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The Simplest Way to Expand Business in Canada

Posted by Karen McMullen


Jun 17, 2019 9:00:00 AM

The Simplest Way to Expand into CanadaYour business has been growing steadily, but you’re always on the lookout for new opportunities. As your current markets have reached maturity, you’ve been wondering what your next move will be.

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One option now on the table is an international expansion to Canada

How can a company expand internationally?

There are a number of different ways to set up shop in Canada. Some are easier than others. This method may very well be the simplest way to expand business in Canada.

There Are Many Ways to Expand Business in Canada

For some business owners, moving in to Canada involves opening a branch office. This office is much like any other branch office, with the exception that it’s on Canadian soil. If you’ve opened offices in other cities or states, this may feel like the most logical move for you.

You will want to check the legislation governing branch operations, such as the tax laws. There might be a better way to expand business in Canada if you want tax efficiency.

You can also set up as a subsidiary company. This creates a new Canadian company, which is considered a separate entity from your parent company.

An acquisition is another way to expand a business. You could buy a Canadian business or property. Investing into an existing Canadian company is yet another option.

In any of these scenarios, it’s prudent to consult with financial experts, HR experts, and legal experts as well. Having professional advice offers you the strength of informed decisions. You want to make the best choice for your business.

Work with a PEO

The easiest route into Canada for most businesses is through a partnership with a professional employer organization, or PEO.

While you’ll still need to decide whether you’re setting up as a branch office or a subsidiary, working alongside a PEO can take the guesswork out of the HR logistics of your expansion.

Working with a PEO is like bringing in a specialized Canadian HR team. Their experts can help you monitor compliance, and they’ll administer your payroll. Your Canadian employees will be paid on time, every time, and you won’t need to worry about penalties from the Canada Revenue Agency.

The PEO will also provide access to other infrastructure, such as banking or insurance. Some PEOs provide health savings accounts for your employees. Through their program, you can rest assured you’re getting the best price and that the program is compliant..

Is a PEO Partnership Right for Your Business?

You might ask yourself whether you’re in the right position to partner with a PEO. Most small businesses can benefit from working with a PEO. The PEO is built to handle clients of all sizes, which means their infrastructure could help you as your business expands. Whether you have five employees or 500, the PEO is able to provide timely, efficient HR assistance for your business.

This is even more important for international businesses. The PEO’s expert team already knows the ins and outs of employment law, payroll taxes, and more, so they can help you conduct payroll, pay taxes, and provide leave, vacation, and more to your employees.

Talk to a PEO Today

If you’re thinking of ways to expand business in Canada, talk to a PEO today. Expert insights could help you get started on the road to successful international expansion.

With the right assistance, crossing borders and expanding into new markets is easier than ever before.


Topics: Business Expansion

Canadian vs US Employment Laws: What International Employers Need to Know

Posted by Karen McMullen


Jun 5, 2019 9:00:00 AM

foreign-vs-us-employment-laws-what-international-employers-need-to-knowInternational employment laws pose a challenge for almost any employer who looks to move beyond their national borders. For American companies moving to Canada, the differences between US employment laws and the rules in the new market can be confusing. Similarly, Canadian employers may have plenty of questions about the US laws.

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If you’re crossing the Canada–US border in any capacity, here are some of the most pertinent points you’ll want to keep in mind.

US Employment Laws and Human Rights

One of the biggest points of departure between Canadian and US employment laws is around human rights.

In Canada, the federal Charter of Rights and Freedoms grants Canadians the right to live free of discrimination. The Charter outlines many prohibited grounds of discrimination, such as gender, race, sexual orientation, age, and more. In some cases, Canadian courts have added prohibited grounds to the Charter by “reading in.”

The provinces have also created human rights legislation, which sometimes goes further than the federal Charter. Most provinces use this legislation to help protect Canadian workers and end discrimination in employment.

One example demonstrates how this can impact international employers. Some interview questions, such as those about marital status, are considered discriminatory in most provinces. Asking about religion, family status, or health could also be considered discrimination.

Canadian employees can start proceedings against their employers by complaining to their provincial Human Rights Commission. In the US, by contrast, employees would usually sue their employer independently.

Background Checks and Drug Testing

In the US, it’s very common for employers to require a background check. Some may also require a drug test as part of the hiring process.

