more about individuals, not necessarily who owns a company, but if we were to suppose that a non-US citizen were to become an employee of a company which works on some specific field ("critical technologies, infrastructure, sensitive data, and specific real estate deals") and that foreign employee was promoted to higher and higher roles, eventually being put into a position to hire other people from their country, that might trigger automatic CIFUS oversight review.
It's not enough to simply have a company deemed as critical to be US-based; if the majority of its workforce is foreign nationals, that is a security (and economic) concern for the entire nation, and will come to attention of the US Government.
Dealing with any US government bureaucracy is exhausting, but dealing with US government bureaucracy as it relates to national security is an entirely different beast.
I also realize that "90% of US-based companies" might not currently fall under CIFUS oversight, but if a company expands or pivots into new markets, I would assume that the vast majority of US CEOs would not want to lose out on the opportunity to win an sweet Government contract - that would limit future growth.
You can't legally hire someone else not currently in the US or at least has a US-work permit and thus can be legally hired in the US and made a resident in some state. It used to be that the law turned a blind eye about this but now that's not the case.
You can Deel these employees but you can only transfer money abroad long enough till you realize that the only way to do it fully legally is to create a foreign entity in the foreign country and hire the employee through it. Might work for a particular and unique talent but it doesn't scale.
The US system is now hostile for "globally" distributed teams.
I 'work' remotely for a US company from abroad regularly. I have no connection to the US.
I own a corporation and it is a B2B outsourcing arrangement rather than an employee though.
I don't get the same rights as an employee, but am fine with that as they are paying me and I am voluntarily providing the work.
I am surprised more people don't try that arrangement as I have seen nothing to suggest there are problems with it so far. I just needed to get an EIN, file 8832 as I have a single member foreign corporation then fill in a W-8BEN-E and protectively file 1120-F and 8833 every year.
While this is flying under the radar, this is not legal in pretty much all jurisdictions. You are an employee and using a company to contract services. It is not legal even if you were both based in the same country.
I am not technically an employee - I get given a project and agree to complete milestones for payment. I supply my own tools and take on any risks that it won't be delivered or stuff will break. I carry my own insurance. I could hire other people to do the work if they passed my client's background check requirements and signed the NDAs.
I have a few different clients who I do work for and actively market my services.
Not quite. Disguised employment is a pretty specific and (usually) clear-cut issue with well defined criteria. The problems start when a jurisdiction broadens the definition to include whatever they want because they want to capture more tax revenue.
IANAL, but I've been freelancing for years and had a similar thing come up. In the end I was found compliant with the law, ie: not in disguised employment.
They’re hired through outsourcing firms. The company pays the outsourcing firm as a subcontractor. It’s quite common, even amongst the Silicon Valley startups I work with.
My experience is that outsourcing has only accelerated since Covid made remote work commonplace. It never used to be a thing amongst trendy startups.
Why hire internationally when you can hire someone remotely from the MiddleOfNowhere South Dakota that will happily work for peanuts and not have to deal with tax issues, time zones, etc?
Besides every opening for any remote job gets hundreds of applications within 24 hours. Most companies only need good enough CRUD developers. The market is flooded with unemployed “full stack developers”
EU I've seen is still friendly to timezone alignment instead of regional, but seems to just be less aware at all that people outside of EU might want to apply.
The remote hype has died down, political winds have changed, and in some cases regulations tightened around hiring locally first before trying to find contractors abroad (since you can't employ people directly as explained by others in this thread).
As others have touched on, the legality of workers rights is very complex.
Companies don't want to learn and create the proper legal structures and compliance practices just to hire 1-2 people in that country.
Foreign countries have different holidays, worker protections, parental leave, taxes, etc. that companies just don't want to deal with. Some countries make it a huge mess paying someone in equity/options (see China).
Among other reasons, 2022 Section 174 tax changes require 15 years of depreciation for non-US software engineering ("R&D") expenses, vs 5 years for US workers, https://hn.algolia.com/?query=Section%20174. There's currently a proposal in Congress to restore US R&D tech worker salary depreciation to one year, for the 2026-2030 period.
Depending on the circumstances, one of the reasons why may come down to certain regulations outlined by CIFUS[1] or similar inter-government agencies.
I realize you're talking more about individuals, not necessarily who owns a company, but if we were to suppose that a non-US citizen were to become an employee of a company which works on some specific field ("critical technologies, infrastructure, sensitive data, and specific real estate deals") and that foreign employee was promoted to higher and higher roles, eventually being put into a position to hire other people from their country, that might trigger automatic CIFUS oversight review.
