# Which US employment and payroll laws apply to workers in Latin America?

Very few of them, when the worker is not a US citizen. The FLSA's minimum wage and overtime rules do not apply to work done in a foreign country, US anti-discrimination laws protect only US citizens abroad, and Social Security, Medicare and FUTA reach work outside the US only for US citizens (and, for Social Security and Medicare, residents) employed by an American employer. The law of the country where the work is done applies instead.

By Nick Gomez, COO at Nearshorers. Updated 2026-11-02; figures checked 2026-11-02. Web page: https://nearshorers.com/compliance/us-employment-laws-for-workers-in-latin-america

## At a glance

- **FLSA minimum wage and overtime:** Do not apply to work in a foreign workplace [1]
- **Title VII, ADA and ADEA:** Protect US citizens abroad, not non-citizens [2]
- **Social Security and Medicare:** Not owed on a non-US citizen working outside the US [3]
- **FUTA:** Reaches work abroad only by US citizens employed by an American employer [4]
- **US income tax withholding:** None as a rule: pay for work done abroad is foreign-source income [5][6]
- **Form 1099-NEC:** Not filed for a foreign person who gave you a valid Form W-8 [7]
- **Form I-9:** For people hired for employment in the United States [8]
- **Social security agreements in Latin America:** Chile, Brazil and Uruguay [9][10][11]

US employment law is mostly territorial. A company in Texas that hires a developer who lives and works in Mexico does not carry US wage-hour, anti-discrimination and payroll-tax rules with it: each statute defines its own reach, and for a worker who is not a US citizen and works outside the United States, most of them stop at the border. The local rules take over. In Mexico, for example, any personal, subordinated work for a salary is an employment relationship whatever the contract is called, and the law presumes one exists between whoever performs personal work and whoever receives it.[12]

This page goes statute by statute, with the section that sets each limit. It covers the US side only: being outside US law does not make a contractor in Latin America safe from being treated as an employee under local law.

## Does the FLSA cover a remote worker in Latin America?

No. The Fair Labor Standards Act's minimum wage, overtime, recordkeeping and child labor sections (29 U.S.C. 206, 207, 211 and 212) do not apply to an employee whose services during the workweek are performed in a workplace within a foreign country.[1] The exemption follows the place of work, not the employer or the worker's nationality, so the federal minimum wage of $7.25 an hour does not follow a US company's hires to Latin America.[13]

The test is applied week by week: the statute looks at where the employee's services during the workweek are performed, so a week spent working in the United States, such as an onsite visit, can fall under the FLSA.[1]

## Do Title VII, the ADA and the ADEA protect workers in Latin America?

Only US citizens. Title VII defines an employee in a foreign country to include a US citizen,[14] and it does not apply to an employer with respect to the employment of aliens outside any state.[15] The ADA and the ADEA extend to US citizens working abroad in the same way.[16][17] The EEOC's own summary: non-US citizens are not protected by US equal employment opportunity laws when employed outside the United States, and US employers do not have to comply with Title VII, the ADEA or the ADA abroad where compliance would violate the law of the country where the workplace is.[2]

Coverage also depends on size. Title VII and the ADA apply to employers with 15 or more employees, the ADEA to employers with 20 or more.[14][16][17] When a US employer controls a corporation incorporated abroad, the practices of that corporation are presumed to be the employer's own.[15]

## Do you pay Social Security, Medicare or FUTA on a worker in Latin America?

Not for a non-US citizen who works there. For Social Security and Medicare (FICA), employment means service performed within the United States, whatever the citizenship or residence of employer and employee, or service outside the United States by a US citizen or resident as an employee of an American employer.[3] A Mexican or Colombian national working in their own country falls in neither group. FUTA covers service outside the United States only when performed by a US citizen as an employee of an American employer.[4]

For comparison, a US employee costs the employer 6.2% Social Security tax on wages up to $184,500 in 2026 and 1.45% Medicare tax on all wages, and the same amounts are withheld from the employee.[18] FUTA is 6% of the first $7,000 of each worker's wages, with a credit of up to 5.4% for state unemployment tax, so as little as 0.6%, or $42 a year per worker.[19][20][4] None of it applies to a non-citizen working in Latin America; their own country's social security system applies instead, and the [Mexico guide](https://nearshorers.com/countries/mexico) lists what an employer pays there.

