Working with a local partner, such as university or NGO in the host country to employ local staff—and in some cases, U.S. expats or third-country nationals (TCN)—can be a simple solution.

Drexel colleges and departments are responsible for identifying and vetting the partner organization and negotiating the service agreement. These partners are often found through pre-existing research relationships. Global Safety & Operations (GSO) and the Office of the General Counsel (OGC) can advise on the service agreement.

In this arrangement, the staff are employees of the local organization, and the administrative requirements associated with their employment are the responsibility of the local organization. Contact Drexel Human Resources with questions.

Pros

• Fast implementation relative to other options
• Potential for preexisting office space
• Limited risk for university
• Partner responsible for tax and labor law compliance
• Partner administrative fee typically less than other options

Cons

• Visa sponsorship may not be available
• Little or no control over benefits
• Potential for conflicts of interest

Costs

• Salary
• Fringe expense to cover employer-sponsored benefits and employer-owed taxes
• Partner's monthly administrative fee to cover cost of adding employee to payroll (typically 5–10 percent of salary)
• Visa sponsorship fees, if necessary

A professional employer organization (PEO) provides employment services, including human resources and payroll services, similar to a temporary staffing agency. Human Resources manages Drexel’s relationship with several global PEO firms and Drexel Human Resources can guide you through this option, if it’s right for your project.

Contracting with a PEO is an option when a small number of employees are needed in a specific location for a limited period of time.

In this model, the individuals are employed by the PEO and provide services to the department, college, or school. The PEO is responsible for all employment law, tax, and reporting requirements.

Pros

• Widely available
• Limited risk for Drexel
• PEO responsible for tax and labor law compliance
• Sourced office space at a cost
• Potential for visa sponsorship

Cons

• High administrative costs
• Little or no control over benefits
• Potential for joint-employer liability

Cost

• Salary
• Fringe expense to cover employer-sponsored benefits and employer-owed taxes
• PEO’s monthly service fee (10–15 percent of compensation, or more)
• PEO one-time onboarding fee ($500–1,000 per employee, or more)
• Visa sponsorship fees, if needed

If your project doesn’t need full-time in-country staffing, frequent business travel by U.S.-based staff may be an acceptable solution. This may avoid many of the complications of employing someone based in a foreign location. It is only an option if the employee resides in the U.S. for more than six months per year and maintains a U.S. address.

Combining this option with another hiring option can also be a good solution. For example, local nationals could be hired through a local partner (option 1), and then the U.S.-based staff could frequently travel to train the locals and provide oversight. If the employees spend more than six months of the year in the U.S., they will usually be considered U.S. - based and can be paid through the Drexel payroll. Drexel Human Resources can guide you through this option.

Pros

• Avoids foreign employment complications
• Full Drexel University affiliations, benefits, and access

Cons

• Can be difficult to accurately predict travel within the tax threshold
• Travel expenses can add up
• Business and work activities may be limited
• Visa and work authorization requirements can be costly, time-consuming, and require sponsorship (cannot simply operate on a tourist visa, in most countries)
• Use of office space abroad can trigger permanent establishment and tax liabilities
• Overstays can trigger individual income tax and payroll tax obligations

Cost

• Salary
• Fringe expense to cover employer-sponsored benefits and employer-owed taxes
• Travel expenses (flights, lodging, per diems, visa and passport fees, immunizations, etc.)

Enlisting an independent contractor (IC) can be more straightforward than hiring an employee, but every country has different rules about the distinction between contractors and employees. If this method appeals to you, you will need to work with Drexel Human Resources to submit contractor classification evaluations and develop agreements.

In most countries, workers are assumed to be employees unless they qualify as contractors by meeting certain criteria. The following factors may influence the classification:

• Percentage of time spent on Drexel projects in aggregate
• Control over how, when, and where the work is done
• An established business as a contractor doing similar work for clients other than Drexel
• Use of own offices or facilities and equipment
• Payment of own business expenses
• Compensation based solely on services rendered (no vacation/holiday pay or employer-sponsored benefits like health insurance)

Some countries may require ICs to register as businesses and/or collect a service tax or value-added tax (VAT) from their customers, including Drexel. A few countries require employer-like obligations (for instance, tax withholding) for institutions engaging contractors.

In the event of IC misclassification, Drexel could have significant liability for retroactive payroll taxes, payroll withholdings, vacation, severance, and any applicable fees and penalties. If you are considering this option, please make an appointment to discuss with Drexel Human Resources.

Pros

• Fast implementation relative to other options
• IC responsible for tax compliance in most cases
• IC responsible for work/office space
• IC responsible for obtaining visa sponsorship, if needed

Cons

• No Drexel University affiliation
• Increasing contractor restrictions worldwide
• Triple damages for misclassification
• Not a viable long-term solution

Cost

• Service fees
• Any other costs agreed to in the contract (for example, travel expenses)
• Country-required expenses for tax withholding and reporting requirements, in rare cases