Cristin Monnich
By Cristin Monnich, Senior Director & GM of Global Compliance & AOR at Worksuite
Why This Matters
Freelancers are powering global organizations—from design studios in Lagos to DevOps talent in Kraków. But in 2025, with increasing attention and enforcement from regulators worldwide, global contractor missteps don’t have to be costly—they’re avoidable.
Whether you’re managing 5 freelancers or 500, your compliance strategy should be proactive, not reactive. Below are 10 of the most common legal risks—and the concrete steps compliance-conscious companies are taking to address them.
1. Misclassifying Contractors as Employees
The Risk
Treating a contractor like a full-time employee—by controlling their hours, limiting their client base, or embedding them in team structures—can lead to reclassification. This can trigger retroactive taxes, social security contributions, and legal claims.
What to Do
Use a classification framework to ensure you’re applying the correct localized standards and partner with an Agent of Record (AOR) like Worksuite to assess your engagements across jurisdictions.
2. Ignoring Local Tax Laws
The Risk
Contractor tax obligations vary widely. In the U.S., you need a 1099. In India, it’s GST. In Puerto Rico, there are statutory withholdings. Miss the filing, or the obligatory withholding and your company absorbs the penalty.
What to Do
Use a contractor compliance platform that automates jurisdiction-specific forms and tax flows. Worksuite tracks and supports local requirements across 180+ countries.
3. Skipping Legally Required Contract Clauses
The Risk
While you may not require a unique localized contract for every country and region, certain countries require written contracts with specific clauses covering termination rights, confidentiality, and more. Without them, your contract may be deemed invalid and unenforceable.
What to Do
Automate contract creation with localized templates. Worksuite embeds country-specific language vetted by regional legal counsel to ensure validity.
4. IP Ownership Gaps
The Risk
If your contractor creates something valuable—but your contract doesn’t include a proper IP assignment—you may not actually own the work.
What to Do
Include clear, enforceable IP clauses in every agreement. Worksuite standardizes IP assignment language and ensures all contracts are securely stored for audit and M&A readiness.
5. Violating Data Privacy Rules
The Risk
Sharing contractor data across borders without safeguards violates laws like GDPR, CCPA, and PDPA—and could result in seven-figure fines.
What to Do
Work with platforms that enforce data minimization, encryption, and local storage rules. Worksuite is GDPR-compliant and supports regional data residency.
6. Late or Incorrect Payments
The Risk
Some countries, states or local municipalities mandate specific pay timelines—and penalties for delays. Missteps here can risk unnecessary liability, damage relationships and spark complaints.
What to Do
Centralize payment operations. With Worksuite, you pay one invoice—then our platform automates localized, on-time disbursement to contractors worldwide. No chasing missing bank details.
7. Hiring or paying in Sanctioned Regions
The Risk
Engaging contractors in regions under OFAC or other international sanctions can trigger major legal violations—even unintentionally.
What to Do
Use payment processes with built-in sanctions screening and real-time regional compliance checks. Worksuite blocks engagements in restricted areas.
8. Letting Contracts Expire or Drift
The Risk
Outdated contracts can become invalid—or fall out of sync with current work scope and local laws. In some regions, contracts must be updated regularly.
What to Do
Enable automatic contract renewal reminders, contract amendments and legal review triggers. Worksuite flags agreements approaching expiration or requiring localization updates. Our Contracts module helps by guiding with specific alerts and ability to track against specific tasks or contract deliverable dates.
9. Overlooking Local Labor Protections
The Risk
Some jurisdictions offer labor protections to long-term or economically dependent contractors—even if you call them “freelancers.”
What to Do
Monitor engagement duration, exclusivity, and work structure. Consider Employer of Record (EOR) or Agent of Record (AOR) solutions when the line between contractor and employee gets blurry.
10. Lacking Documentation During Audits
The Risk
If your company is audited, acquired, or raising capital, inconsistent documentation can derail deals—or attract regulatory scrutiny.
What to Do
Centralize every contract, payment, and tax form in a single system of record. Create defense files for each engaged Freelance worker who is classified as self-employed. Having a readily available and easily exported defense file will save you time, effort and potentially millions of dollars should you face a governmental audit or inquiry for a group of workers. Defense files should house all of your vital contract information and help demonstrate solid justification for paying workers a self-employed. Worksuite creates audit trails by default, so you’re always audit-ready.
Compliance Readiness Checklist
Before your next freelancer engagement, ask:
- Have we run a jurisdiction-specific classification test?
- Is our contract localized with required clauses?
- Are tax obligations automated and auditable?
- Is IP clearly assigned and documented?
- Are we screening for sanctions and data privacy risk?
If not, it’s time to reevaluate your workflows.
Final Thoughts: Don’t Wait for an Audit
The compliance landscape in 2025 is complex—but not insurmountable. What separates risk-prone companies from compliant ones isn’t legal firepower. It's a process.
By operationalizing compliance through the right partners, frameworks, and tools, companies can scale global freelancer programs safely—and earn trust with contractors, regulators, and stakeholders.
Need Help?
Worksuite helps teams stay compliant in 180+ countries with built-in classification, contracts, tax workflows, and global payments—whether you use Contractor Direct, AOR, or EOR.
Book a Compliance Consultation
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Cristin Monnich is Senior Director and GM of Global Compliance & AOR at Worksuite. She helps global teams build classification-first contractor programs that scale safely.
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