## Do you withhold US income tax or file a 1099 for a worker in Latin America?

As a rule, no. Compensation for labor or personal services performed outside the United States is income from sources outside the United States,[5] and the IRS states that wages earned by nonresident aliens for services performed outside the United States are foreign-source income, not subject to federal income tax reporting and withholding.[6]

For an independent contractor, IRS Publication 515 says that a foreign person who gives you a valid Form W-8 is exempt from backup withholding and Form 1099 reporting.[7] Without it, the IRS presumption rules decide the payee's status, and if they point to a US payee the payment falls under Form 1099-NEC reporting and backup withholding at 24%.[7][21] A Form W-8BEN stays valid until December 31 of the third year after it is signed.[22] The [W-8BEN manual](https://nearshorers.com/manuals/w-8ben-for-latin-american-contractors) shows how to collect it line by line, and the [W-8BEN-E manual](https://nearshorers.com/manuals/w-8ben-e-for-latin-american-companies) covers contractors who invoice through a company.

## Do you need Form I-9 or OSHA compliance for someone working abroad?

USCIS describes Form I-9 as required for every person hired for employment in the United States after November 6, 1986, as long as the person works for pay.[8] A developer hired to work from Medellín is not hired for employment in the United States. The Occupational Safety and Health Act applies to employment performed in a workplace in a state, the District of Columbia and listed US territories,[23] which leaves out a home office in Bogotá or São Paulo.

## What changes when the worker is a US citizen?

Much more US law follows a US citizen abroad. Title VII, the ADA and the ADEA protect US citizens employed abroad by a US employer or by a foreign company it controls.[2] Social Security and Medicare apply to service outside the United States by a US citizen or resident as an employee of an American employer, a term that includes any corporation organized under US or state law,[3] and FUTA applies to US citizens employed abroad by an American employer.[4]

Social security agreements keep the same work from paying into two systems; the IRS describes their purpose as avoiding double taxation of income with respect to social security taxes.[24] In Latin America, the United States has agreements in force with Chile since December 1, 2001,[9] Brazil since October 1, 2018[10] and Uruguay since November 1, 2018.[11]

## Which US rules still apply to a team in Latin America?

Two matter in almost every hire:

- **Sanctions.** US persons, wherever located, are generally prohibited from transactions, direct or indirect, with people and companies on OFAC's SDN List, other blocked persons and those covered by comprehensive country or region embargoes.[25] The [OFAC manual](https://nearshorers.com/manuals/ofac-sanctions-check-latin-america) walks through the search for each contractor.
- **Ownership of the work.** Under the US Copyright Act, a work made for hire is either a work prepared by an employee within the scope of employment, or a specially ordered or commissioned work in one of nine listed categories, such as a translation or a compilation, with a written agreement signed by both parties.[26] Software is not on that list, so for an independent contractor's code, the agreement needs an express assignment of rights rather than a work-for-hire clause alone.

## Whose law decides if a contractor is really an employee?

For labor law, the country where the work is done, with its own test. In Mexico, personal, subordinated work for a salary is an employment relationship whatever the contract is called, and the law presumes an employment relationship between whoever performs personal work and whoever receives it, so the client has to prove the work was independent.[12] A US-law contractor agreement does not change that. The [Mexico guide](https://nearshorers.com/countries/mexico) covers the test, the employer costs and what a misclassified contractor can claim, and [Latin American labor law and US companies](https://nearshorers.com/compliance/does-latin-american-labor-law-apply-to-us-companies) compares the tests in Mexico, Colombia, Brazil and Argentina.

## Key statistics

| Metric | Figure | What it measures | Source |
|---|---|---|---|
| Social Security tax, employer share | 6.2% | Of wages up to the wage base; the same amount is withheld from the employee | [18] |
| Social Security wage base | $184,500 | 2026 limit on wages subject to Social Security tax | [18] |
| Medicare tax, employer share | 1.45% | Of all wages, with no wage base limit; the same amount is withheld from the employee | [18] |
| Additional Medicare Tax | 0.9% | On the employee's wages above the statutory thresholds; no employer share | [27] |
| Maximum employer Social Security tax per worker | $11,439 | 6.2% of $184,500; calculated by Nearshorers | [18] |
| FUTA rate before credit | 6.0% | Of wages up to the FUTA wage base | [19] |
| Maximum FUTA credit for state unemployment tax | 5.4% | Leaves a net FUTA rate as low as 0.6% | [20] |
| FUTA wage base | $7,000 | Wages per worker per year subject to FUTA | [4] |
| FUTA per worker at the full credit | $42 a year | 0.6% of $7,000; calculated by Nearshorers | [19][20][4] |
| FICA and FUTA owed on a non-US citizen working in Latin America | $0 | Their work outside the US is not employment under either tax | [3][4] |
| Federal minimum wage | $7.25 an hour | Does not apply to an employee working in a foreign workplace | [13][1] |
| FLSA sections that stop at the border | 4 | Minimum wage (206), overtime (207), records (211) and child labor (212) | [1] |
| Title VII employer threshold | 15 employees | For each working day in 20 or more calendar weeks in the current or preceding year | [14] |
| ADA employer threshold | 15 employees | For each working day in 20 or more calendar weeks in the current or preceding year | [16] |
| ADEA employer threshold | 20 employees | For each working day in 20 or more calendar weeks in the current or preceding year | [17] |
| Backup withholding rate | 24% | Applies when a payment falls under Form 1099 reporting and the payee is not documented | [21] |
| Form W-8BEN validity | Through December 31 of the third year after signing | A form signed in 2026 is valid through 2029 | [22] |
| Form I-9 start date | Hires after November 6, 1986 | For employment in the United States, as long as the person works for pay | [8] |
| Chile | In force since December 1, 2001 | Signed February 16, 2000 | [9] |
| Brazil | In force since October 1, 2018 | Signed June 30, 2015 | [10] |
| Uruguay | In force since November 1, 2018 | Signed January 10, 2017 | [11] |
| Categories of commissioned work that can be a work made for hire | 9 | With a written agreement signed by both parties; software is not one of them | [26] |

