OCV supports a fully remote workforce, but many jurisdictions outside the USA have restrictions that do not align with the needs of an early stage startup workforce. With flexibility and speed in mind, OCV recommends prioritizing hiring workers in the United States classified as employees and workers outside the United States to be engaged as contractors through a third party firm.
Hiring employees in the United States can offer several benefits for businesses. Some of these benefits include:
Flexibility in hiring laws for ramping up and down a team (short notice periods etc).
Culture for startups, Entrepreneurship and Innovation: The entrepreneurial spirit and culture of innovation in the U.S. can foster a dynamic business environment that encourages creativity and risk-taking.
Strong infrastructure: reliable internet, easy to ship computers, teams can meet easily for occasional face to face get togethers (no need for Visas or international travel)
Intellectual Property Protection: U.S. laws offer strong protections for intellectual property, which is critical for companies relying on patents, trademarks, and copyrights.
English as a Business Language: English is widely spoken and used as a business language, making it easier for international companies to operate in the U.S.
Tax Benefits: Depending on the state and industry, there may be various tax incentives and benefits available to businesses operating in the U.S.
Employee Equity: This is a standard practice for employee incentives and retention in the U.S. Outside of the U.S. the implementation and administration is complex and expensive.
Exceptions are made for critical hires outside the USA. We expect no more than 2 key employees outside the USA to be hired. A critical hire is someone who has extensive experience with your open source project and can make significant contributions to your company success.
In general, we recommend portfolio companies pay employees and contractors in their local currency to avoid situations of adverse exchange rate fluctuations for the employees. Exchange rate management is not a core activity to scaling the business and will create an unnecessary distraction for the management team down the road.
An Employer of Record (EOR) is a third-party company that is responsible for administrative tasks related to employing a worker such as payroll and tax compliance. The EOR is considered the legal employer of the worker while the worker is under the direction and supervision of the client or hiring company. The EOR provides services such as human resources, payroll, and benefits administration services to other companies.
Open Core Ventures companies which support a global workforce where the company may not have a legal entity leverage an EOR in helping manage local employment laws and regulations.
OCV presents employment candidates with indicative offer letters prior to an employment contract to demonstrate intent to hire an employee. OCV companies utilize an employer of record (EOR) firm to generate the official employment contract.
Indicative offer letters generalize and outline intended terms while local employment contracts are dictated by local law and include relevant local employment statutes. Indicative offer letters provide written documentation to move forward with providing notice to current employers and signify an intent to move forward with an opportunity but are not directly binding until an employment contract is signed.
In some countries (e.g. Netherlands, France, and Belgium) collective bargaining agreements provide industry-wide terms and conditions that will apply on top of employment contracts which will cover items such as the notice period required from employer to employee in the event of termination. When employing executives or senior leaders, local legal teams can inform employment contracts beyond the guidance offered by the EOR.