Ask HN: Why are most Startups asking for US Remote instead of just Remote?

https://news.ycombinator.com/item?id=36414681

by prakhar897 • 3 years ago

44 86 3 years ago

news.ycombinator.com

Does it matter which country the employee is located in if the job is remote?

I understand that timezones may mismatch but employees generally accomodate to the timezone everyone wants.

The different countries payroll can be handled by a decent Saas itself.

So, why are companies hellbent on getting US Remote Employees instead of Remote anywhere?

kidgorgeous• 3 years ago

benefits. govt subsidies

redmerchant2• 3 years ago

Why bother? Recruiting in another country, figuring out what work experience or schools are legitimate etc is extra hassle. Taxes, different holidays, language/communication problems etc.

US talent pool is already deep enough.

If they want to use other countries it’s just for lower wages.

cpursley2• 3 years ago

That’s just not true and you know it. There’s many other reasons to hire somebody other than wages.

wil421• 3 years ago

Why would a startup go through the hassle if they didn’t need too?

codegeek• 3 years ago

"If they want to use other countries it’s just for lower wages."

Why not as long as the person I am hiring is equal or better than a similar person in America but say 1/5th the cost. Capitalism 101.

Lower Wages does not always mean lower quality. It just means that an American has to compete harder because they need say 5x salary of their foreign counterparty.

With fully remote world, why would I not hire anywhere in the world as long as I find the right person.

shortrounddev2• 3 years ago

I don't bother vetting candidates based on their schools. Bachelor barely even matters for junior engineers; if you're hiring someone with 4-5 years of experience, college is utterly irrelevant.

dsq• 3 years ago

It is of course true that skilled people can be found everywhere. The US however is unique in being the largest developed country with positive inward immigration. This gives it the depth you speak of. No other country has this combination of factors.

tarunmuvvala• 3 years ago

This is very recent change. There should be some benefit for the company too.

I know a company which hired the best MIT PhD but they also hired the best IIT PhDs for the work. Both of them do equally good. But the IIT PhDs are more cost effective and hence they expanded the program in India.

lisasays2• 3 years ago

It doesn't always matter. But sometimes it does. A great deal in fact.

Language, culture, verifiability (even on the level of being able to do a standard background check), payroll, legalities. And all the other reasons they aren't always keen to use offshore people, even if it seems "cheaper". And did I mention language, culture?

The different countries payroll can be handled by a decent SaaS itself.

Throwing a different payroll system into the mix for the the sake of 1 or 2 resources can easily end up being more trouble than it's worth.

beardyw• 3 years ago

Their culture may be preferable, unless you mean just compatible.

lisasays2• 3 years ago

Of course I mean "compatible". There's no way I would say tech company culture is preferable to anything.

janosdebugs• 3 years ago

I would assume legal compliance in more than one way. Some countries don't allow you to fire employees as you wish, you have to comply with worktime regulations, etc. Your ability to ask for noncompetes, or have the employee sign over their rights to all IP concieved during the employment may also be challenging. If you mess up, you might get sued in an unfamiliar jurisdiction. All in all, a whole lot of legal work that is only worth it if you can't fill the position otherwise.

barrysaunders2• 3 years ago

Tax, work rights, compliance, labor protections and entitlements all get pretty complicated. Some countries have high levels of public holidays, rules around dismissal that get legally complicated in the case of downsizing. It's not simply a thing that can be handled by a SAAS.

MagnumOpus• 3 years ago

Though it is a thing that can be handled by Umbrella-corporation-as-a-Service such as Remote.com - that is their whole business model. (Not cheap though - $7k per employee per year.)

barrysaunders2• 3 years ago

it can handle part of it, it doesn't solve for a lot of things around compliance and risk. They might help you understand local compliance, but the business still needs to be actually compliant. Just look at the mess Twitter got into trying to downsize their international operations. If you're an american startup, then you have to balance the tradeoff of risk in having international staff that might require considerable thought in managing them, vs having a single compliance profile.

ayende• 3 years ago

Huge hassle regarding taxes, legal details, etc.

