How do I pay employees outside the US?
- Claire Baker
- Apr 4
- 2 min read
Newsflash: Canada is not the same country as the US.
Shocking, I know.
But if one of your employees lives in Canada, or any non-US country, you need to pay them according to the laws in that country.
Even if they speak with a North American accent.
You think I’m joking, but I have seen employers who are surprised that they need to make payroll accommodations for people in Canada.
More often, they think they can just pay them as contractors and be done with it.
There’s more to the difference between an employee and a contractor than whether the company withholds taxes.
👉 You can’t offer benefits like PTO, insurance, or parental leave to a contractor.
👉 You can’t define their schedule, give them performance reviews, or manage them as a member of your team.
👉 They shouldn’t be working exclusively for you. Not for very long, anyway.
If you want to do any of those things, your best option is to get an employer of record (EOR).
Basically, an EOR is a business entity in another country that you pay to employ your employees for you.
The EOR pays the employee in local currency, according to local laws, and offers them whatever benefits are standard in their country.
They’re expensive, starting at about $699 per employee per month (depending on the vendor and country). But the cost isn’t what sets my teeth on edge.
With an EOR, you have very little insight or control over how they treat your employees.
You can see virtually nothing about how your employees get paid, and you can do even less to change it.
With most EORs, you need to submit changes a full 3 weeks before they take effect.
It makes sense that they would need that kind of processing time to manage such a complicated system at scale, but you have no idea what happens behind the curtain.
I once did a deep dive into a mysterious payment in the UK.
New employees were paid a random amount on their first paychecks. The number didn’t seem tethered to anything in reality.
It turned out that a UK law required that all wages be reported within 24 hours of payment.
Because the EOR’s processing times meant that they wouldn’t have the information they needed for the first paycheck until weeks later, they just...
...made up a number equivalent to a couple of days of pay and paid it.
They just made it up.
They paid out the remaining correct amount on the following paycheck, but that wasn't until some 6+ weeks after the new employees had started.
Nothing to see here.
Pat-pat, look over there.
EORs are an imperfect solution. They allow you to pay people fairly, but they still aren't a great experience for anyone involved.
If you have an employee who is moving abroad, it's worth engaging in a transparent conversation about the trade-offs and setting expectations for is and isn't under your control as an employer.
If you'd like help setting up your EOR (or giving your international employees a better experience), we can help.
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