It's not enough to simply have a company deemed as critical to be US-based; if the majority of its workforce is foreign nationals, that is a security (and economic) concern for the entire nation, and will come to attention of the US Government.
Dealing with any US government bureaucracy is exhausting, but dealing with US government bureaucracy as it relates to national security is an entirely different beast.
I also realize that "90% of US-based companies" might not currently fall under CIFUS oversight, but if a company expands or pivots into new markets, I would assume that the vast majority of US CEOs would not want to lose out on the opportunity to win an sweet Government contract - that would limit future growth.
[1] https://en.wikipedia.org/wiki/Committee_on_Foreign_Investmen...
You can't legally hire someone else not currently in the US or at least has a US-work permit and thus can be legally hired in the US and made a resident in some state. It used to be that the law turned a blind eye about this but now that's not the case.
You can Deel these employees but you can only transfer money abroad long enough till you realize that the only way to do it fully legally is to create a foreign entity in the foreign country and hire the employee through it. Might work for a particular and unique talent but it doesn't scale.
The US system is now hostile for "globally" distributed teams.
I 'work' remotely for a US company from abroad regularly. I have no connection to the US.
I own a corporation and it is a B2B outsourcing arrangement rather than an employee though.
I don't get the same rights as an employee, but am fine with that as they are paying me and I am voluntarily providing the work.
I am surprised more people don't try that arrangement as I have seen nothing to suggest there are problems with it so far. I just needed to get an EIN, file 8832 as I have a single member foreign corporation then fill in a W-8BEN-E and protectively file 1120-F and 8833 every year.
While this is flying under the radar, this is not legal in pretty much all jurisdictions. You are an employee and using a company to contract services. It is not legal even if you were both based in the same country.
I am not technically an employee - I get given a project and agree to complete milestones for payment. I supply my own tools and take on any risks that it won't be delivered or stuff will break. I carry my own insurance. I could hire other people to do the work if they passed my client's background check requirements and signed the NDAs.
I have a few different clients who I do work for and actively market my services.
Not quite. Disguised employment is a pretty specific and (usually) clear-cut issue with well defined criteria. The problems start when a jurisdiction broadens the definition to include whatever they want because they want to capture more tax revenue.
IANAL, but I've been freelancing for years and had a similar thing come up. In the end I was found compliant with the law, ie: not in disguised employment.
They’re hired through outsourcing firms. The company pays the outsourcing firm as a subcontractor. It’s quite common, even amongst the Silicon Valley startups I work with.
My experience is that outsourcing has only accelerated since Covid made remote work commonplace. It never used to be a thing amongst trendy startups.
Why hire internationally when you can hire someone remotely from the MiddleOfNowhere South Dakota that will happily work for peanuts and not have to deal with tax issues, time zones, etc?
Besides every opening for any remote job gets hundreds of applications within 24 hours. Most companies only need good enough CRUD developers. The market is flooded with unemployed “full stack developers”
UK has started doing it too.
EU I've seen is still friendly to timezone alignment instead of regional, but seems to just be less aware at all that people outside of EU might want to apply.
The remote hype has died down, political winds have changed, and in some cases regulations tightened around hiring locally first before trying to find contractors abroad (since you can't employ people directly as explained by others in this thread).
As others have touched on, the legality of workers rights is very complex.
Companies don't want to learn and create the proper legal structures and compliance practices just to hire 1-2 people in that country.
Foreign countries have different holidays, worker protections, parental leave, taxes, etc. that companies just don't want to deal with. Some countries make it a huge mess paying someone in equity/options (see China).
W-8BEN and don't worry about it, there are larger problems tbh. Or if you can use it for tax minimization hire internally.
Time zone differential, at least at my (large) employer.
Timezones are hard.
Among other reasons, 2022 Section 174 tax changes require 15 years of depreciation for non-US software engineering ("R&D") expenses, vs 5 years for US workers, https://hn.algolia.com/?query=Section%20174. There's currently a proposal in Congress to restore US R&D tech worker salary depreciation to one year, for the 2026-2030 period.
What does this mean in practice? Wouldn't companies just jump through the bureaucratic hoop to hire people for a third of the prices?
Does the company in question have cash flow for 15 years of advance tax payments?
If someone in the US is 3x the price does the company in question have cash flow for 5 years of advance tax payments?
If they are a startup on the "Who's Hiring" page, that depends on whether they have US investors.
Huh?