What to Know Before Hiring International Employees

Quick look: Ready to look beyond U.S. borders for talent? Get a clear picture of what global hiring involves, from labor laws and international payroll to work authorization, benefits, and culture considerations, and see how small and mid-sized businesses (SMBs) can hire compliantly with the right policies and support in place.

Your next great hire might live thousands of miles away. As U.S. businesses compete for skilled talent, more are looking beyond state lines and national borders to find it.

According to the latest Bureau of Economic Analysis (BEA) data, U.S. multinational companies employ about 44 million people worldwide, and roughly 14 million of those jobs were outside the United States. Employment abroad was largest in India, Mexico, and the United Kingdom.

Benefits of hiring international employees

There are several reasons why growing businesses choose to build a global workforce. Here’s what they stand to gain:

• Access a larger talent pool: 69% of U.S. employers have difficulty finding skilled talent, and hiring across borders can help fill key roles faster.
• Develops a multilingual team: Employees who speak different languages can help businesses better serve current customers and connect with new markets.
• Provides first-hand market insight: Employees who live and work in other countries can bring valuable perspective on local business practices, customer preferences, and marketing strategies.
• Extends your coverage: Team members in different time zones can support customers across more of the day.

Your staff can benefit, too, with flexible schedules and expanded career opportunities. But despite all the advantages, a global team brings some extra considerations, and identifying them early makes them less stressful to navigate.

Top challenges of hiring international employees

Hiring internationally can introduce complexity at many stages of the employee lifecycle. Here are some of the biggest areas to keep in mind:

Legal and compliance

Every country has its own employment laws and those can vary significantly by location. Some regulations to keep on your radar include:

• Minimum wage, working hours, termination rules, notice periods, and mandatory benefits, which vary widely and change often.
• Employee classification, as misclassifying an employee as a contractor can trigger fines, back taxes, and legal exposure.
• Data privacy laws, like the General Data Protection Regulation (GDPR), which shape how you collect and store candidate and employee data. (In 2025 alone, European regulators issued roughly €1.2 billion in GDPR fines.)

Those rules can also differ depending on whether the employee works remotely from their home country or relocates for the role.

Legal entities

Hiring in another country used to mean establishing a local entity, a process that can require significant time and money, but that’s no longer the only route.

Alternatively, companies can partner with an employer of record (EOR), which lets you hire compliantly without an entity. Depending on the arrangement, EORs can handle certain local human resources (HR) administration and compliance requirements, typically for a per-employee fee.

Payroll and taxes

Paying people correctly tends to get even more layered across borders. When you have a global team, it’s crucial to properly manage tax withholding rules and social contributions like pensions, health insurance, and social security equivalents. And when it comes to budgeting for salaries, it’s important to take into account currency fluctuations.

Benefits and compensation parity

What’s considered competitive changes from country to country, as the norms and regulations surrounding healthcare, parental leave, pension contributions, paid time off (PTO), and other benefits may be governed by law or shaped by market expectations.

Pay equity should remain in focus during this planning, too. Rather than choosing a uniform global salary, it may make more sense to target a specific percentile of the local market rate. In other words, instead of paying every new hire in a certain role the equivalent of $80,000 USD, it may make sense to pay them the 50th percentile of their local market rate, or right in the middle of what other local companies pay for the position.

Cultural and communication gaps

A distributed team has many strengths, but can naturally mean more nuanced collaboration and meeting schedules, and different communication styles and workplace norms. Proactively addressing and setting guidelines around these circumstances can help everyone feel comfortable and stay productive.

Onboarding and equipment logistics

A great first week matters whether an employee is down the street or across the world. To keep everything on track, businesses must coordinate getting hardware, software access, and any necessary documentation to the employee abroad, while also adhering to any import and customs rules. Planning these details before the employee’s start date can prevent unnecessary delays.

Termination and offboarding

Employment requirements don’t end when an employee leaves.

Many countries have strong worker protections, including mandatory severance, notice periods, and “just cause” requirements. In other words, ending employment is not typically as simple as it is at an at-will organization in the U.S.

Visa and work authorization, if applicable

Work authorization requirements depend on where the employee lives and where they will perform the work.

If an employee is relocating to another country, businesses may need to account for visa sponsorship, application timelines, eligibility requirements, and associated costs. A remote employee who already lives and works in their home country may not need a work visa, but other local employment and tax requirements can still apply.

11 best practices for hiring international employees

Ultimately, staying compliant when hiring talent from abroad comes down to three things:

• Knowing each country’s labor, tax, and data privacy rules,
• Classifying every worker correctly, and
• Having a compliant legal employer in place locally, whether that’s your own entity, an EOR, or a professional employer organization (PEO) with global capabilities through a trusted EOR partner.

These best practices can help you cover all three.

1. Establish a clear policy on which countries and states are approved for remote work.
2. Outline maximum stay limits for different regions. Research your obligations if an employee spends more than one to three months in a particular state or country, then set limits based on visa, taxation, and residency rules.
3. Proactively coordinate with staff to set expectations and require approval for any change to their work location plan. Decide in advance what you’ll do if someone relocates without authorization.
4. Maintain your company’s HRIS with current employee location information.
5. Advise your payroll professional or your payroll team at your PEO so they can update state unemployment and workers’ compensation policies and account for currency fluctuations, tax withholding rules, and social contributions.
6. Make employees aware of their responsibilities by tracking days worked in each state or country and by budgeting for additional professional accounting and tax services to ensure their taxes are filed properly.
7. Choose the right employment structure. Depending on your hiring plans, you may establish your own legal entity, work with an EOR, or use a PEO with international partners.
8. Confirm adherence to local labor and data privacy laws in every location, from working hours and notice periods to how employee data is stored.
9. Verify you offer all legally required benefits in each work location, since healthcare, leave, and pension rules differ by country.
10. Consult legal counsel or your PEO’s compliance experts on visa and work authorization questions and termination restrictions, ideally before you make an offer.
11. Build a culture that includes everyone, wherever they work. Rotate meeting times across time zones and encourage cross-cultural awareness.

Enjoy the benefits of a global team, without building your HR infrastructure from scratch

A PEO can help with many HR, payroll, benefits, compliance, and domestic recruiting responsibilities. Some PEOs also offer services designed to support international hiring.

ExtensisHR, for instance, works with global EOR partners to provide international payroll management and healthcare coverage in 150+ countries.

By onboarding employees, handling payroll and compliance, and paying in-country taxes at the local level, SMBs can quickly, legally, and cost-effectively hire international employees without setting up a full entity.

These global services can help you:

• Reduce the need to coordinate separate lawyers, accountants, and payroll providers across multiple countries
• Expand into new talent markets without establishing a local entity immediately
• Simplify international payroll and employment administration
• Decrease some of the administrative work associated with international hiring
• Create a more consistent HR experience as the workforce expands across borders

And with an emphasis on personalized support, ExtensisHR’s PEO solution also provides:

• A dedicated Account Manager, plus an HR Business Partner and Payroll Specialist assigned directly to your business
• Customizable benefits packages to meet your specific workforce’s needs, along with a dedicated employee support line and an option for one-on-one benefits meetings for new hires
• Strategic HR insights from certified experts that keep you ahead of industry changes

Hiring international employees can open the door to talent and growth that a domestic-only search simply can’t match. With clear policies, a plan for payroll and compliance, and the right support behind you, going global is well within reach, even for smaller organizations.