In Canada, these checks are rare. Much like certain interview questions, background checks and drug tests could be considered discriminatory. Drug testing is allowed very rarely, and it’s usually not worth the risk of having a Human Rights Commission investigate.

Background checks in Canada are becoming more common, especially for certain professions, such as working with children and other vulnerable persons. If an employee handles money, merchandise, or sensitive information, a background check may be recommended.

Working Hours, Breaks, and Leave Time

Other major differences between Canadian and US employment laws are around working hours, breaks, and leave.

Federal US employment laws are rather sparse on regulations for these areas. There are no maximums on the number of hours employees can work, provided they’re compensated fairly. The US is also one of just three countries that doesn’t have mandated breaks for employees.

Individual states can create their own rules, but only a handful provide paid lunch breaks. Paid leave is also at the employer’s discretion. There’s no need to provide paid vacation, for example, unless you want to.

Canada presents almost the polar opposite situation. Most provinces have legislation requiring employers to offer paid and unpaid breaks, and capping the number of hours employees can work. Most laws lay out the maximum time an employee can work without a break, maximum shift lengths, minimum time between shifts, and maximum number of hours to be worked in a week.

The Canadian provinces also include legislation for paid time off, such as mandatory vacation and paid leave.

You Must Be Compliant

In both the US and Canada, compliance is important. In Canada, however, employers may find the rules are stricter, and there are more of them. There are also more bodies dedicated to ensuring compliance.

A great example is payroll and taxation. You’ll need to keep records in Canada. Not doing so could result in a fine or even a criminal charge. You could be asked to provide evidence of record-keeping to the Canada Revenue Agency or a provincial body.

If you need help staying on top of your compliance, you’re not alone. Get in touch with a PEO. Discover how we can help.


Topics: Compliance and Legislation

Payrolling US Workers from Abroad? 5 Laws You Need to Know

Posted by Karen McMullen


May 20, 2019 9:00:00 AM

Payrolling US Workers from Abroad 5 Laws You Need to KnowTalk to almost anyone who employs a worker in the US, and you’ll likely hear about the myriad rules that govern how you pay your team members. Conducting payroll in the US can be a bit intimidating for that reason.

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It’s imperative for international companies to familiarize themselves with the laws, especially if they want to reduce risks and avoid penalties. Review some of the major federal laws you’ll need to be familiar with if you’re planning to pay US workers from abroad.

1. The Fair Labor Standards Act

The Fair Labor Standards Act, or FLSA, was introduced in the 1930s. It’s been updated periodically since then. It’s designed to cover full-time and part-time workers in both the private sector and at all levels of government.

The FLSA sets a federal minimum wage and also governs overtime. Currently, overtime wages are set at one-and-a-half times an employee’s regular hourly wage. The FLSA also governs the number of hours minors can work.

It’s important to note that the FLSA doesn’t cover all workers in the US. It offers individual coverage and enterprise coverage. Workers in certain industries may be exempt from some of the regulations, such as overtime pay.

It’s also important to note that state law can override the FLSA. Many states, for example, have higher minimum wages than the federal rate. In these cases, employers would need to comply with state law.

2. The Federal Unemployment Tax Act

If you are a private, for-profit enterprise operating in the US and employing American workers, you may need to pay unemployment taxes, as per the Federal Unemployment Tax Act. Also known as FUTA, this Act coordinates with state unemployment systems to provide unemployment compensation for people who lose their jobs.

Employers alone are responsible for FUTA payments. Employees don’t pay a portion of these funds through payroll deductions. Requirements vary from state to state, as each state administers its own unemployment program.

3. The Federal Insurance Contributions Act

If you’ve heard someone talk about FICA payroll deductions, you’ve encountered the Federal Insurance Contributions Act. This is the legislation that provides for programs like Medicaid and Social Security.

FICA requires employers to make deductions from their employees’ paychecks. These withholdings are then used to pay into social programs. Employers are asked to provide a match for what they withhold from their employees.

You’re expected to withhold 1.45 percent of wages for Medicare and up to 7.65 percent for Social Security. If your employees earn over $200,000, there’s another surtax as well.

4. Employee Retirement Income Security Act

You may not be subject to the Employee Retirement Income Security Act, but it’s a good law to know if you have US employees.

