International Hiring Guidelines and Considerations

Types of Workers / Independent Contractors & Employees:

•Workers may be classified as employees or independent contractors

•These two classifications generally carry different income tax, social tax, benefits and contractual requirements à misclassification risk

•Rules and regulations governing the classification of workers differ by country but there is a lot of overlap in the concepts applied from country to country

•In general

–Where an individual is an independent contractor, JHU has the right to control or direct the result of the work and not what will be done and how

–Independent contractors are not financially dependent on one organization but operate as an independent business serving multiple clients and bearing the risk of economic loss; independent contractors also provide their own business supplies and equipment

–Independent contractors do not receive benefits such as pay for time not worked (i.e., vacation/holiday) or insurance and do not have a continuing relationship with JHU

•All relevant facts and circumstances should be taken into account in making determination

•Taxes may be required to be withheld on payments to contractors, especially where the payment originates from a JHU local entity or locally registered presence

•When necessary, JHU engages a third party (Compandben) to hire employees or independent contractors

•All international independent contractors above $5,000/year require Tax Office review and approval

Fellowships / Stipends Non-Compensatory Payments

Non-Compensatory Payment Background

•Non-Compensatory Payments (aka “Fellowships”/”Fellowship Payments”) are payments to students to support their own academic progression and endeavors (e.g. stipends to support housing and other living expenses). There is no service requirement in exchange for these payments.

•Under normal circumstances, fellows reside in the United States and receive their fellowship payments via the U.S. payroll platform.  These payments receive a more favorable tax treatment than wages and the tax department classifies in SAP accordingly.

Problems Created by COVID

•Due to Covid, many students studying from alternative countries were expected to be ineligible for payment from the U.S. payroll platform (e.g. no U.S. bank account, no nexus to U.S.).

•Intake process was created by the tax department to review each fellowship stipend payment and determine the best way for processing. 

•Accounts Payable was identified as the best solution, but only with the right controls and reviews in place to ensure:

–Export controls and sanctions compliance

–U.S. tax compliance (e.g. proper characterization of the payment (non-compensatory vs. compensatory), proper sourcing of the payment (i.e. U.S. vs. foreign))

–Foreign tax compliance

–Other legal and compliance considerations

JHURA Brown Bag: International Hiring Guidelines and Considerations

https://jhura.jhu.edu/filter_items/international-hiring-guidelines-and-considerations/

Slides from brown bag:

3rd Party Employment and Remote Work Guidance:

Laura McIntyre, Director Global HR: ldmcintyre@jhu.edu

Carrie Kroll-McMullin, Assistant General Counsel International Compliance: ckmcmullan@jhu.edu

Denise Singley, Assistant Director International Tax: dsingl13@jhu.edu