A U.S. company can hire a foreign employee, but the right way depends on where the person will work and how you plan to manage them. If you are a U.S. founder, HR lead, or finance owner hiring your first international employee, the main challenge is choosing an approach that matches local laws in the worker’s home country while keeping your process simple.
Many teams want global talent because it creates a competitive advantage. You can move faster, reach new markets, and build an international team with skills that are hard to find locally. But global hiring comes with legal complexity, tax obligations, and compliance requirements that do not exist in a normal U.S. hire. Even when you hire remote employees, the rules in other countries still apply.
Key takeaways
A U.S. company can hire a foreign employee by sponsoring a visa for U.S.-based work, hiring the worker as an independent contractor, setting up a local legal entity abroad, or using an Employer of Record (EOR). For many teams hiring remote foreign employees, an EOR is often the fastest and lowest-risk path because it supports global payroll, compliant contracts, local employment laws, and ongoing compliance.
Four options to hire a foreign employee
When people ask, “How can a us company hire a foreign employee?” they usually mean one of two things. They either want to bring someone into the U.S. or they want to hire international employees who stay in their home country as remote workers. These are not the same. The first is mainly an immigration services and immigration program question. The second is mainly a local regulations, payroll, and employment laws question.
Option one: Sponsoring a foreign employee to work in the U.S.
If the person will perform the job in the United States, you generally need to follow immigration law and use the correct visa process. The employer role can include filing petitions, maintaining records, and meeting wage and process rules tied to specific visa categories. A good place to understand the government’s view of hiring foreign labor is the U.S. Department of Labor’s overview page. https://www.dol.gov/general/topic/hiring/foreign?utm_source=chatgpt.com The USCIS petition process overview also helps employers understand the flow and responsibilities. https://www.uscis.gov/working-in-the-united-states/information-for-employers-and-employees/petition-process-overview?utm_source=chatgpt.com
This option can work well for roles that must be physically in the U.S. or when you are relocating a key hire. It can also be slow and uncertain. Timelines vary, approvals are not guaranteed, and total cost can include filing fees plus legal fees. If your real goal is global work done abroad, this route can be unnecessary. In that case, you are usually better off solving for compliant employment in the person’s home country instead of trying to move the person.
Option two: Hiring a foreign independent contractor
Hiring international contractors can be practical when the work is truly project-based. Many companies start here because they think it is simpler: they sign a contract, receive invoices, and pay contractors without running a full employer payroll. This can be fine for global contractors who operate independently and manage their own time, tools, and delivery.
The risk is misclassification risk. If a contractor relationship looks like permanent employment, local authorities may treat the worker as an employee, even if your agreement says “contractor.” That can create retroactive taxes, penalties, and obligations tied to employee benefits and mandatory contributions. This option is often a poor fit for a full-time employee doing core work inside your global team, because it increases compliance risk as the relationship becomes more integrated and long-term.
If you want a resource that explains the practical misclassification traps, use this Rivermate internal guide to avoid misclassifications. https://rivermate.com/blog/avoiding-contractor-misclassification?utm_source=chatgpt.com
Option three: Setting up a foreign legal entity
Setting up a local legal entity means you register a company presence in that foreign country and hire directly under local laws. This route gives maximum control, and it can be the right choice for global expansion when you plan to hire a bigger international workforce in one location.
It is also the heaviest operational path. Entity setup can require registration steps, ongoing filings, local bank accounts, and continued administration under local employment laws. You also own the full burden of tax reporting, payroll, and compliance requirements. The ongoing work is manageable when you are building a real team in one country, but it becomes hard when you are hiring across many countries, because local regulations differ and mistakes can be expensive.
This option makes sense when the goal is long-term presence, repeat hiring, and a stable base for new markets. It is often the wrong move if you simply need to hire international talent fast in one or two roles.
Option four: Using an Employer of Record (EOR)
An Employer of Record is a partner that hires the worker on your behalf in their home country. The EOR becomes the legal employer, while you manage day-to-day work. This is why EORs are a popular solution for global hiring when you want speed without building local entities.
In practice, the EOR supports local employment laws by issuing compliant contracts, running local payroll, and handling local tax obligations such as income taxes and employer-side mandatory contributions. It also helps with statutory benefits and practical employment administration. You still decide the employee’s salary, job scope, performance goals, and daily workflow, but the legal employment framework is handled locally through the EOR.
You can use this comparison to help you choose between international contractors and an EOR.
Legal, tax, and compliance considerations U.S. companies must address
When you hire internationally, the most important rules are usually the local employment laws where the employee works. That is true even for remote foreign employees. These rules can cover notice periods, paid leave, termination steps, and benefits. Payroll rules can also require local tax withholding and filings. In many places, wages earned locally create employer obligations that must be managed through proper payroll, not informal payments.
Tax obligations are not only about payroll. There is also a corporate tax angle. If your remote employees represent the company in a way that creates a taxable presence, you can face permanent establishment concerns in that foreign country. This risk depends on facts, including the person’s authority and activities, so it is not something to guess on. It is something to evaluate early when you hire internationally.
A second reality is accountability. Even when vendors help, companies responsible for the working relationship can still face exposure if the setup does not match local laws. This is why ensuring compliance matters from day one, especially if you plan to scale an international team across other countries.
How an Employer of Record simplifies hiring foreign employees
An EOR simplifies hiring because it reduces the number of local systems you must build yourself. Instead of creating foreign entities, opening local bank accounts, and learning local regulations from scratch, you use a process that is already designed to fit local employment laws. That can reduce compliance risk and shorten time to hire, which matters when you are competing for global talent.
It also supports better long-term outcomes. Contractors can be right for some work, but many roles eventually require permanent employment to support retention, stability, and employee benefits. An EOR can provide a compliant bridge between “hire international now” and “maybe build a local legal entity later if the country proves strategic.” That helps teams expand into new markets with less operational drag.
Conclusion
A U.S. company can hire a foreign employee in four main ways. If the job is in the U.S., you usually look at immigration services and the visa route, using official references like the Department of Labor and USCIS for the right process.
If the person will work in a foreign country, you choose between hiring international contractors, building local entities, or using an Employer of Record. Contractors can be useful, but misclassification risk can turn a “quick win” into a costly compliance problem. Entity setup can support deep global expansion, but it adds significant admin and tax reporting work. For many companies, an EOR is the most efficient way to hire employees abroad quickly and legally while supporting global payroll and local compliance.
If you want to hire international employees without setting up entities, explore Rivermate’s Employer of Record services to hire international workers with compliant contracts, proper payroll, and local support across many countries.
FAQs
Can a U.S. company hire an employee who lives in another country?
Yes. A U.S. company can hire an employee abroad using an EOR, through a local legal entity, or in some cases through contractor relationships if the work truly fits that model.
Do U.S. companies have to sponsor a visa to hire foreign employees?
No. Visa sponsorship is generally only needed if the person will work in the United States.
Can I hire someone who is not a U.S. citizen?
Yes. You can hire non-U.S. citizens either for U.S.-based roles with the correct authorization or for remote employees abroad using local employment options.
Is using an Employer of Record legal for U.S. companies?
Yes. Using an Employer of Record is legal when it follows local laws, with the EOR acting as the legal employer in the worker’s home country.