ERISA governs pension plans offered by companies in the US. While it doesn’t require an employer to offer a retirement plan, it does set up standards for pension plans. This includes how to report on plans as well as disclosure and fiduciary requirements.

5. The Family Medical and Family Leave Act

The Family Medical and Family Leave Act may not seem like it will have much of an impact on your US payroll operations at first. It provides only unpaid leave for your employees, which means you don’t need to worry about paying them if they do take leave.

Nonetheless, it’s a good idea to pay attention to the provisions in this law. It requires you to provide workers with up to 12 weeks of leave following the birth or adoption of a child, or for serious illness of the employee, their spouse, a child, or a parent.

This leave is job-protected, so you’ll need to know how to fill the position while the employee is away.

This list provides a good starting point for international employers. There are many other US laws that affect how you’ll handle payroll for your US workers.


Topics: Payroll

Global Companies: 5 Things to Keep in Employee Files in the US

Posted by Karen McMullen


May 6, 2019 9:00:00 AM

Global Companies 5 Things to Keep in Employee Files in the USHiring and employment often present concerns for global employers. How do you let someone go? How can you find the right people for the job? What are your tax responsibilities as an employer, and how do you make sure you’re not misclassifying your workers?

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There are many nuances in this area, including documentation and employee files. You might be wondering what you need to keep in your files. Employing workers creates plenty of paperwork, but do you need to keep everything?

If you keep these five records, you should be well on your way to satisfying most requirements.

1. Global Companies Must Keep Files Relating to Job Performance

You’ll want to keep documents related to the employee’s job performance in their file. This includes records of evaluations and commendations.

These documents are important, particularly if an employee or ex-employee decides to file proceedings against you. Evaluations can show a record of the employee’s performance, which can help establish a pattern of behaviour in a courtroom situation.

2. Tax Documents Are Also Important

Global companies may feel overwhelmed by the number of tax forms they need to fill out or have their US employees complete. Not only are these important to complete, but it’s important for you to keep them on record.

At minimum, you’ll want to keep a copy of the employee’s Form W4 on file. This document allows you to collect and withhold taxes on the employee’s behalf. Employees should be permitted to periodically review and amend the form, which can be difficult if you don’t have it on file.

3. Records Pertaining to Discipline and Complaints

It’s also important for global companies to keep formal documentation of poor employee behaviour, disciplinary actions, and complaints from co-workers or customers. All these files can be presented as evidence in court.

They may also assist you in determining whether to keep on an employee or let them go. If corrective measures have been taken, but the employee’s behaviour doesn’t improve, it might be time to let them go.

4. Information about Compensation

You’ll also want to file records around notices of raises. You should supply employees with written statements of their raises, but you will want a copy in your files as well. This can serve as evidence if the employee lodges a complaint.

Benefits are also a form of compensation, and you’ll want to those records as well.

Be sure to explain to employees what their compensation consists of, and have them sign a form indicating they’ve read and understood the information.

5. Documents about Hiring and Departure Should Be Kept

Your employee file should open with a description of the job, as well as the employee’s resume and application. You should also include your formal offer of employment.

You’ll need to retain records for some time after an employee departs, so be sure to add documents to their file. Other documentation, such as exit interviews and records that clearly state the reasons an employee parted ways with the company, are important to keep on file. As with paperwork mentioned earlier, these items can serve as evidence if a complaint arises.

With these basics in hand, global companies can build better personnel files for their US employees.


Topics: human resources

The 5 Steps to Take after Hiring Employees Abroad

Posted by Karen McMullen


Apr 29, 2019 9:00:00 AM

The 5 Steps to Take after Hiring Employees AbroadHiring employees abroad can be a challenge for international companies. You need to hire top talent, but you may not have as much insight into the international job market. Cultural differences can make it more difficult to evaluate education, experience, and fit.

Download our free guide on what US companies need to know about paying  employees in Canada.

Once you’ve hired a new employee, you also need to know which steps to take next. Take a look at this guide. It will help you get your new hires settled in.

1. Adjust Your Onboarding Process for Hiring Employees Abroad

Onboarding technically begins the moment someone contacts you about a job opportunity. How quickly you respond to and how you communicate with them during the hiring process forms the basis of their experience with your business.

