I think most of the companies (most likely including Automattic) are not doing it like that for remote employees from other countries. They are just "hiring" them as contractors, that is formally it's just B2B, the employee would register some kind of individual business entity in their country, send invoices, pay taxes. The contract may include things like vacations, sick days, (home office) equipment compensation, N months notice/severance pay, but it has no connection to the laws for normal employees in that country.
I think doing it differently would not be practical, because the company would have to maintain some kind of companies/offices in each country. Another option can be hiring the employee directly at the main company (not sure about US, but I am pretty sure it's possible at least for some countries in Europe), but it's also more complex and I am not sure if this would even make sense for the employee since e.g. they would not be able to access the benefits like healthcare remotely. And as long as the contract is good and the company is trustworthy, being a contractor/self-employed may have some advantages like lower taxes.
I think doing it differently would not be practical, because the company would have to maintain some kind of companies/offices in each country. Another option can be hiring the employee directly at the main company (not sure about US, but I am pretty sure it's possible at least for some countries in Europe), but it's also more complex and I am not sure if this would even make sense for the employee since e.g. they would not be able to access the benefits like healthcare remotely. And as long as the contract is good and the company is trustworthy, being a contractor/self-employed may have some advantages like lower taxes.