What an Employer of Record Actually Covers When You’re Hiring Remote Staff in Colombia From a US Base

You found the right person for the role. They are based in Colombia. You are based in the US. Now what?

This is the moment most business owners hit a wall. Hiring someone internationally sounds straightforward until you realize you are dealing with a foreign labor code, mandatory benefits you have never heard of, payroll in a different currency, and zero legal infrastructure in-country.

That is where an Employer of Record comes in. And if you are hiring in Colombia specifically, understanding what an EOR actually covers is not just useful background knowledge. It is the difference between a compliant hire and a liability you did not see coming.

What an Employer of Record Is (and Is Not)

An Employer of Record, or EOR, is a third-party company that legally employs your worker in their home country on your behalf.

Here is how it works in practice: You find the candidate, you decide what they will do, you manage their day-to-day work. The EOR steps in to handle everything on the legal and administrative side: contracts, payroll, taxes, benefits, and compliance with local labor law.

You stay in control of the work. The EOR handles the paperwork, the legal obligations, and the in-country infrastructure.

One thing an EOR is not: a recruiter. An EOR company gets involved once you have already selected your candidate. They are not finding your hire. They are making sure you can employ them properly.

Why You Cannot Just Pay a Colombian Contractor and Call It Done

This is the shortcut a lot of US companies try first. They find someone in Colombia, agree on a monthly rate, and set up a contractor relationship. No local entity needed. No benefits to manage. Simple.

The problem is that it is often not legally clean, and the risk is real.

Colombian labor authorities can reclassify your contractor as an employee if the working arrangement looks like employment, regardless of what the contract says. If you are setting their hours, assigning their tasks, providing their tools, and expecting them to work exclusively for you, that looks like employment. And if they are reclassified, you become liable for back taxes, unpaid benefits, and penalties dating back to day one.

Local tax authorities in a contractor’s home country may reclassify your contractor as an employee under local labor laws, potentially holding your business liable for unpaid employer contributions and taxes retroactively.

That is not a theoretical risk, but a common outcome for companies that grow a remote team without proper employment structures in place.

What Colombian Labor Law Actually Requires

Colombia has a comprehensive labor code, the Codigo Sustantivo del Trabajo, that governs all employment relationships in the country. Here is what that means for any employer, including you as a US company using an EOR.

Under Colombian law, employers are required to provide the following:

• Health and social security contributions. Employers contribute to Colombia’s national health system and social security on behalf of each employee. These contributions are mandatory and non-negotiable.
  
• Pension contributions. Both employer and employee contribute to a pension fund. This is separate from health contributions and similarly required for all formal employment relationships.
  
• Severance pay (cesantias). Employers must contribute one month’s salary per year into a dedicated severance fund for each employee. According to Colombia’s labor law framework, this fund is held separately and the employee can access it for specific legally authorized purposes, including housing and education, or in full upon termination.
  
• Severance interest. On top of the severance fund, employers must pay 12% annual interest on the cesantias balance, paid each January.
  
• A 13th-month bonus. Colombian law mandates a prima de servicios, effectively a 13th-month salary, paid in two installments across the year.
  
• Paid annual leave. Employees are entitled to 15 days of paid vacation per year after completing one year of service.

None of this is optional. When you hire through an EOR, all of it is handled on your behalf. When you hire through an informal contractor arrangement, all of it is your problem if things go wrong.

What the EOR Specifically Covers

When a US-based company uses an EOR to hire in Colombia, here is what that service handles:

• Employment contracts. The EOR drafts and signs a locally compliant employment contract with your hire. This protects both you and the employee.
  
• Payroll processing in Colombian pesos. The EOR pays your employee in local currency, on time, in line with local payroll schedules. You fund the EOR in USD and they handle the conversion and disbursement.
  
• All mandatory benefit contributions. Health, pension, severance, severance interest, and the 13th-month bonus are calculated and paid by the EOR on your behalf.
  
• Tax compliance. The EOR handles all local tax withholding and reporting obligations. You do not need to understand Colombian tax law to stay compliant.
  
• Offboarding and termination. If the working relationship ends, the EOR manages the process in line with Colombian labor law, including final settlement calculations and severance obligations.

The EOR carries the statutory employer liability for compliance, while your company retains full control over the employee’s daily work and performance.

What You Still Control

This is where people sometimes get confused. Using an EOR does not mean handing over management of your team.

You decide what work gets done. You set the priorities. You give feedback and direction. You manage performance. The EOR is not in the room for any of that. They are the legal structure that makes it possible for your Colombian team member to be a properly employed, protected worker, not a contractor who carries all the risk.

Think of it as the employment infrastructure running quietly in the background. Your hire shows up on their first day ready to work for you. The EOR makes sure they are employed correctly.

Where Filta Fits In

Filta operates as an EOR in Colombia for US-based media, advertising, digital marketing, and broadcasting teams.

What that means practically: when you hire through Filta, they become the legal employer of your Colombian team member. They handle the employment contract, payroll in COP, all mandatory contributions under Colombian labor law, equipment, and ongoing HR support. You stay in charge of the work.

Filta is also not just an EOR provider. They handle talent sourcing and vetting as part of their model, so if you have not found your candidate yet, they can help with that too. The full process, from identifying the right person to getting them compliantly employed and working with your team, sits under one roof.

For a US-based team that does not have HR infrastructure in Colombia, does not speak the language of Colombian labor law, and does not want to set up a foreign legal entity just to hire one or two people, this is what a clean, compliant hire actually looks like.

Frequently Asked Questions (FAQs)

• Do I need to set up a company in Colombia to hire someone there?
  No. That is exactly what an EOR eliminates. The EOR holds the legal entity in Colombia and employs your hire on your behalf. You do not need your own local registration to hire compliantly.
  
• What is the difference between hiring a contractor and using an EOR in Colombia?
  A contractor arrangement is an independent business relationship. An EOR arrangement is formal employment. The distinction matters because Colombian labor authorities can reclassify contractor relationships that function like employment, which can expose you to back taxes and benefit liabilities. An EOR structure is compliant from day one.
  
• What mandatory benefits does a Colombian employee receive?
  Under Colombian labor law, employees are entitled to health insurance contributions, pension contributions, severance pay (cesantias), severance interest, a 13th-month bonus (prima de servicios), and 15 days of paid annual leave per year. All of these are managed by the EOR on your behalf.
  
• Who pays the employee their salary?
  The EOR processes payroll in Colombian pesos and pays the employee directly. You fund the EOR in USD, and they handle the currency conversion, disbursement, and all related tax and benefit deductions.
  
• Can I still manage my Colombian hire day to day?
  Yes. The EOR handles legal employment. You handle everything else: work assignments, performance, priorities, and communication. Nothing changes about how you manage the work.
  
• How long does it take to get someone hired and set up through an EOR in Colombia?
  With a prepared candidate and an EOR that has existing in-country infrastructure, the process from contract to first day can typically happen within a few weeks.
  
• What happens if I need to end the employment relationship?
  The EOR manages offboarding in compliance with Colombian labor law, including calculating and processing any severance obligations. This protects both you and the employee and ensures the separation is handled correctly.

Filta is ranked in the top 9% of outsourcing providers globally. We help US-based media, advertising, and digital marketing teams hire and compliantly employ dedicated remote staff in Colombia, covering talent sourcing, EOR compliance, payroll, equipment, and ongoing support under one roof.

Book a free strategy session → We will show you exactly how to hire expert nearshore talent in 3 to 5 weeks with the same quality you would expect from a 10-week local search.