Are death squads considered local mercenaries?

Not usually. You need pretty loyal people to start going around killing people. They can be loyal for fear or chemical dependence or social status or lack of options and they’ll be better for such awful work than paid professionals. If you can buy killers, killers can generally be bought.

@Smashley You got a point, doing death squad job means you willingly become a murderer for different reasons rather than the money.