How To Hire And Pay Employees In The United States

Emerald Technology's guide to hiring employees in The United States.

CURRENCY

United States Dollar is the official currency of The US. Its currency symbol is $, USD.

CAPITAL CITY

Washington, D.C, has been The US' federal capital since 1800. Home to The Capitol, White House and Supreme Court.

LANGUAGE

English is the most prominent spoken language in the US, with over 240 million speakers across the country.

POPULATION The current population of the US is  331.9 Million in 2021 based on World bank numbers.
PAYROLL FREQUENCY The payroll frequency in The US is most commonly bi-weekly. Monthly pay checks are also common.
PUBLIC HOLIDAYS The US Federal Government recognises 10 national holidays. This can vary depending on location, industry and work schedules. 

GROW YOUR TEAM IN THE U.S

NO ENTITY, NO PROBLEM

To start growing your team in the United States, you must establish a local entity- including an account with a local bank, a local office and an address registered as a subsidiary. This allows you to manage payroll, tax, benefits and compliance for your employees, but can take several months. 

Emerald can hire and payroll your workers, quickly and compliantly with their ready to go entity. Make growing your team simple with Emerald as a global partner.

PROS AND CONS OF HIRING IN THE UNITED STATES

The US  has an extremely educated workforce, claiming 30 of the top 100 best universities in the QS World University Rankings, with the Massachusetts Institute of Technology (MIT) taking the top spot. Whether you require tech, life sciences, creative, or financial talent; you’re sure to find the top achievers in the US to drive your business goals forward.

If you embrace remote working, you have 50 different states to source talent from. Some states are known for being market leaders within industries. For example, if you are operating within the technology and IT space, areas like Texas, North Carolina, and California, are famed for their tech hubs and ability to attract top talent. Likewise, New York is a global leader in finance and creative industries.

The US has implemented 'at will' employment, which is unique to the US. Within employment contracts, US employees are hired 'at will.' Meaning, the employer or employee can terminate the employment at any time, with or without any notice. 

There is also no state-sponsored healthcare, so employers are legally required to offer employees healthcare benefit plans.

WHY THE UNITED STATES IS GOOD FOR REMOTE WORKERS

Americans are embracing flexible work, just like the rest of the world. 

Whilst boasting from a hybrid workforce with 58% of the US workforce having the opportunity to work from home., it offers a high attractiveness to other remote workers and digital nomads. 

Miami and Las Vegas were both recognised amongst other cities as the most attractive places to live and work in the world. 

From the US, 24 states have implemented special remote working incentives from digital nomad visas, tax incentives, and relocation payments. 

START GROWING YOUR REMOTE WORKFORCE NOW

WORKING TIME AND OVERTIME IN THE UNITED STATES

The standard working hours in the United States is 40 hours per week. However, there is a substantial variation amongst industries and jobs. Under the Fair Labour Standards Act (FLSA), non-exempt employees who work more than 40 hours per week are entitled to one and a half times their standard salary rate. Employees that are exempt are not entitled to overtime payments. Typical job roles that are exempt are managerial or executive positions, administrative positions, creative jobs, and professional positions.

ANNUAL LEAVE AND THE U.S' PUBLIC HOLIDAYS

Annual leave is not a legal requirement in the United States. However, most employers will offer paid annual leave to employees. This is typically 10 days but can vary between employers. There are 10 public holidays in the United States, however, this can vary according to the state the employee is located in. It is at the employers discretion if an employee is paid for public holidays.

January 1st: New Year's Day
3rd Monday in January: Martin Luther King's Birthday
3rd Monday in January: Washington's Birthday 
Last Monday in May: Memorial Day 
June 19th: Juneteenth National Independence Day 
July 4th: Independence Day 
First Monday in September: Labor Day 
Second Monday in October: Columbus Day 
November 11: Veterans' Day 
Fourth Thursday in November: Thanksgiving Day 
December 25th: Christmas Day 

PROBATION PERIOD IN THE UNITED STATES

A probation period in the U.S typically lasts between 3 – 6 months. The length depends on what has been agreed between the employer and employee and can be extended beyond 6 months.

RESIGNATION AND DISMISSAL IN THE UNITED STATES

Many employees in the U.S. with the exception of the state of Montana are employed ‘at will’ meaning both the employee and employer can terminate the employment relationship at any time. If a written contract of employment is provided most employers will state any required notice periods on both sides. Generally, at will employees can be terminated with or without cause, provided it is not for an illegal reason such as race, age, gender, on parental leave, or on sick leave. This is classed as unjustified dismissal or wrongful termination. The employment contracts of management, senior executives, and highly skilled workers will often include a ‘just cause’ termination clause, meaning the employee may only be terminated for a cause listing the permitted grounds.

In mass dismissal cases the Worker Adjustment and Retraining Notification Act (WARN) will need to be followed. The WARN Act has various criteria depending on the number of employees and the reason for the mass lay off of employees.

There is no legal requirement for employers to provide terminated employees severance payments. However, this can be negotiated when the employee is first hired.

Employees that have health insurance with their employer should not be immediately cut off from their policies after being terminated. Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), a terminated employee may continue to use their health insurance for a certain number of months after termination. They will also be entitled to a special enrolment period and may begin to search for an individual or family policy on their own.