## Frequently asked questions

### Does the US minimum wage apply to a remote worker in Mexico?

No. Under 29 U.S.C. 213(f), the FLSA's minimum wage, overtime, recordkeeping and child labor sections do not apply to an employee whose services during the workweek are performed in a workplace within a foreign country. Mexico's own minimum wage and labor law apply instead.

### Do I withhold Social Security and Medicare for a contractor or employee in Colombia?

Not for a non-US citizen working there. FICA applies to service within the United States, or outside it only by a US citizen or resident employed by an American employer. A Colombian national working in Colombia falls in neither group, so no FICA is withheld or paid.

### Do I file a Form 1099-NEC for a contractor in Latin America?

Not if the contractor is a foreign person who gave you a valid Form W-8BEN, or a W-8BEN-E for a company. IRS Publication 515 says such a payee is exempt from backup withholding and Form 1099 reporting, and pay for work done outside the United States is foreign-source income.

### Can a worker in Brazil sue a US company under Title VII?

Not as a non-US citizen employed outside the United States: the EEOC states that such workers are not protected by US equal employment opportunity laws. A US citizen employed in Brazil by a US company, or by a foreign company it controls, is covered.

### Do I need a Form I-9 for a remote employee in Argentina?

USCIS ties Form I-9 to people hired for employment in the United States. Someone hired to work in Argentina is not hired for employment in the United States; the I-9 comes in if they later move to work in the US.

### Does US law decide whether my contractor in Latin America is an employee?

Not for local labor law. The country where the work is done applies its own test. In Mexico, personal, subordinated work for a salary is an employment relationship whatever the contract says, and the law presumes one exists, so the client must prove the work was independent.