Of course, it’s not too late to begin onboarding once you make the job offer. Be sure to adjust your onboarding process to reflect cultural differences in the international market. Everything from how you communicate to who your new employee reports to may need to be tweaked.

You may also need to change the process to accommodate remote workers. A good rule is to introduce the new staff member to other key personnel. If they’re working remotely, try to get everyone together on a video call to say hello and welcome the new hire.

2. Get Them into the Payroll System

You should ensure your new hire is quickly added to the payroll system. There’s nothing more frustrating for a new employee than not getting paid on time because their account wasn’t finalized.

You should ask the employee to forward their details as soon as possible. Be sure those are sent to your payroll team or your professional employer organization, so they can set up and verify the account before the next payday.

Be sure to communicate when the employee can expect to be paid, as well as how you’ll handle any partial pay periods while the account is being created.

3. File the Right Paperwork

One of the challenges with hiring employees abroad is knowing what forms you’ll need to fill out after you’ve hired them. It can be challenging to get this paperwork completed in the designated timeframe. For example, you’ll only have so many days to file Form W-2 with the IRS when you hire an American employee.

Familiarize yourself with the paperwork pertaining to new hires before you bring someone on board. This way, you can hand them the paperwork to fill out before their first day. You won’t have to scramble at the last minute to make sure you have the right forms on file.

If you’re not sure, ask a PEO for help.

4. Set up Benefits

If you offer employee benefits, you’ll need to set them up when you’re hiring employees abroad. You may need to tweak the benefits package you offer in each international market you operate in. For example, health insurance is a bit different in the United States and Canada, since the two countries have very different healthcare systems. Often, offering an HSA is the easiest way to offer benefits to employees while controlling costs.

You’ll also need to file paperwork to get your employee enrolled in your employer-sponsored plan. It’s a good idea to go through the benefits package with new employees, explaining the coverage they have and how claims work.

Again, a PEO can help you find the right benefits package and get it set up for your employees.

5. Establish Expectations

Finally, when you hire employees abroad, be sure to establish clear expectations with them. How often should they communicate with you, and who should they report to on a daily basis?

Streamlining your processes and upgrading your onboarding procedures now will help you create a productive and creative relationship with each employee you hire.

7 Signs It's Time to Outsource Payroll

Topics: Business Expansion

4 Tips to Compare US Payroll Service Providers

Posted by Karen McMullen


Apr 17, 2019 9:00:00 AM

4 Tips to Compare US Payroll Service ProvidersWhen you’re expanding to the US market, there are many challenges you’ll face. One of the ongoing issues for global companies is employing American workers. From hiring to termination, there are many tasks to be managed, and you’ll need to be familiar with the ins and outs of American employment regulations.

Request a quote for US payroll services today!

One way to make these tasks easier is to work with US payroll service providers or a professional employer organization (PEO). The experts on staff can help you manage payroll, monitor compliance, and more.

The question is, how can you be sure you’re hiring the right company? During the decision-making process, you’ll need to compare and contrast different providers. Use these tips, and selecting the right provider will be easier.

1. Ask about Support from US Payroll Service Providers

The first thing you should do is ask about the kind of support you’ll receive with your payroll service. Will you have a dedicated agent or team of people working on your account? Can you contact them? If there’s a significant time zone difference, and how will they manage this?

You should also ask about support for different systems and programs they use. Will you be required to use their programs to log information?

Support is a key factor in finding the right payroll service provider.

2. Determine Your Needs

When you’re comparing US payroll service providers, it’s easy to get caught up with extras you don’t necessarily need. It can also be tempting to choose a bare-bones plan that doesn’t meet all your needs because it fits your budget.

Always keep your needs in mind. If you’re going to need help with more than just US payroll, it might be a good idea to work with a professional employer organization that offers support for human resources, compliance, legal, and more.

3. Ask How They’ll Grow with You

As a business leader, you need to be forward-thinking, so you should take steps to future-proof your relationship with your payroll provider.

You plan to grow your US operations, so ask how the payroll provider will scale with you. Can they keep conduct payroll for 100 or 10,000 employees? If not, it might be time to consider someone else.

4. Think Beyond Payroll

Payroll is certainly one of the more time-intensive tasks related to the employer-employee relationship in the US. It’s far from the only aspect you need to consider.