For example, if you hired someone in Israel, you are mandated to pay taxes, contribute to pension plan, etc. There are labor laws details that you need to know how to work through, etc.

As a fine example, let's say that you have hired someone in Israel and they worked for you for 5 years. You covered payment and told them that they'll cover local taxes, etc.

You now want to fire them.

The following sequence of events happen:

* They sue for wrongful termination (there is a particular process to follow) * They sue for missing pension contributions (the law says that if you didn't contribute to the pension, you are both civilly and criminally liable). And it can be that you are found to be effectively the "pension fund". * They sue for severance pay, which is calculated as 1 month of salary X years worked.

That can be a huge surprise for you.

That is leaving aside things like what happens around work accidents. Did you carry local insurance for that? Or are you on the hook for millions because of that?

Those are all things that can be solved, but they are a major headache.

mozball• 3 years ago

Is there no app/api that abstracts all this away?

rich_sasha3• 3 years ago

There are agencies that do this. They have international offices, they hire the remote-abroad employee as a real employee of theirs, and the hiring company contracts the agency as a B2B deal. The agency is on the hook for all these things.

I don't know anyone who has ever used these so I guess they are expensive and awkward.

To answer your question more directly, it's not an app but rather a conglomerate of international brick-and-mortar businesses, with legal departments, HR, payroll, insurance... Not lightweight.

throwawayadvsec2• 3 years ago

there is if you pay

KptMarchewa4• 3 years ago

deel.com

gregjor2• 3 years ago

Lol, no. This is a people and legal issue, across national jurisdictions, not a technical problem to solve with an API.

nsoonhui• 3 years ago

But wouldn't employing them as _contractors_ would sidestep all these difficulties?

pja2• 3 years ago

Most European countries have laws that punch through a contractor relationship if it looks indistinguishable from an employee/employer one. So you need a legal judgement that your contract is written appropriately to avoid that

It's not hard necessarily, but you do need to get it right for each individual country. I can understand a company exec just not wanting the hassle.

You can employ through contracting agencies in the target country that handle all this stuff, but you'll still have a certain amount of pain when you run into different countries' Ideas of what is appropriate behaviour when firing someone.

kevinak• 3 years ago

If someone is working as a contractor under employment like terms then that person is, in many countries, considered an employee and what you’re doing is illegal.

hactually2• 3 years ago

Well then they're not employees, they're contractors.

The difference is that in the former, they're a representative of my business, in the latter, they're providing a service to further their own business.

SideburnsOfDoom4• 3 years ago

Some sure. I see UK startups that hire EU "contractors" to ramp up, and it works well. Even in the relatively free-wheeling UK there are limits though. There's usually 2-year limit to the contract, for reasons perceived or real.

arp242• 3 years ago

We had a real problem with this a few years back when we hired two people from the Netherlands (from a Ireland-based company) and they immediately offered them a fixed position (instead of the more usual temporary contract), and they both turned out to be net-negative contributors: didn't actually get any work done, and created hassle/problems for others (one was referred by the other, and they were problematic in more or less the same ways, this was at an early stage before we realized the depth of the problems).

But due to offering the "wrong" contract we also couldn't let them go, since that's very difficult (IMHO, too difficult) outside of gross misconduct, and is probably going to be expensive regardless. They also gave me such a contract by the way, as the first Dutch employee, but that wasn't an issue as no one wanted to get rid of me :-) I actually told them that was not a good idea, but after some turnover in the HR department it seems that got lost.

Both left on their own account eventually, but taking in to account their wages, the increased workload for others, the fact that others literally quit the company because of these toxic assholes, by my estimation each individually cost the company well over a millions euro with nothing to show for it (I'm fairly certain zero code of one survived, and very little of the other).

bradwood• 3 years ago

Most _US_ startups, you mean.

Startups actually do exist outside of the US, believe it or not. And you may find that those are a lot less picky than US ones about the location of remote workers.

SideburnsOfDoom4• 3 years ago

UK based here, and HMRC (the UK tax man) is quite picky too. It is, as others have noted, a hassle to hire outside of your government's jurisdiction for many legal reasons, tax being the first of them but not the last.

