Global Operations Toolkit
Considerations for Employing Staff Outside the U.S.
The Global Operations Working Group on Global Employment created this information to assist University of Minnesota faculty and staff in hiring, paying, providing benefits, and managing employees of the University outside the United States.
Consult your college or administrative unit Human Resources Lead (HR Lead) as soon as possible when you anticipate a new hire*. Your HR Lead will ensure all standard employment processes and procedures of the Office of Human Resources (OHR) are followed, starting with the University Hiring Process. The following are components to consider that are specific to employing staff outside the U.S.
*Your HR Lead can also help you decide if the work would be best completed by an independent contractor through a Contract for Professional Services. The Office of Human Resources’ provides some guidance on working with independent contractors.
Legal Considerations (U.S. & local)
Hiring an employee outside the U.S. will likely require observance of both U.S. employment regulations for persons working outside the U.S. and the local employment regulations of the country where the individual will be working. The laws may include required government notifications, tax implications, vacation payout regulations, termination procedures and severance, and implication for rehiring. Please contact Global Operations to answer any questions about legal considerations for employees working outside the U.S.
There are several compensation components to consider for long-term international employment, in addition to the standard compensation components for any employee. The items are to be outlined and budgeted for at the time of hire or global assignment. It is critical to follow any external research sponsor rules regarding any of these compensation components.
A. Post Differential – Living Allowance
Employees working abroad may encounter environmental conditions that are significantly different than in the U.S. (a cost of living differential). An employee may also incur additional costs for things such as the storage of personal items during their time abroad. These conditions and additional costs may be considered “hardships”. Using the U.S. State Department guidelines, base pay adjustments may be made at the percentage of 5 to 25%. Adjustments are monitored and reviewed quarterly and can be adjusted and awarded retroactively if needed. Please review the U.S. State Department Guidelines.
B. Post Allowance – Living Allowance
There are established federal guidelines for post (cost of living) allowance for locations where goods and services, excluding housing and education, are found to be significantly higher. Living allowances may be available, based on a person’s percentage of “disposable income” that may vary depending on salary and family size (i.e., cost of living differential). Please review the description of the methodology used to develop local and U.S. government indexes of living costs abroad.
C. Living Quarters Allowance – Housing Allowance
This allowance is for private housing, intended to cover most if not all expenses for rent, utilities, and other allowable expenses, including security guard service when the cost is higher than in the U.S. For administrative ease, it is treated like per diem. It is important to review the Government guide to Annual Living Quarters Allowance in U.S. Dollars to make sure the cost of living abroad will be within an employee’s budget. Please review the U.S. State Department Guidelines.
D. Home Service Transfer Allowance – Living Allowance
Payment of expenses when transferring from a foreign area back to the U.S. is available on a case- by-case basis. Please refer to the University of Minnesota administrative policies on Relocating Employees and and Traveling on University Business.
E. Shipment of Personal & Household Effects – Moving Expense
Assistance for the shipment of personal and household effects to and from an international post assignment and storage of household goods will be available on a case-by-case basis. Please refer to the University of Minnesota administrative policy on Relocating Employees.
F. Evacuation (Security) Payments – Foreign Travel
The cost incurred when an employee/family member(s) is authorized or ordered to evacuate a foreign post for security reasons. This unexpected expense is not covered for employees and dependents with UPlan medical coverage and must be purchased through University-approved international insurance. Please see the University's international insurance information.
G. Travel – Home Leave/R&R – Living Allowance
There are established federal guidelines providing for air transportation for employees and authorized dependents from international post to home of record and lodging every 1 to 2 years. Please review the U.S. State Department Guidelines.
H. Foreign Transfer Allowance – Living Allowance
This allowance is available when transferring from the U.S. to a foreign area or between foreign areas. Please refer to administrative policy on Relocating Employees.
I. Temporary Quarters Subsistence Allowance – Housing Allowance
Assist with “temporary” lodging, meals, laundry and dry cleaning in the foreign area prior to occupying permanent quarters or upon final departure from the foreign post after vacating permanent quarters. Please refer to University administrative policy on Use and Lease of Real Estate. Also see U.S. Government Relocation Allowances include miscellaneous relocation expenses; please review the U.S. State Department Guidelines.
The U.S. Government provides its employees abroad with either free schooling or an Education Allowance to cover the costs of adequate elementary and secondary education comparable to that provided without charge in public schools in the U.S. Please review the U.S. State Department Guidelines regarding Education Allowance.
U.S. citizens and resident aliens working outside the U.S. who earn foreign income may be able to exclude all or part of their foreign salary or wages from their income when filing their U.S. federal tax return. They may also qualify to exclude compensation for their personal services or certain foreign housing costs. Please consult the Internal Revenue Service’s resource on foreign earned income.
Nonresident aliens receiving payments from the University of Minnesota are subject to a variety of employment and tax rules. Please consult the Office of Human Resources’ resource on tax information for nonresident aliens.
The University offers benefits to eligible employees who work outside the U.S. Typically, if the employee is a U.S. national or initially working for the University in the U.S. before an international assignment, the benefits will be through the University similar to employees working here in the U.S. If the employee is a local national (i.e., from the country in which the work is performed) or a third country national (i.e., from a country other than the U.S. or the country in which the work is performed), then the international benefits program with provisions for health, dental, personal accident, and life insurance likely will be appropriate. Please work directly with your HR Lead regarding benefits packages and enrollment.
OHR provides a variety of resources for onboarding new employees. Work with your HR Lead for unit-specific onboarding processes and to customize these resources and processes for an employee working outside the U.S.
OHR also provides several Manager's Checklists. Below are several elements to consider adding or customizing to the checklists for employees outside the U.S.
- Consider whether the employee needs to visit the U.S. at the time of hire to meet with people and access resources in person; if yes, make arrangements
- Determine if the employee will need visa assistance for travel to the U.S. or other countries during their employment
- Consider arranging for cultural orientation assistance depending on the situation
- If applicable, arrange housing allowance payment schedule following country-specific requirements
- Make arrangements to track paid time off (e.g., sick, vacation) if not on University payroll and discuss process with employee
- If you need assistance with translation for business cards, contact GPS Alliance
- Inform new employee about registering with the U.S. State Department Smart Traveler Enrollment Program (STEP) to receive country specific information and alerts. (Similar services are available for non-U.S. citizens through their home country embassy websites)
- Discuss calendar and clarify arrangements for country-specific holidays
- Remind employee that University policy requires that all University employees traveling on University business must register their international travel, including employees based abroad and leaving their current country, in advance of the trip and regardless of funding source (see Registering International Travel).
If you have further questions about employing staff outside the U.S., please contact Global Operations through the online form or through Katie Van Geem (see contact info on right).
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