As you compare US payroll service providers, you should consider whether you need services that go beyond payroll. Would it be helpful to have assistance with HR compliance? What about delivering training and onboarding?

You may want to consider PEOs over US payroll providers alone. A PEO can help you manage payroll and so much more, which could be key to your success in the US market.


Topics: Payroll

Global Companies: 5 Challenges to Employing US Workers

Posted by Karen McMullen


Apr 1, 2019 9:00:00 AM

global-companies-5-challenges-to-employing-us-workersYour business is on the move, and your next target is the coveted American market. Like many global companies before you, you’re confident that you’re ready to face this challenge.

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Opening a US office or starting up operations in the US market means hiring American workers. The American labour market comes with unique challenges. Some of them are cultural, while others are legal.

Whether you’ve just hired your first American worker, or you already have a few US workers on your payroll, keep these five challenges in mind.

1. Global Companies Are at Risk of Misclassifying Employees

Can you explain how the IRS defines a contractor? If not, you’re not alone. Many business owners can’t, whether they’re running an international business or the US is their home base.

A lack of familiarity with American regulations causes some trouble for international employers, putting them at higher risk of misclassifying their workers. The IRS and several states have started cracking down on misclassification in recent years.

Take care that you review the definitions of both 1099 workers and other employees. This will help you avoid misclassification and the associated penalties.

2. State Law Can Vary from Federal Law

Learning the legal framework of any new country is a big task for companies looking to expand beyond its borders. This usually results in a lack of familiarity with an employer’s legal requirements.

In the United States, the situation can become increasingly complex. You’ve acquainted yourself with the federal legal framework, but laws change from state to state.

Minimum wage is one example. The federal government has set a minimum wage, but many states have enacted their own minimums. For each state you operate in, you’ll need to ensure you’re acting in compliance with the law.

States may also have their own laws around working hours for certain industries and even how you terminate employment with an employee. Before you hire an employee in any given state, you’ll want to check the fine print on these points.

3. Payroll Deductions and Remittances to the IRS Are Challenging

Another challenge for global companies is payroll deductions and the remittances they must send to the IRS when they employ American workers.

As the employer, you’ll be responsible for withholding income tax for your employees. How much you withhold from their paycheck depends on how much they earn.

You’ll also need to withhold for social programs like Medicare and Social Security. These withholdings have to be remitted to the IRS on a regular basis, usually in accordance with how often you conduct payroll.

As a result, administering payroll and sending payments to the IRS is a big challenge for most employers. Global companies can get the help they need by partnering with a professional employer organization (PEO) that offers payroll processing services.

4. The Job Market Can Pose a Challenge

Unemployment in the US has dipped over the last couple of years. There are fewer workers on the market as a result.

This situation can pose challenges for global companies who are searching for top talent. Your choice of state can also affect your hiring options. If you’re hiring in an area where the talent pool is relatively limited, you may have to pay more competitive wages.

Learning the job market is often something that happens after you’re actively seeking out new employees.

5. You May Need to Adjust to Employee Expectations

Cultural challenges can crop up in almost any aspect of the employer-employee relationship. Your employees may expect you to offer certain benefits or that they’ll receive certain amounts of time off.

They may also expect that you’ll communicate with them in particular ways.

Obviously, global companies have plenty to think about when it comes to hiring US workers. Getting a helping hand from a PEO can help you navigate the employee-employer relationship with ease.


Topics: Business Expansion

5 Facts and Stats about the ACA

Posted by Karen McMullen


Feb 13, 2019 9:00:00 AM

5_Facts_and_Stats_about_the_ACAThe Affordable Care Act was introduced in 2010. Over the course of several years, the Act’s provisions were phased in, with the aim of offering more affordable health care coverage to more Americans than ever before.

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Since its introduction, the ACA has been hotly contested. The current Administration is seeking ways to follow through on a campaign promise to repeal this Obama-era piece of legislation. So far, though, attempts have been unsuccessful.

This guide looks at the ACA by the numbers, showcasing what it’s done for Americans and their families, and where it’s fallen short. If you’re thinking about expanding into the US, you should know as much as possible about benefits such as health care.

1. More Americans Have Health Care Coverage

The ACA was designed to provide more affordable health care coverage to more Americans. It’s no secret the cost of health care insurance has been rising, and fewer employers now offer it. This left millions of Americans uninsured.

