For US technology companies facing a domestic talent shortage, Latin America offers enormous potential. The region is home to a growing pool of highly skilled, time-zone-aligned software engineers.
But hiring across borders introduces real legal and compliance challenges. Questions about labor law, payroll, taxes, and contracts often keep teams from exploring this opportunity.
This guide outlines the core legal risks of international hiring and introduces a simple, compliant alternative that makes nearshore team building as seamless as hiring locally.
The core challenges of international hiring
Hiring a developer directly in a Latin American country involves multiple compliance hurdles:
Entity establishment
- US companies must often set up a local legal entity before hiring
- This process can be costly and time-consuming
Country-specific labor laws
- Every country has unique requirements around contracts, paid time off, severance, and working hours
- Many countries mandate a 13th-month salary or other bonuses
Payroll and tax withholding
- Employers must calculate and submit the correct payroll taxes and social contributions
- Errors can lead to penalties or compliance issues
Benefits administration
- Health insurance, pensions, paid leave, and other statutory benefits vary by country
- Managing this across multiple jurisdictions requires dedicated operational resources
Without local legal expertise, these issues can slow down hiring or lead to unintended violations.
A comparison of hiring models
There are two primary ways to engage international talent:
Direct contractor model
- Hire the developer as an independent contractor
- Simple and fast to set up
But this model carries major risks:
- If the developer works set hours, uses your equipment, or reports to a manager, they may be misclassified
- Misclassification can result in fines, back taxes, and reputational risk
- Contractors often remain disconnected from the core team experience
Employer of Record (EOR) model
- Partner with an organization like Howdy.com that acts as the legal employer in the developer’s home country
- You manage the day-to-day work while the EOR handles compliance
Benefits of the EOR model:
- Full legal compliance in the developer’s country
- Simplified payroll, benefits, and HR support
- Seamless integration of developers into your team without taking on administrative complexity
The Employer of Record (EOR) model: the Howdy.com solution
Howdy.com uses the EOR model to make hiring from Latin America easy, fast, and fully compliant.
We handle all compliance
- Our local HR and legal experts manage employment contracts, tax obligations, and labor law adherence in every country we operate in
We manage payroll and benefits
- We take care of monthly payroll, tax withholding, and statutory benefits
- You receive one simple invoice each month
You focus on building
- Your nearshore developer becomes a full-time, integrated member of your team
- You focus on product delivery and team leadership while we handle all back-end administration
Conclusion: Focus on talent, not paperwork
Our model gives you what matters most: top-tier engineering talent working in your time zone, fully integrated into your team, without the operational burden. You lead. We handle the rest.