Legal Question in Employment Law in California

How to compensate a non-us person

Hi,

Someone (non-US person) is interested in working for us (a startup). Obviously he doesn't have social security #, etc.

How do we compensate him without having to worry about the payroll tax issue and how to properly expense the payment? ie. do we just consider him as a consultant and having him invoice us? any other recommendation?

Separately, if there is a stock option component, will that be non-qualified or incentive? Also, as a non-US person, will there be any issue for him to exercise the options later?

Thanks


Asked on 4/26/07, 11:39 am

1 Answer from Attorneys
Thomas Pavone Pavone & Cohen

Re: How to compensate a non-us person

Employers, even start-ups, may not employ an individual who is not lawfully entitled to work in the US. Independent contractor deals and consulting arrangements will be disregarded if the real relationship is employment. The law is fairly well developed and in short if a continuing work and pay arrangement looks like employment it will be considered as employment. This includes the obligation to deduct and remit payroll taxes, workers' compensation and compliance with wage and hour laws. Both the individual and the company must also complete an I-9 form that verifies the right to work in the US.

If the individual has special skills or expertise he may qualify for various visas issued by the US Government. It would be wise to consult with an immigration attorney to explore how you can do this lawfully.

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Answered on 4/26/07, 3:28 pm


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