According to the Kaiser Family Foundation, 44 million Americans were uninsured in 2013, three years after the Act was introduced. That number fell to under 27 million by the end of 2016 but then climbed again.

At the end of 2017, 27.4 million Americans were still uninsured. While there’s still work to do, the end result is more Americans have coverage than ever before.

2. Most People Have Coverage for Less than $100 a Month

One of the biggest concerns about the ACA has been the cost of the program. Many politicians feel the program costs the government too much, while employers have voiced concern about rising health care insurance costs.

Reports found that, in 2017, more than 75 percent of eligible participants had coverage that cost them under $100 a month. This is mostly thanks to subsidies, which help offset the high costs of insurance.

3. The Costs Are Still High

For the remaining 23 percent of Americans covered by the ACA, premiums were high. Premiums are tied to risk factors, so older people tended to pay more. Someone in their 60s could find themselves on the hook for more than $10,000 in premiums.

Younger people paid less, but they were still paying around $5,000 per year. This is due to the fact that the ACA requires plans to include particular features. The costs of plans are expected to continue increasing, which is why some people say the current system is unsustainable.

4. States Would Suffer Disproportionately from Repeal

Since the 2016 election, there’s been talk of repealing the ACA. There have even been attempts to repeal or change the Act.

If the ACA were to be repealed, some states would be more severely impacted than others. Massachusetts would suffer the most. Rust Belt states like Michigan and Ohio would also be disproportionately affected, along with some of the coal-producing states like West Virginia.

5. The ACA Does More than Provide Health Care

Most people think of the ACA as a law about health insurance, but it actually does much more. The 10 sections of the Act outline a number of different provisions, each designed to improve the health care system in the United States.

One good example is the National Prevention Council, which acts as a coordinator for all federal health promotion plans. The idea is that encouraging Americans to live healthier lives will reduce the burden on the health care system in the future.

The Future of the ACA

From these facts and figures, it should be clear that the ACA has done good in some ways, but it has also fallen far short in other ways. More Americans have affordable coverage, but some are paying far too much for what seems to be an unsustainable system.

The ACA will continue to affect how employers handle health care benefits for their employees in the foreseeable future.


Topics: Business Expansion

A Quick Guide to US Labor Law

Posted by Karen McMullen


Jan 28, 2019 9:00:00 AM

A_Quick_Guide_to_US_Labor_LawAs a Canadian business owner, you’re likely thinking about how you’ll expand your business in the future. Maybe you’re planning an expansion into the US in the near future. Maybe that date is a little further off.

Download "7 Challenges Companies Face When Expanding into the US" eBook

You might already be making moves to get into the US market.

No matter when you plan to expand, you’re going to need a solid understanding of US labor law before you set up shop on the other side of the border. If you’re planning to hire any American employees or contractors, make yourself familiar with the basic of US labor law by using this quick guide.

Most Labor Law Is Federal

The first thing you should understand about US labor law is that most of it is handed down from the top level of government. There are federal-level bodies that oversee labor law compliance.

This is a stark difference from Canada, where federal labor law covers approximately 10 percent of the workforce. The remaining 90 percent of workers are usually subject to provincial laws, which vary across the country.

That’s not to say there aren’t state laws you’ll need to be aware of. In fact, you’ll likely need to be aware of the differences in state requirements on a variety of subjects.

The States Dictate Unemployment Insurance and Workers’ Compensation

One of the most obvious areas of state control is unemployment. Unlike Canada, which has a federally mandated program, each US state is free to define how unemployment works. Premiums are remitted from the employer to the state, rather than to the federal IRS.

The same is true of workers’ compensation programs. You’ll need to familiarize yourself with the programs and requirements in each of the states you operate in.

Worker Classification Is Important

Another thing you should know when you hire workers in the US is that it’s important to get worker classification correct. Worker misclassification is a concern at both the federal and state level.

This stems from concerns that employers are purposefully misclassifying their employees as contractors in order to avoid federal obligations to them. For example, if you hire an employee, you’ll need to submit payroll remittances, which include tax withholding and Medicare, to the IRS. If someone is a contractor, however, you don’t need to collect and submit these remittances.

You might not purposefully misclassify an employee, but it’s easy to do in error as well. Familiarize yourself with the rules the IRS uses to determine whether someone is a contractor or an employee.

