Challenges with US Companies Hiring Workers in Canada: Interview with Marc Pavlopoulos

Pic CMarc Pavlopoulos is a Silicon Valley software exec with 15 years of experience in building tech startups. He is the CEO and Founder of Syndesus, which builds engineering teams in Canada for US tech companies. Syndesus also offers PEO (Professional Employer Organization) services to US company seeking to hire workers in Canada.

The HR Gazette met Marc recently through HR Consultant, Tim Baker, who specializes in Cross Border Employment. We were intrigued by Marc’s business model and target market. In today’s world of remote teams and creating an engaged organizational culture, we took some time to explore how Syndesus provides talent and employment solutions while maintaining compliance and sustaining a strong culture.

HR Gazette: Tell us a little more about your professional background and accomplishments.

Marc: I’ve helped build 7 tech startups in Silicon Valley and Toronto in sales, business development, and strategic alliance roles. I also spent a year in venture capital in Toronto and earned my MBA in Canada from the University of Western Ontario (Ivey School of Business). Having lived and worked in both Canada and the US, I have a unique perspective on the nuances of both countries.

HR Gazette: Tell our readers about Syndesus; the company’s history and vision.

Marc: Just about every tech company in San Francisco, Silicon Valley, New York and Boston has trouble finding and hiring software engineers. And if you find the ideal engineer to join your company, they are hounded every day by recruiters from other well funded startups and from Google, Facebook, and Apple, making retention a problem. Those who tried outsourcing to India or Eastern Europe mostly regretted it.

While many graduates from Canada’s top engineering schools move to the US after graduation, many more did not choose to leave Canada, because Canada is their home. Yet the opportunities available to those who stayed were nowhere near as exciting as what happens in the US tech hubs.

My vision for Syndesus is to bring together engineers and highly skilled workers all across Canada with US companies seeking to hire them. As the hires take place in Canada, this helps Canada reverse its brain drain and become more of a hub of technology and innovation. It helps the US companies who cannot find qualified workers in the US and who have had challenges with remote teams/outsourcing to Ukraine and India.

HR Gazette: What is cross border employment and how does Syndesus assist US companies with workers in Canada?

Marc: US companies often need to employ workers in Canada in variety of roles – sales reps, engineers/developers, marketing managers, etc. Sometimes it’s a single worker, other times a team of people. The challenge for the US company is how to legally employ these people in Canada.

There are a few options:

1 – Create a Canadian corporation and directly hire the workers as employees.

This is an ideal solution if the US company has plans to do business in Canada or if they are hiring a large team. For hiring individuals or small teams, it can be quite expensive and a distraction for the US company to maintain 2 sets of books, file taxes in Canada, and comply with Canadian labor laws.

2 – Hire the workers as consultants/contractors.

There are potential legal challenges to this approach, which we will discuss shortly.

3 – Utilize the services of a PEO (Professional Employer Organization) in Canada.

This solution works well for hiring individuals or small teams. A PEO’s services can tyically include, but are not limited to: Outsourced HR, payroll, and benefits. They are responsible for compliance with all Canadian employment laws. Using a PEO allows a US company to treat workers in Canada like employees without having to build a corporate, legal and accounting structure in Canada.

Syndesus is a PEO, with added services for technical recruiting and procurement of office space.

syndesus_logoHR Gazette: How did you discover the need for this unique solution and business model?

Marc: Most of my career has been spent working with small and mid-sized tech companies. They are laser focused on building their business, and don’t have the time or headcount to address the challenges of setting up operations in a foreign country. I also asked CFOs and Engineering VPs in the US about their experience with hiring remote workers in Canada. None of them were well versed in Canadian labor laws, nor did they have the time to get up to speed.

Microsoft and Google may be experts in hiring and operating in many countries, but most US companies are not. My goal is to make this process of employing workers in Canada as simple as possible so my clients can focus on their core business.

HR Gazette: It sounds like you offer more than just employment/payroll services. What other ways do your US clients benefit from Syndesus’ solutions?

Marc: I build engineering teams (2-20 people) in Canada for US tech startups and high growth tech companies. Additionally, I help them find office space for their workers in Canada, whether they want co-working space or a dedicated office. I’m also set up to access Canadian R&D tax credits if the technical work being done by the engineers qualifies. These tax credits are quite lucrative.

My service is very a la carte. Some US companies just want the tech recruiting, while others only want the PEO service to help them employ/payroll their Canadian workers.

HR Gazette: Why not just treat the worker as an contractor or consultant? Are there any risks of in having that type of relationship?

Marc: The CRA (Canada Revenue Agency), Canada’s IRS, has a similar legal definition of an independent contractor to the one that exists in the U.S. The risk of treating someone as an independent contractor across the border is the mis-classification of the worker. If this is the case, as determined by the CRA or other party, there could be hefty penalties to the U.S company.

HR Gazette: With you living in San Francisco, how do you ensure your recruitment, HR & employment compliant in Canada?

Marc: Having lived and worked in Canada for 5 years, I know that the laws and regulations are quite different than in the US. I initially wanted to partner with a Canadian PEO or HR/Payroll firm that could handle the legal requirements of employment in Canada. But I quickly found out that these firms didn’t understand my clients (US tech companies), and were not set up to access any of the Canadian R&D tax credits or grants that are available in Canada.

So I decided to incorporate in Canada and custom build this service for my clients. To do so, I had to hire the following specialists which had both Canadian and US experience: An HR specialist, payroll firm, lawyer, and accountant. Additionally, I had to partner with a Canadian consulting firm that had deep expertise with the Canadian R&D tax credits. I was able to build a cohesive solution for my US clients that allows them to quickly and easily hire skilled workers in Canada.

syndesus_defineHR Gazette: Let’s talk about the worker/employee for a minute. How do they benefit from being employed rather than acting as a contractor/consultant to the US company?

Marc: Contractor/consultant relationships with their employers are very arm’s length; no benefits are provided, stock options are usually not granted, and the worker is not immersed in company culture or the company vision. The contractor/consultant is paid to do a service and that’s it. This may work for some industries, but not for companies that know that their workers are the most important resource they have.

A PEO structure that employs the worker, communicates the message that the worker is, in a sense, part of the US company’s culture, and puts in place a structure where they can have benefits, such as healthcare and RRSP’s (similar to a 401K), participate in stock option plans, and more closely ties them to company events and company culture.

HR Gazette: It’s obvious that Syndesus offers some great solutions for US companies building teams in Canada. Is there anything else you’d like to add for our readers?

Marc: I’m always happy to brainstorm with companies that are thinking of hiring in Canada in the future, or who may already have workers/consultants in Canada.

Learn more about Syndesus at www.syndesus.com


Opinions expressed in this article are those of the author and not of The HR Gazette or its team members.
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