[larzang]

Something I never see mentioned in these discussions is the surprisingly high hurdles to actually operating a distributed company. You'd think in 2021 it wouldn't be difficult to have employees doing knowledge work in multiple US states without running face-first into laws governing conducting actual business in multiple states, but that's not at all the case. International is even worse. The additional complexity and costs of having non-local employees can absolutely be prohibitive, leading some companies to just abuse 1099 status.

This obviously isn't a problem if you're FAANG or Salesforce, but for a company of 20 it is.

[pimterry]

I've worked in a ~50 person distributed company - the practical contracting steps weren't a big issue.

You pay everybody outside your local jurisdiction as contractors, and you pass on the significant savings to them as salary, so they can approximate the normal employee benefits purchased directly for themselves. I understand this is a bit more complicated in the US as health insurance is a key benefit, but not impossible, and that's not a problem in most of the rest of the world.

Employees do need to register locally as freelancers, file invoices & do taxes, but that's a relatively simple process for such cases everywhere I'm aware of, and any costs can be included in the salary bump. We made it work with no big problems or complaints for anybody in the 2 years I was there.

[ghaff]

I don't know all the details but even having distributed employees as W-2 workers with full benefits can't be that hard. I worked for a 10 person company with employees in a few different states plus the UK and they were able to make it work.

[redisman]

See but that’s not that great for the employee. Making them do accounting and “breaking” tax law on pretending to be independent contractors.

https://gosmallbiz.com/the-independent-contractor-checklist/

[cigaser]

Why not hire people as contractors? So far it worked great for us.

[woeirua]

The vast, overwhelming majority of "independent" contractors on 1099s do not actually qualify for that status as defined by the law. Most of them should be W2 employees per the law.

The only reason most companies get away with this arrangement is because the government has refused to enforce it except in egregious cases, and ignorance on the part of the employee.

But it's a pretty tenuous situation. See Uber in CA.

[secondbreakfast]

> The additional complexity and costs of having non-local employees can absolutely be prohibitive, leading some companies to just abuse 1099 status.

[crims0n]

I can attest to this. There was a delay in my hiring process because the company that hired me needed to set up some kind of entity for tax purposes in my state - they had nobody else operating out of there at the time.