Medium-sized companies will have a "legal entity" in e.g. EU and US as well, and can hire workers in those polities. The workers are then "employed" by the legal entity for HR purposes, regardless of where their immediate co-workers are located.

There are also legal limits on how many days per year one can work "abroad" - company policies on this do vary, but HMRC imposes strict constraints on what is allowed. A max of several weeks per year is what I've seen. Also it's not from "any country", it excludes the ones on this list: https://www.gov.uk/government/collections/financial-sanction...

jrowley• 3 years ago

Some employers have gov or otherwise paranoid customers that require data not leave the country.

petra• 3 years ago

Does it matter if you are a US citizen(or an EU citizen for a similar case) that lives in another country?

bsmith• 3 years ago

Yes, because you are taxed based on where you do your work, not where you are from, or where your employer is from.

sschueller• 3 years ago

* Except American's, which are also taxes by the US in addition to where they are currently located.

gnrlst• 3 years ago

All the comments here focus on the complexity/beaurocracy/contract/etc, without realizing there are companies like Deel that take all that complexity away. Also, some (smart) startups also have full time contractor agreements for ex-NA remote employees, so you are considered an employee in every aspect internally but rather than payroll you send an invoice every month. This works well because most employment contracts are tied to local market rates and bands.

paddim8• 3 years ago

Most don't. Most in the US might.

hactually2• 3 years ago

You're asking why businesses aren't employing people working across timezones AND deploying a second payroll system AND ignoring the cultural/benefits package incl. gov based subsidies the business misses out on due to hiring internationally AND the tax complications...

Have you ever started a business and run it with a team of folk from across the world on a budget (not including just contracting people via UpWork etc)?

hinata083• 3 years ago

Maybe working with employees from different countries can cause a great stress for some teams.

Employees can be upset that you hire oversea. They expect that coworkers there are underpaid, and that you hired these people for that reason. So the image of the company gets a hit even among your workers. And if you go oversea for workforce, they could think that their job will be outsourced as well in the future. And you won't get the same engagement.

Differences in culture do exist as well. I have heard wild stories about outsourcing in India.

Jet lag is also a thing.

kidgorgeous's benefits. govt subsidies can be also right. I think the YC themselves funds nothing but local startups (do they ? I haven't tried to fund a startup yet) Anyway, it's difficult to promote a company that doesn't have any local impact.

However, all the tax and labor laws things are overstated. Countries like France, Romania, India, or Morocco have efficient consulting firms. Large and small companies from any industry work with them everyday on every kind of subject (IT, engineering, ...)

fy20• 3 years ago

- Culture and language. Even if you compare US vs UK, the UK is much more European in it's approach to work. If you want to exploit people and have them dedicate their life to your company, better stick to US workers.

- Working hours. If you are on the West Coast, good luck finding someone in Europe who will be available at 3pm your time.

- Superiority complex. I get the impression a lot of Americans treat everywhere else like it is a third world country. I work for a US company that has a branch in a post-Soviet EU country, and when the C-levels were discussing expanding our team, they were talking as if there would be a queue of people waiting at the door to interview.

Taxes and employment laws are really not an issue, there are plenty of ways around it, especially if you are a small startup. As others have pointed out, the simplest way is to treat someone as a 1099 independent contractor. You pay them gross, and let them deal with all their own tax responsibilities. If you want proper employees there are agencies everywhere who will deal with this for you, and in a lot of cases government agencies will help you and / or give you tax breaks as they want you to invest in their country.

(Source: As a European, I've worked half my career remotely for US companies)

hinata083• 3 years ago

indeed

I've already been asked by some silicon valley guy on Discord if France did tech and had universities.

Like come on, Europe is not stuck at La Belle Époque and Victorian Era. And even then, it had tech.

And despite not having a job there atm, they want to stay in California. I told him there are plenty of well paid IT jobs in Europe, but apparently the USA is a special place, and you have to be pay uni debt, and stuff like that.

leereeves• 3 years ago

the simplest way is to treat someone as a 1099 independent contractor

This is not so simple. Genuinely treating someone as an IC means giving up a lot of control. As the IRS says:

You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done).

