As more US companies look to hire in Latin America, one question comes up consistently: how do you do it legally without setting up a company in every country? The answer, for most businesses, is an Employer of Record.
What Is an Employer of Record
An Employer of Record (EOR) is a third-party organization that legally employs workers in a foreign country on behalf of another company. The EOR handles all the local employment requirements — contracts, payroll, tax withholding, benefits, and compliance with local labor law — while the worker performs their day-to-day work for you.
From your perspective, the relationship looks like this: you define what the person works on, how they spend their time, and what they deliver. The EOR handles the legal, financial, and administrative side of their employment in their home country.
This arrangement is fully legal and is how thousands of US companies compliantly employ people in Latin America without establishing a local entity.
Why You Need an EOR for Latin America
Each country in Latin America has its own labor law framework, and most of them are significantly more protective of workers than US law. Common requirements include:
- Mandatory employer social security contributions
- Legally required severance calculations
- Paid vacation accrual minimums
- 13th-month salary payments (aguinaldo) in Mexico and elsewhere
- Specific termination procedures and notice periods
- Local pension fund contributions
If you hire someone in Colombia, Mexico, or Argentina and pay them directly as a "contractor" without an EOR — especially for long-term, full-time work — you face potential misclassification liability. Tax authorities in these countries actively investigate foreign companies paying local workers without proper employment structures.
An EOR eliminates this risk entirely.
Countries Where Surlink Operates as EOR
<a href="https://surlink.app" class="text-surlink-accent underline underline-offset-2 hover:text-surlink-blue" target="_blank" rel="noopener noreferrer">Surlink</a> sources and employs professionals across the main LATAM hiring markets:
<strong>Colombia</strong>: One of the most popular countries for US companies due to its tech talent, EST-compatible timezone, and stable business environment.
<strong>Mexico</strong>: The largest Spanish-speaking labor market in the world, with strong engineering and business talent.
<strong>Argentina</strong>: Top-tier technical talent, particularly in software engineering. High English proficiency.
<strong>Chile</strong>: Highly professional workforce, strong institutional trust, and good timezone overlap.
<strong>Peru and Costa Rica</strong>: Growing talent pools with competitive salaries and good English proficiency.
How the EOR Process Works
Working with an EOR is simpler than most companies expect:
<strong>Step 1 — You find the candidate</strong>: Either through your own sourcing or through a staffing partner like Surlink that handles the search for you.
<strong>Step 2 — EOR onboards the employee</strong>: The EOR creates a compliant employment contract under local law, registers the employee with local tax authorities, and sets up payroll in local currency.
<strong>Step 3 — Employee starts working with you</strong>: Day-to-day management, task assignment, and performance management stay entirely with you.
<strong>Step 4 — You pay a single invoice</strong>: Each month, you pay the EOR a consolidated invoice that covers the employee's salary, employer contributions, EOR fees, and any benefits.
<strong>Step 5 — EOR handles compliance ongoing</strong>: Payroll runs, tax filings, statutory benefits, and any employment law changes are managed by the EOR without you needing to track them.
EOR vs. Contractor Arrangement
Many companies start by hiring LATAM professionals as contractors and paying them directly. For project-based or short-duration work, this is often fine. For ongoing, full-time, integrated team members, the risks of misclassification increase significantly over time.
The defining factors that regulators look at when determining whether someone is a contractor or employee:
- Exclusivity (do they work only for you?)
- Integration (are they embedded in your team structure?)
- Direction (do you control how they spend their working hours?)
- Duration (has the relationship been ongoing for months or years?)
If you answer yes to most of those questions, the person is likely an employee under local law regardless of how you have structured the payment. An EOR keeps you compliant from day one.
Cost of Using an EOR
EOR fees typically range from $299 to $699 per employee per month, on top of the employee's salary. Compared to the cost of establishing a local legal entity (which can run $10,000 to $30,000 upfront plus ongoing compliance costs), an EOR is far more economical for most companies.
At <a href="https://surlink.app" class="text-surlink-accent underline underline-offset-2 hover:text-surlink-blue" target="_blank" rel="noopener noreferrer">Surlink</a>, EOR is included in our service. You get sourcing, vetting, placement, and EOR compliance in one package — with a 180-day replacement guarantee on every hire.
When an EOR Is Not the Right Fit
An EOR makes the most sense for individual or small team hires. If you are planning to hire 50 or more people in a single country, establishing your own legal entity may be more cost-effective long-term. At that scale, the monthly EOR fees exceed the fixed cost of a local entity.
For most US companies hiring one to twenty LATAM professionals, an EOR is the most practical, compliant, and cost-effective solution.
Getting Started
The fastest path to compliant LATAM hiring is to work with a partner that combines talent sourcing with EOR infrastructure. <a href="https://surlink.app" class="text-surlink-accent underline underline-offset-2 hover:text-surlink-blue" target="_blank" rel="noopener noreferrer">Surlink</a> delivers both — pre-vetted candidates in 5 business days and fully managed EOR compliance in the countries where they live.
Book a free 30-minute demo to see how it works for your specific roles and headcount.