It’s very common in the tech world to have a relationship between companies and international remote workers which legally meets the definition of employment in one or both countries but which pretends in the contract wording to be an independent contracting relationship.

A lot of companies decide that the risk of getting caught in this deception and the penalties which would be imposed in that case are lower than the hassle, expense, and uncertainty of doing things the legal way; while some truly don’t even realize that it is in fact a deception. And there’s very little legal risk for the employee aside from the loss of rights and benefits they should be entitled to and legally unwarranted extra financial burdens on their part, so they often bow to macroeconomic factors and accept what sources of income they can find.

Independent contracting can of course be fully legitimate if the substance of the relationship is arranged to match what the law understands independent contracting to mean. Maybe Nate’s legal advisors correctly concluded that the arrangement he’s implementing falls in this category. Maybe.

But when the substance of the relationship is employment and only the legalese and payroll look like contracting, then what’s actually happening is the employer is dodging a lot of mandatory contributions to the employee’s local social security systems (such as pension and healthcare) and a lot of the mandatory employment protections applicable in that jurisdiction.

This also pushes some or all of the mandatory contributions and benefits which legally should be the employer’s financial responsibility onto the misclassified employee, and usually without a sufficiently compensatory increase in contracting rate vs the amount they’d be paying in salary if it were correctly handled as employment. (The illegal contracting rate in an international context might still very well be above legal local employment salaries. But I’m instead comparing to what the salary would be if the exact same working relationship were handled according to the law, such as the same employer might often offer to employees in their headquarters jurisdiction.)

The employee can make a huge mess for the employer if they ever report the misclassification to the authorities with adequate proof of the true nature of the relationship, because misclassifying an employee as an independent contractor is illegal. The employer will often be audited and required to pay unpaid social contributions going back years. Sometimes the employee can also recover contributions they paid which should never have been their responsibility according to the law. But most don’t want to risk informal blacklisting from the industry or even the stress of engaging in that complaint process in the first place.

Sure, but how the heck do his adopted kids factor into this?

Interesting, thanks. In the United States contracting so often just means that we have the same shitty job security as the full-time employees who are a little delusional about how safe they are, we occasionally have to talk about renewing the contract, and we get paid twice as much. There's no logic to it but it's not quite as awful as what's painted above.