This Wisdom of the Crowd (ACC member discussion) addresses hiring foreign contractors in the U.S. This resource was compiled from questions and responses posted on the forum of the Small Law Department ACC Network.*
*(Permission was received from the ACC members quoted below prior to publishing their forum comments in this Wisdom of the Crowd resource.)
I. PROCESSES AND CHECKLIST FOR SPONSORING A FOREIGN CONTRACTOR IN U.S.
Question:
We need to bring over an IT developer for approximately one month to cover an extended vacation for a current U.S.-based developer. The overseas developer is employed by a development company currently under contract with us.
The person will come as an employee of the foreign company and be paid by them. I believe we are reimbursing the company for his travel expenses as well (and not directly to the contractor). I was really thinking about any additional liability if this person gets hurt while in our U.S. facility or while traveling, causes damage to others or property while onsite. Do other companies routinely collect emergency contact information from foreign contractors and have additional contractual provisions with the company (indemnification, etc.) for these circumstances? I'm double-checking that our corporate insurance will cover contractors as well.
Wisdom of the Crowd:
- Response #1: Interesting question. Will the person come in his role as an employee of the foreign company, and be paid by them? Or will you be paying him directly? We often have our offshore resources come in for a few weeks, and I don't think we've thought about it much, relying on the master agreement with the offshore IT company to cover pay, benefits, insurance, confidentiality, ownership of anything developed, etc.i
- Response #2: In the contract with the foreign employer, make sure you have included the following requirements and clauses:
- Indemnification (foreign and domestic) of:
- Government fines, claims and investigations Employee (your contractor's employees) Any employment matters Add the usual third party indemnification
- Add a clause about background checks (foreign contractors have different standards to conduct such background checks) - make sure it meets your and US background checks.
- Add that contractor will be responsible for all costs and out of pocket expenses, including immediate deportation. If there is going to be some reimbursement, do not pay the employee directly under no circumstances.
- Add language stipulating the contractors responsibilities with respect to US labor laws, and immigration laws. Specify that foreign laws are inapplicable to you. Get representations and guarantees about the above and that the contractor has complied with local applicable laws.
- Be advised that for healthcare, finance, ITAR, and some other regulations, you may not be able to hire foreigner to perform the work.
- If you have a contractors' policy add it to your agreement. Ensure that your privacy (access to the contractor's employee CPU and data) is well stipulated and covenants against virus, and unauthorized data access are express.
- Clarify tax concerns (you are not paying foreign taxes) and currency terms.ii
- Response #3: See the cautionary tale of Prof. John Ross, a 72 year old retired University of Tenn. professor who was sentenced to 4 years in prison for illegal exports of military technical information as a result of ignoring the "deemed export rule". http://tradelawyersblog.com/blog/archive/2009/july/article/university-professor-gets-severe-sentence-for-deemed-export-violations/, and the more recent charges against the University of Massachusetts http://www.williamsmullen.com/news/university-charged-export-violationsiii
iDeborah Schwarzer, General Counsel, Aeris Communications, Inc., Santa Clara, CA (Small Law Departments forum, Mar. 19, 2014).