And merely calling someone an IC while actually controlling their work hours, projects, etc risks legal consequences.

igetspam2• 3 years ago

When everyone is a contractor, you actually have to treat them they way too. That means there are benefits and supportive actions you cannot take or they become an employee by the implication. Then you may have to setup a local business, convert them to full time and deal with the local gov. It sounds much simpler than it is.

For instance, maternity/paternity leave. If you give someone full leave, one could argue that it's a benefit only afforded to FTEs and that could be enough to convince the local business office that the person is, in fact, an FTE. Now you're in violation and have to pay fines as well as setup a local office of one, who will never visit said office. So you do the proxy office thing, which incurs cost right away. Come tax season, you have to figure out what you owe based on the person and your new legal status as a for profit business in the area. Your cost to operate has just become significantly higher. Now you have to rethink the position and location and a non zero number of these will result in closing the local role and having to let someone go. Lose lose for everyone. The alternative path says "no baby leave because you're a contractor." That sucks too because you like the people you hire and want to do right by them but that also means keeping them employed.

You can find alternatives and that's not a literal situation but it is the combination of a few situations into one example, so the contents are real but not as a single tale. (I don't want to tell anyone's specific story.)

Global remote hiring is hard.

gregjor2• 3 years ago

This, and the (I would think obvious) detail that IRS rules and US labor standards may not mean anything in other countries. Just because the “employer” classifies someone as a 1099 contractor doesn’t mean that classification and the associated tax rules apply to a foreign national working in another country.

logicalmonster• 3 years ago

Taxes and employment laws are really not an issue, there are plenty of ways around it, especially if you are a small startup.

Of course there's legal ways for a company to employ somebody not in the US. But many employees at companies don't want to deal with that headache and create any extra work for themselves.

As proof of that, look at how many jobs ask for remote US workers in a list of XYZ random states. They can legally employ anybody they want to in the US, but they don't want to deal with taking the time out figuring out how to deal with hiring somebody from say Alabama or South Dakota if they've never done that before.

twunde• 3 years ago

To clarify, the reason that remote jobs list random states is because those are the states that the company has already done the payroll/HR paperwork for. They can add others, but its a fair amount of work by legal, finance and HR. If you're only hiring 1 person from that state, its a lot of hassle for relatively minimal benefit. This is part of the reason why PEO companies like Justworks are extremely beneficial for remote companies since they're already pre-registered in every US state. Also if you're founding a company where you want remote workers you should skip directly to a PEO since otherwise its a time-suck of issues.

tourmalinetaco• 3 years ago

Superiority complex

Ironic, I’ve met the exact same mindset from the vast majority of Euros, including this post. Even between other Euro countries. Perhaps, instead of being a so-called “American mindset”, it’s simply a “human mindset” and we all view others outside of our borders as beneath us. It would certainly explain the last few millennia now wouldn’t it?

hinata083• 3 years ago

and we all view others outside of our borders as beneath us

I thought the idom was "the grass is (always) greener (on the other side)"

Brain drain and mass emigration are a thing in so many places !

In Hungary, this was a factor in Orban being elected to make the country better again for the youth.

In Romania, this caused domestic wages to increase, as so many workers were outposted.

In France, the political and social climate is so toxic that Québec is seen as the getaway to finally enjoy a simple life.

Ukraine is literally at war and being wiped out. I don't think they're having a nice time being smug.

UK is having a hungover from 2016 and Brexit.

Euros don't like the USA for some reason. But it's pretty much the only country that is seen as beneath us. (With UK maybe)

The USA is still an ally, btw. But some trust deserves to be earned back. Especially on social (are we still welcome after Trump? are women and transgenders still humans who have rights ? Is it a crime to kill people who walk suspiciously through the town and don't look like they have a MAGA cap ? Or good policing ?) and economic issues (is the USA still investing in Europe, or is it just FCPA-ing corporations to buy them for cheap and shut them down ?)

