Compensation & Benefits
Employer of Record
An Employer of Record (EOR) is a third-party company that is responsible for administrative tasks related to employing a worker, such as payroll and tax compliance. The EOR is considered the legal employer of the worker while the worker is under the direction and supervision of the client or hiring company. The EOR provides services such as human resources, payroll, and benefits administration services to other companies.
Deel
Deel is the "employer" on payroll for OCV companies. This helps legally hire and manage workers globally without the massive overhead of setting up local entities, ensuring compliance with complex foreign labor laws, taxes, and payroll. All portfolio company employees, including founders (and many contractors), will need to be set up for payroll in Deel.
OCV Ops will initially set up accounts with Deel for portfolio companies in coordination with the founders. Founders will sign the MSA and be responsible for onboarding subsequent employees to Deel as the account administrator. The Deel Founder Guide can be found in the OCV + Founders Shared Resources folder.
Payroll processing
The EOR processes regular payroll semi-monthly (cadence may vary by country), but invoices the company once a month. For cash flow planning, founders may need to be aware that the current cash on hand (bank account balance) may not reflect the latest payroll draw due to a timing difference of the EOR invoice.
Once the EOR invoices the company, payroll payment is processed by the accounting team. It's important to note that payroll must comply with various laws and regulations, including wage and hour laws and tax laws. Failure to comply with these laws can result in penalties.
Recommended employee benefits
Specific details on worker classification guidelines and payment terms for contractors are here.
Deel Benefits can be found in the shared Drive in the Deel EOR Benefits Guide Folder.
Employee Benefit
US Employees
Non-US Employees
Contractors
Annual Salary
Yes
Yes
No
Bonus*
No
No
N/A
Healthcare**
• Premium Plan • Dental • Vision • Company pays 85% employee premium • Company pays 50% for dependents premium
• No additional coverage if National Healthcare is available • Select a mid level plan if National Healthcare is not available
No
Paid Time Off
• 2 weeks accrued • Can request additional paid time off (not accrued) subject to managerial approval
Statutory compliance based on minimum local requirements for paid time off (which may accrue) and local holidays. Can request additional paid time off (not accrued) subject to managerial approval.
No
Remote Work
Yes
Yes
Yes
Home Internet Reimbursement
Yes
Yes
No
Equipment
Yes
Yes
No (leasing available)
*Option for the company's CEO to implement the bonus plan after the external funding round. Each company should establish an annual performance and compensation review process.
**The company pays for healthcare plan premiums; there may be additional copays or out-of-pocket costs to employees and dependents. See details for country-specific compliance here.
Cash compensation
OCV companies have to manage their burn rate and cannot always offer salaries that compete with a larger, established company. OCV companies offer stock equity incentives, opportunities to learn the latest technologies, and rapid career advancement. Hiring managers should look for team members who are willing to take a certain amount of risk when working for a start-up. Team members must weigh the risks and benefits of working at a start-up and decide if such an opportunity is right for them.
Do not discuss one person’s compensation based on someone else’s compensation. There is no “fairness” in compensation, only the market rates. Consider adding a compensation page to your company handbook outlining your policy. Appropriate compensation based on location is challenging to implement and maintain, but ultimately, it will enable you to hire the best talent for your team regardless of location.
Pay location-based market rates
Use location-based market rates for compensation. Paying based on regional rates is more standard than paying a global compensation rate. U.S.-based roles tend to have a higher percentage of equity in the total compensation package.
Some companies advertise compensation packages at a global rate, which may send a message that the company can't hire anyone who lives in high-cost-of-living areas, but represents above-market compensation to people in the rest of the world. When companies post their roles with salary transparency and pay the same everywhere, it may appear simple, but a one-size-fits-all approach has limitations. Great candidates who live in high-cost-of-living areas may be unaffordable to compensate when compared to a global rate, and can negatively impact staffing choices.
Use these benchmarking tools to better understand fair market compensation for salaries:
Betts (for GTM / Sales roles)
Pay in local currency
Pay employees and contractors in their local currency to avoid situations of adverse exchange rate fluctuations for the employees. Exchange rate management is not a core activity for scaling the business and will create an unnecessary distraction for the management team down the road.
Exempt vs. Non-Exempt Status
In the US, employees are classified into two categories, exempt and non-exempt, based on the overtime pay and minimum wage laws, which can also vary by state. The primary difference between these two categories is how they are compensated for their work.
Most OCV company employees during the first 18 months will likely have exempt status. Founders should pay attention to any admin hires like Executive Assistants (EAs).
Exempt employees
Exempt employees are those who are exempt from the overtime pay and minimum wage laws. They are typically salaried employees who are paid a fixed amount regardless of the number of hours worked. Exempt employees are not entitled to receive overtime pay when they work more than 40 hours a week.
Common examples of exempt employees include executives, professionals, and administrative employees. Employers are not required to keep track of their hours worked or pay them overtime.
Non-exempt employees
Non-exempt employees are those who are covered by the overtime pay and minimum wage laws. They are typically hourly employees who are paid for the actual number of hours worked. Non-exempt employees are entitled to receive overtime pay at a rate of 1.5 times their regular pay rate for any hours worked beyond 40 hours per week or 8 hours per day, depending on the state.
Common examples of non-exempt employees include hourly workers, clerks, and non-managerial employees. Employers are required to keep track of their hours worked and pay them overtime.
The exempt or non-exempt status of an employee is important because it affects their entitlement to overtime pay and minimum wage. Understanding the difference between these two categories can help employers ensure that they are complying with labor laws and treating their employees fairly. It can also help employees understand their rights and what they are entitled to under the law.
Temporary employees
In the US, temporary employees are hired by a company for a finite period of time, often to fill in for absent employees or to meet short-term business needs. They are typically paid by the hour and are entitled to overtime pay if they work more than 8 hours a day or 40 hours a week, depending on the state.
Annual performance review and raises
Management teams are responsible for developing an annual review process. Compensation increases should be based on market rates for roles rather than inflation-based adjustments.
Market adjustments naturally incorporate inflation to some degree while also considering broader economic factors that affect compensation—sometimes even offsetting inflation increases. For example, inflation may be high while market rates remain stable. Companies should strive to maintain parity with overall market compensation levels.
Therefore, salary adjustment discussions should focus on market rates rather than changes in employee cost of living. When a founder determines that a role merits a market-rate increase based on performance or requires adjustment for market parity, they should notify the accounting team and update the necessary changes with the company's EOR and payroll provider.
Tracking employee PTO
Employees engaged through the EOR accrue PTO with minimum amounts determined by local laws. You can view the required PTO for each location in your EOR platform. The EOR requires an accrual-based PTO policy, and each company must establish its own PTO policies that comply with the local statutory requirements outlined by the EOR.
Managers can approve time off that has not yet accrued by the employees, effectively providing more than the statutory amounts of PTO. This is done on a case-by-case basis, and the PTO will need to be approved and tracked in your EOR platform.
Unused, accrued PTO is paid out according to local regulations when an employee leaves or the company winds down. Companies should consider PTO accrual as part of cash flow planning and emphasize the importance of tracking PTOs in the EOR platform with their team members.
Founders, please see detailed instructions on how to track PTO here.
Contractor PTO Policy
Generally, contractors are not eligible for paid time off.
Immaterial time periods are generally permissible, e.g., half-days, as part of normal remote work flexibility. Material time-off should be discussed and agreed with founders in advance, and the invoice rate may need to be adjusted accordingly, especially if billed as a weekly or monthly rate.
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