RESTRICTIVE COVENANTS

The enforceability of restrictive covenants in the U.S are determined by state law. Courts within states that enforce non-compete agreements hold that a covenant restricting the activities of an employee upon the termination of their employment can be enforced if it protects a justifiable business interest, is fairly limited in scope, and is reasonable. Meaning, it should only offer fair protection to the employer’s interest and not be so extensive as to interfere with the interests of the public or prevent an employee from engaging in his or her livelihood. The following are some factors when considering the fairness of a restrictive covenant. Scope of business covered, the business need for the protection, the extent of interference with public interest, the extent of limitation on an employee’s opportunity to pursue further employment options, length of time the restriction covers, and geographical area this covers.

READY TO HIRE YOUR EMPLOYEES IN THE UNITED STATES?

CONTRACT OF EMPLOYMENT IN THE U.S

There are no minimum requirements for an employment contract in the U.S, and they can take multiple forms. It is always best practice to produce a contract of employment in writing that include the terms of employment such as salary, start date, benefits, work location, and length of employment. A written contract can also describe if an employee is an ‘at will’ employee. There are also no legal provisions for fixed term contracts. Unlike many other countries there is no limit on the duration of a fixed term contract of employment, or the circumstances in which a fixed term contract may be entered.

THE UNITED STATES' MATERNITY LEAVE

The U.S is one of the only countries in the world that does not require paid maternity or paternity leave by law. However, although paid parental leave is not required at the federal level in the U.S, a few states do mandate paid parental leave. Under the Family and Medical Leave Act (FMLA) some employees are entitled to up to 12 weeks of unpaid maternity leave. This is on the basis that the employer has at least 50 employees within a 75-mile radius, and that the employee has worked at least 1,250 hours over the past 12 months. Some companies do offer paid parental leave to be competitive and be a desirable place to work.

SICKNESS LEAVE IN THE U.S

As with parental leave the U.S does not require employers to provide sick leave to their employees. If an employee does need to take time off due to illness, under the Family and Medical Leave Act (FMLA), some employees are entitled to up to 12 weeks unpaid sick leave. The same applies as with parental leave, the employer has at least 50 employees within a 75-mile radius, and that the employee has worked at least 1,250 hours over the past 12 months. Sickness leave is one of the more common benefits within the U.S that employers do offer.

SOCIAL SECURITY IN THE UNITED STATES

Every employee and employer in the U.S must pay social security contributions. It is the employers responsibility to make the relevant deductions from an employees salary. The contribution rate is 6.2% despite an employee’s earnings, this is capped at $147,000.00 per annum on earnings. The same contribution rate applies to both employees and employers.

HEALTHCARE AND INSURANCE

Employers are not required to provide health insurance as a benefit to employees. However, the Affordable Care Act (ACA) will penalise some employers who fail to. Exceptions for health insurance by employers vary based on the size of the company. If a company employs more than 50 employees, they will be required to follow different rules and regulations compared to employers with less than 50 employees. The ACA have also introduced tax credits for small businesses to assist with the cost of health insurance.

Medicaid is a national public health insurance program established in 1965 that is funded by income tax. If a person has an income below the federal poverty level, or a particular disability, they will be able to have their medical cover either fully or partially covered by the state government. This can include hospital cover, medicines, doctors’ appointments, and nursing home care.

Medicare is for U.S residents over the age of 65, despite income. If an individual has paid Medicare taxes whilst working, they will qualify for Medicare. Medicare will still require a small contribution monthly but will provide large reductions in insurance premiums. Foreign workers cannot access Medicare unless they have worked in the U.S for at least 10 years.

It is strongly recommended that foreign employees take out private health insurance. Without insurance a hospital stay, or medical treatment can result in an extremely large bill, which many employees may struggle to repay.

Employment of

FOREIGN NATIONALS IN THE UNITED STATES

All foreign citizens require a work visa to work in The United States. It has different types of work visas, which you can discover more about here.
Salary Taxes

MINIMUM WAGE IN THE U.S

The federal minimum wage is $7.25 per hour (USD). Some states or cities may set this rate higher than the federal minimum wage.

UNITED STATES INCOME TAX

The U.S tax year runs from January to December. It is the employer’s responsibility to ensure taxes are paid from salaries before payments are made to employees. There are state taxes to pay which vary in each state as well as federal tax. Federal tax varies depending on the employee’s personal situation, such as if they are single, married or jointly filing with a partner, or if they are head of their household. 

SALARY PAYMENTS IN THE U.S

Most states in the U.S require employees to be paid on a fortnightly basis. However, some do allow monthly payments, whilst others require weekly payments.

SOCIAL SECURITY CONTRIBUTIONS IN THE U.S

Social security in the U.S are the responsibility of the employer to deduct from an employee’s salary before payment. Both the employer and employee are subject to social security contributions. Below are approximate contribution rates. Please note these can vary, and there maybe additional contributions depending on the state the employee is based in.

 

  FICA Social Security  FICA Medicare FUTA (Federal Unemployment Tax Act) FUTA (Additional tax for income over $200,000.00)
Employer  6.2% 1.45% 0.6- 6% N/A
Employee 6.2% 1.45% N/A 0.9%

 

Social security is capped at $147,000.00 annual earnings.

Federal unemployment tax rate is 6% with a taxable base of $7,000. If a state operates their unemployment insurance programmes in compliance with federal law, the FUTA tax is reduced to 0.6%.

WORKER MISCLASSIFICATION IN THE U.S

Similar to other countries, The U.S has strict rules on classifying individual contractors and full-time employees differently. Misclassifying your workers can put your business at risk of fines.

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