As a reminder, a former worker from the Ford factory in Blanquefort ran at the previous presidential election, in here. And the law allowing abortion was just turned into a constitutional right, in a rare transpartisan move to avoid the US situation in the future.

cm20122• 3 years ago

Europeans love to compare their upper class of college educated people to poor uneducated people in the USA. They lord over their superiority to people of Walmart.

mejutoco5• 3 years ago

it’s simply a “human mindset” and we all view others outside of our borders as beneath us

I am sad to read this stated as common knowledge, especially in a forum that promotes curiosity. It is not true in my opinion, and should not be normalized.

I am not taking sides in "Euros" or people from US or anything like that, because there are competent people everywhere, but this is not a "human mindset". It has a more fitting name: ignorance. I am not saying you are ignorant (you are just expressing a supposedly common view), but people who think they are above foreigners (no matter which specific country we take as reference) are.

In the last few millennia humans have progressed a lot thanks to cross-pollination of many origins: Greek thought, Italian, Arab, British, American, just to name a few. Suffice to say, I do not share this jaded view of the world.

SkyPuncher2• 3 years ago

You're very dismissive of taxes and employment law, but when you step wrong, things going bad very quickly.

Import/export laws and data compliance laws are another huge factor. In the EU, it means having significantly higher burden. I other areas, lack of laws make enforcement of certain things extremely difficult.

cm20122• 3 years ago

I promise you, laws, regulations, liability and beaureucracy are huge issues in hiring internationally.

Example: if you run a marketing agency in the US, most liability insurance absolutely forbids non US workers from working in your ad accounts.

Core_1• 3 years ago

The most obvious reason is taxes and complications with the IRS. The current legal immigration and taxation systems have not foreseen that people from other countries are not living in the U.S. while working in the U.S. The assumption is that once you’re hired by a company in the U.S., you are either working there with a local work permit (for the U.S.), on a work visa, or sent to a different country coming from the U.S. (being either U.S. citizen or having the U.S. residence permit).

igetspam2• 3 years ago

We have a pretty geographically diverse remote team. It's wildly complicated to deal with, both from a team side and the HR side. Coordinating conversations with everyone when they're spread all over the world leaves very few possible times and those times are needed by everyone, so there's a lot of meeting collision. And employment law is different everywhere. You can't afford to setup "offices" in every location, so everyone is a contractor/consultant. They work full time and have an equity plan but it's all a bunch of little personal businesses. Focusing on a few key locations makes this more manageable.

Big companies can afford the investment into many small locations and they can afford having the regional expertise to avoid running afoul of local and federal governments. In an ideal world, we'd make this easy for ourselves but the world is not ideal.

mattpallissard• 3 years ago

I've worked at a lot of places that posted us only jobs while also employing many overseas independent contractors.

Typically when I've seen job postings US only they're looking for some type of coverage during US business hours; on-call, supporting juniors, meetings with c-suite, etc.

ezedv• 3 years ago

Startups often prioritize US remote candidates due to various factors like market access, time zones, and talent pool density.

dyeje• 3 years ago

Timezones and additional administrative overhead mostly.

nektro• 3 years ago

being remote or not doesnt affect things like work visas and payroll/tax/benefits differences

b200002• 3 years ago

because remote according to them means "be close enough so you could just as well be on site"

tough• 3 years ago

Does it make sense for a non-US developer to just set up an LLC to offer his services at US rates?

I can deal with 3 in the AM meetings or whatever if the pay is good anyways.

badpun2• 3 years ago

I'm guessing part of the reason for startups specifically is, US remotes will be shown as employees, while non-US remotes will technically be contractors, thus not counting towards the head count - which is one of the things that determines the valuation once the company is flipped in an IPO or acquisition.

b200002• 3 years ago

because of legal and tax reasons

and because they want to have the idea you are local

donnie12345• 3 years ago

@prakhar897 The question is based on wrong premise. Developing countries like India don't have engineering talent and that's the reason why US startups do not want to hire any unskilled employee. They are giving these lame responses to these unskilled candidates because they don't want be seen as rude.

Ask HN: Why are most Startups asking for US Remote instead of just Remote?

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