Kristin Kane writes for www.ework.com – a Ms.Money partner.
Today’s technology, borne of the digital age, has made it possible for companies to outsource project work to just about anyone, anywhere, at lightning speed-even to an independent professional living on the other side of the planet. But while technology moves full-steam ahead, it may take some time for our business and legal practices to catch up.
Many employers are unclear about the legal issues related to hiring foreign consultants, and understandably so. This is, after all, a relatively new arena. But as human resources experts and employment attorneys untangle this increasingly important issue, hiring managers may find they have more freedom than they thought.
Independents Living and Working Outside of the U.S.
Charles Steel is a Principal of Expatriate Resource Solutions, a Little Rock, Arkansas-based consulting firm specializing in international human resources assistance.
Steel advises that in terms of U.S. governmental regulations, there are generally no restrictions on contracting the services of an independent professional living outside of the United States. As long as the work is done outside of the United States, the consultant does not need a visa or work permit.
However, while the U.S. government may not place restrictions on these relationships, the consultant’s home country may have pertinent regulations. Steel advises that before contracting the services of a foreign consultant, it is best to speak with someone who is familiar with human resources law in the country in question—such as an HR consultant or applicable government agency.
The regulations become more complicated if the independent does some work within the United States. In most cases, it is possible for an independent to make a business trip to the U.S. without applying for a work permit. If a visa is required, the B-1 visa is usually appropriate. This visa covers many business-related activities, including attending meetings and seminars, and negotiating contracts. However, if the consultant will be performing work-related activities not covered under the B-1 visa, he or she may be required to apply for a work permit.
When a company contracts the services of an independent professional, it is generally the independent’s responsibility to calculate and pay the appropriate state and federal taxes. For the most part, the same principle applies to companies who hire independents living outside the United States. In most cases, companies will not be faced with additional tax-related issues when hiring foreign consultants. Nevertheless, it is best to research the laws of the particular country in question, as regulations vary from country to country.
H-1B Visa Issues
If the consultant lives in the United States but is not a U.S. citizen or Green Card holder, he or she must have a work visa. In most cases, a non-U.S. citizen living in the United States can be contractually engaged, provided he or she has an H-1B visa.
This article is intended as a preliminary guide to the legal issues related to international outsourcing. For specific information, contact a human resources consultant or an attorney specializing in employment law.