Hiring Employees Who Will Be Working Outside the United States
As we continue to work remotely, we may hire new faculty, staff or students who live abroad and planned to relocate to Philadelphia but have delayed the plan due to COVID-19 and Drexel’s current online learning environment. Faculty, professional staff or student employees who will be working remotely outside of the U.S. will need to be hired through a Professional Employer Organization (PEO).
A Professional Employer Organization (PEO) is an outsourcing firm that provides services to organizations acting as a co-employer for those individuals who will be working in countries where Drexel is not an established employer. The PEO becomes the employer of record for tax purposes and handles onboarding of the hired individual along with payroll and benefits. Drexel University contracts with SafeGuard World International for these purposes. There is cost associated with implementing a PEO that are the responsibility of the hiring department. The costs are on average 30%; however, specific costs are determined by the salary the employee will receive and the employee’s country of residence.
Although we describe hiring conditions under COVID-19, please know that hiring someone that will live outside of the United States or a current faculty, staff or student employee moving outside of the United States, will require the same employment situation. They must be reviewed and most likely hired through the PEO. Please contact Katie Regetta, Assistant Director, HR Compliance and Minors Coordinator, for more information.
Frequently Asked Questions
What employee categories must go through the PEO?
All Drexel University employees performing services outside of the United States who would normally go through Drexel University’s payroll must be hired through the PEO. This includes full- and part-time staff and faculty, temp and adjunct positions, student employees, graduate appointments with stipends, etc.
What can we expect our department to pay?
Human Resources will work with the PEO to determine the exact costs to your department based on the monthly salary and country in which services will be performed. Depending on the country, social costs range from 0% to 120% of the monthly salary. In general, Latin and South America have the highest social costs and the Middle East and Asia have the lowest.
Professional fees average 16% of the monthly salary with a typical minimum fee of $1,250 per month. There is an additional $500-$1,000 set-up fee payable the first month only. The department will not pay Drexel University fringe benefits while the employee is hired by the PEO. The employee will be paid by the PEO on a monthly basis.
What are social costs?
SafeGuard World International describes social costs as the following:
"Social costs are how we refer to the statutory costs of employment in each country, or the employer’s tax burden. In the US, social costs would include items such as FICA, which funds Medicare, Medicaid, and Social Security. Every country is unique when it comes to state provided benefits, which will have a direct impact on the overall social costs. The social costs can contribute towards a wide range of funds in each country, such as State provided health care, pension schemes, social security, etc."
How long is the contract?
Contracts can be set up anywhere from a three month minimum to an indefinite length.
How do benefits work?
- The PEO will work with the department to determine the number of annual sick and vacation days. Human Resources recommends keeping as close to Drexel University’s Time Off Benefits as possible.
- The PEO is responsible for ensuring all statutory benefits required by the country are provided to the employee.
- While employees using a PEO will not be eligible for additional Drexel University benefits, the department may provide an allowance to the employee to purchase relevant plans in the employee’s home country. The allowance is subject to the PEO’s professional fees, but not the social costs.
How does the employee complete work authorization?
The employee will not need to be authorized to work in the United States, nor will a social security number be required while the department is utilizing the PEO. The employee must be authorized to work in the country in which services will be performed. Work authorization will be completed through the PEO in the home country. If/when the employee returns to the United States, work authorization will need to be completed with Human Resources and a social security number will be required for tax purposes.
How is the employee taxed?
The employee will be taxed according to local law in the country in which services are performed. The PEO will provide the employee with any necessary tax documentation.
Is the process different if the employee is currently working for Drexel University?
If the employee is currently working for the university in a full-time benefit eligible position, the individual must arrange to take a leave of absence from the university so that work can be transferred to the PEO. Upon returning to the United States, the employee will return to the university’s payroll and benefits. Employees not in full-time benefit eligible positions, such as students or temp positions, do not need to take a leave of absence. A non-employee associate form is required to maintain account access while the department is utilizing the PEO for all non-student positions.
What do we do when the employee returns to the United States?
Human Resources will periodically check in with the department to determine if the PEO is still necessary. Human Resources, the department, and the employee will work together to time the end of the contract with the PEO and the start or restart of Drexel University employment to avoid a gap in pay. If the employee is new to the university, new hire paperwork and Form I9 authorization will be required.
What does the process look like?
- Reach out to Katie Regetta, Assistant Director, HR Compliance and Minors Coordinator at firstname.lastname@example.org with the following details:
- Employee’s full name
- Employee’s email address
- Employee’s Drexel ID (if assigned)
- Position type
- Position title
- Position responsibilities
- Country in which services will be performed
- Projected start date and contract length
- Rate of pay per month
- Department contact’s full name
- Department contact’s email address
- Human Resources will work with the PEO to provide the department contact with exact costs.
- The department will determine whether they will utilize the PEO or delay the employee’s start date. If the department wishes to hire the employee, the department must obtain written approval from the dean or division head.
- The department, Human Resources, and Procurement Services will work together to execute an addendum to the master agreement on file with the PEO.
- The department will work directly with the PEO for employee onboarding, dates of contract, time-off benefits, benefit allowances, and invoicing.
- If the employee is new to Drexel University and a non-student, the department will need to complete a non-employee associate form for the employee to obtain access to Drexel systems.