Payroll Remittances

If someone is an employee and not a contractor, you might wonder what your responsibilities are. You know you’ll be asked to deal with unemployment insurance and workers’ compensation at the state level.

At the federal level, you’ll need to complete tax withholding for most employees. You’ll also need to make payments to Medicare and Social Security. Again, these are deductions you withhold from an employee’s pay.

You’ll need to submit these remittances to the IRS on a pre-determined schedule.

Holidays, Leaves, and More

The US Fair Labor Standards Act doesn’t include any regulation about paying employees for time not worked. This means you don’t have to offer paid vacation or pay for holidays.

This is very different from Canada, where law indicates a minimum amount of paid vacation per year and also a number of statutory holidays for workers.

Paid holidays, vacations, and even leaves are up to the employer’s discretion. Offering paid holidays and vacation can give you a competitive advantage when it comes to hiring employees. In certain fields, you may need to offer holidays.

There’s much more to US labor law than this quick guide can go over, but it’s a great place to start. If you have questions, why not consult with a professional employer organization that operates on both sides of the border? Their insights are invaluable.


Topics: Business Expansion

5 Things to Know about Working with Independent Contractors in Canada

Posted by Karen McMullen


Dec 12, 2018 9:00:00 AM

5_Things_to_Know_about_Working_with_Independent_Contractors_in_CanadaWhether you’re looking to do business in Canada or just need to hire the right person for the job, you might be considering working with independent contractors in Canada. A Canadian contractor may have the right experience. They can also help you navigate the Canadian market and conduct business in Canada without needing to set up a permanent establishment.

Download our free guide on what US companies need to know about paying  employees in Canada.

Before you hire an independent contractor, however, there are some things you should know. These five tips will help you ensure your working relationship with any independent contractor in Canada is as smooth as possible.

1. Make Sure You’re Hiring Independent Contractors

This may sound obvious, but employee misclassification is a problem for many employers inside Canada and outside as well. Employers believe they’re hiring an independent contractor, but the letter of the law states they’ve actually hired an employee.

Generally speaking, employees have different rights than contractors, which can cause problems if you classify someone as a contractor, but the law classifies the same person as an employee.

What’s the difference? Independent contractors usually have more say about the scope of the work and how it’s completed. They may be able to decide what materials are used, for example. They may also work offsite and they supply their own equipment. They may also subcontract the work.

2. You May Have Less Protection

When you hire an employee in Canada, your business will be able to add provisions about intellectual property, non-competition, and more into the contract language. When you hire an independent contractor, you may find you can’t add these protections or you may need to water them down.

Always be sure to check the legal framework in the province you’re operating in.

3. You Are a Client, Not an Employer

Independent contractors work for themselves. In this scenario, your business is a client, not an employer. This benefits you, as you don’t have employer responsibilities towards the contractor.

It does also mean you’ll need to take a step back when it comes to dictating what the contractor does or doesn’t do. They’ll set their schedule, and they’ll often work on their own site, with their own equipment. They may even decide to do business for other clients, including your competitors.

So long as the work is being completed on time and to standard, you don’t have much control.

4. You Pay for What You Get

When you hire an employee, you may need to pay benefits, commissions, bonuses, or any number of other types of compensation. As the employer, you determine these payments. You are also obligated to take payroll deductions and fund vacation for employees.

When you work with independent contractors, you’ll pay for the services or products you receive. There are “extras” you’ll need to pay. Working with independent contractors can thus reduce your overhead and save you a little bit of money.

5. Breaking up Is Easy

If you’re not satisfied with the service a contractor has provided, it’s easy to end the relationship. You’ll need to pay the bill, and then you’re free of the contractor. You’re under no obligation to hire them again. You don’t even need to contact them again.

If the work was truly unsatisfactory, you might even decide to negotiate a discount on the bill. The only way you’ll face a lawsuit is if you fail to pay. This is completely different from the employee relationship, where you may need to pay severance or negotiate a wrongful dismissal suit.

Not sure if hiring a contractor is the right move for you? Talk to a professional employer organization. They can help you navigate the ins and outs of Canadian employment law and help you decide if you need independent contractors, employees, or a mix of both.

12 Things an American Company Looking to Hire a Worker in Canada Needs to Know

Topics: Compliance

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