## Sources

1. [29 U.S. Code § 213: Exemptions (Fair Labor Standards Act), subsection (f)](https://www.law.cornell.edu/uscode/text/29/213). Legal Information Institute, Cornell Law School. Checked 2026-11-02.
2. [Employee Rights When Working for Multinational Employers](https://www.eeoc.gov/laws/guidance/employee-rights-when-working-multinational-employers). U.S. Equal Employment Opportunity Commission, 2003-04-23. Checked 2026-11-02.
3. [26 U.S. Code § 3121: Definitions (Federal Insurance Contributions Act), subsections (b) and (h)](https://www.law.cornell.edu/uscode/text/26/3121). Legal Information Institute, Cornell Law School. Checked 2026-11-02.
4. [26 U.S. Code § 3306: Definitions (Federal Unemployment Tax Act), subsections (b) and (c)](https://www.law.cornell.edu/uscode/text/26/3306). Legal Information Institute, Cornell Law School. Checked 2026-11-02.
5. [26 U.S. Code § 862: Income from sources without the United States](https://www.law.cornell.edu/uscode/text/26/862). Legal Information Institute, Cornell Law School. Checked 2026-11-02.
6. [Persons employed abroad by a U.S. person](https://www.irs.gov/individuals/international-taxpayers/persons-employed-abroad-by-a-us-person). Internal Revenue Service, 2026-05-22. Checked 2026-11-02.
7. [Publication 515 (2026), Withholding of Tax on Nonresident Aliens and Foreign Entities](https://www.irs.gov/publications/p515). Internal Revenue Service, 2026. Checked 2026-11-02.
8. [Who Needs Form I-9?](https://www.uscis.gov/i-9-central/complete-correct-form-i-9/who-needs-form-i-9). U.S. Citizenship and Immigration Services, 2026-09-11. Checked 2026-11-02.
9. [Agreement on Social Security Between the United States and Chile; Entry Into Force (66 FR 59518)](https://www.federalregister.gov/documents/2001/11/28/01-29562/agreement-on-social-security-between-the-united-states-and-chile-entry-into-force). Social Security Administration, Federal Register, 2001-11-28. Checked 2026-11-02.
10. [Agreement on Social Security Between the United States and the Federative Republic of Brazil; Entry Into Force (83 FR 52298)](https://www.federalregister.gov/documents/2018/10/16/2018-22509/agreement-on-social-security-between-the-united-states-and-the-federative-republic-of-brazil-entry). Social Security Administration, Federal Register, 2018-10-16. Checked 2026-11-02.
11. [Agreement on Social Security Between the United States and Uruguay; Entry Into Force (83 FR 53936)](https://www.federalregister.gov/documents/2018/10/25/2018-23327/agreement-on-social-security-between-the-united-states-and-uruguay-entry-into-force). Social Security Administration, Federal Register, 2018-10-25. Checked 2026-11-02.
12. [Ley Federal del Trabajo (texto vigente; última reforma publicada DOF 21-02-2025)](https://www.ordenjuridico.gob.mx/Documentos/Federal/html/wo125151.html). Orden Jurídico Nacional, Secretaría de Gobernación (Mexico), 2025-02-21. Checked 2026-11-02.
13. [29 U.S. Code § 206: Minimum wage](https://www.law.cornell.edu/uscode/text/29/206). Legal Information Institute, Cornell Law School. Checked 2026-11-02.
14. [42 U.S. Code § 2000e: Definitions (Title VII of the Civil Rights Act of 1964)](https://www.law.cornell.edu/uscode/text/42/2000e). Legal Information Institute, Cornell Law School. Checked 2026-11-02.
15. [42 U.S. Code § 2000e-1: Applicability to foreign and religious employment](https://www.law.cornell.edu/uscode/text/42/2000e-1). Legal Information Institute, Cornell Law School. Checked 2026-11-02.
16. [42 U.S. Code § 12111: Definitions (Americans with Disabilities Act, Title I)](https://www.law.cornell.edu/uscode/text/42/12111). Legal Information Institute, Cornell Law School. Checked 2026-11-02.
17. [29 U.S. Code § 630: Definitions (Age Discrimination in Employment Act)](https://www.law.cornell.edu/uscode/text/29/630). Legal Information Institute, Cornell Law School. Checked 2026-11-02.
18. [Publication 15 (2026), (Circular E), Employer's Tax Guide](https://www.irs.gov/publications/p15). Internal Revenue Service, 2026. Checked 2026-11-02.
19. [26 U.S. Code § 3301: Rate of tax (Federal Unemployment Tax Act)](https://www.law.cornell.edu/uscode/text/26/3301). Legal Information Institute, Cornell Law School. Checked 2026-11-02.
20. [26 U.S. Code § 3302: Credits against tax (Federal Unemployment Tax Act)](https://www.law.cornell.edu/uscode/text/26/3302). Legal Information Institute, Cornell Law School. Checked 2026-11-02.
21. [Backup withholding](https://www.irs.gov/businesses/small-businesses-self-employed/backup-withholding). Internal Revenue Service, 2026-10-10. Checked 2026-11-02.
22. [Instructions for the Requester of Forms W-8BEN, W-8BEN-E, W-8ECI, W-8EXP, and W-8IMY (Rev. June 2022)](https://www.irs.gov/instructions/iw8). Internal Revenue Service, 2022-06. Checked 2026-11-02.
23. [29 U.S. Code § 653: Geographic applicability (Occupational Safety and Health Act)](https://www.law.cornell.edu/uscode/text/29/653). Legal Information Institute, Cornell Law School. Checked 2026-11-02.
24. [Totalization agreements](https://www.irs.gov/individuals/international-taxpayers/totalization-agreements). Internal Revenue Service, 2026-03-14. Checked 2026-11-02.
25. [Updated Advisory on Potential Sanctions Risks for Facilitating Ransomware Payments](https://ofac.treasury.gov/media/912981/download?inline). U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC), 2021-09-21. Checked 2026-11-02.
26. [17 U.S. Code § 101: Definitions (Copyright Act), work made for hire](https://www.law.cornell.edu/uscode/text/17/101). Legal Information Institute, Cornell Law School. Checked 2026-11-02.
27. [26 U.S. Code § 3101: Rate of tax (Federal Insurance Contributions Act)](https://www.law.cornell.edu/uscode/text/26/3101). Legal Information Institute, Cornell Law School. Checked 2026-11-02.

General information to plan a hire, not legal or tax advice.