How German Companies Can Hire in California Without a US Entity

Option 1: Employer of Record (EOR)

An Employer of Record is a third-party company that legally employs your worker in California on your behalf. The EOR handles payroll, taxes, benefits, and compliance. You maintain day-to-day management of the employee. This is the fastest option - you can hire within days without forming a US entity. Costs typically range from $500-700 per employee per month. Popular EOR providers include Deel, Remote, and Oyster.

Option 2: Form a US Entity

If you plan to hire multiple employees or establish a long-term US presence, forming a US entity makes sense. Most German companies choose a Delaware LLC or C-Corp, then register as a foreign entity in California. This requires an EIN (tax ID), California employer registration with the EDD, workers compensation insurance, and a registered agent. Setup takes 2-4 weeks and costs $2,000-5,000 in legal fees.

Option 3: Independent Contractor (Risky)

Some German companies try to engage California workers as independent contractors. This is the riskiest option due to California strict ABC test (see AB5). If the worker is integrated into your operations - attending standups, using your tools, working fixed hours - they are legally an employee regardless of what the contract says. Misclassification penalties start at $5,000 per violation plus back pay for all wages, taxes, and benefits owed.

What Documents Do You Need?

Regardless of which option you choose, you need a compliant employment contract that follows California law, an employee handbook covering California-specific policies, all required federal and state employment notices, and proper I-9 employment authorization verification. HireStates generates all of these documents automatically, tailored to the specific California city where your employee will work.