North America

United States (USA)

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Employer of Record (EOR) in United States (USA)

What you'll learn

  • Country Introduction
  • Employment Terms
  • Minimum Wage and Working Hours
  • Statutory Leave Laws
  • Termination Process
  • Additional Information
United States (USA) Introduction

The United States of America (US or USA) is a country in North America consisting of 50 states, a federal district, 5 major unincorporated territories, 9 minor outlying islands, and 326 Indian reservations with limited sovereignty. The country is bordered by Mexico and Canada, and has the largest GDP in the world. The United States is a melting pot of cultures and ethnicities, and its population has been profoundly shaped by its centuries of immigration from other countries.

Employment Terms

Types of Contracts

  • Full Time Employee
  • Part Time
  • Fixed term
  • Hourly rates

Job Title Restrictions

There are no restrictions on job titles that we can hire in the United States.

Working Hours

Standard working hours in the US are 40 hours a week, 8 hours per day to qualify as a full-time employee.

Overtime is managed based on the employee’s exempt vs non-exempt classification.

Minimum Wage

The federal minimum wage for non-exempt workers in the US is USD 7.25 per hour - however the minimum wage requirements vary by state.

The minimum wage for employees who receive tips is USD 2.13 per hour. The amount of tips plus the USD 2.13 must reach at least USD 7.25 per hour. If not, your employer must pay to make up the difference.

For minimum wage rates by state - see here (and here for tipped workers).

Wage Deductions

In general, withholding authorizations are required for any deductions - this applies to, for example, negative paid time off (PTO) balance, return of equipment, etc.

If an employee has a negative PTO balance, they must sign a withholding to allow deductions from the final if the employee is terminated or quits.

Note that the salary cannot drop below minimum wage via these deductions, so deductions would be capped if they reached this level.

Probation Period

The US is one of the few countries with at-will employment. At-will means that the employer or the employee can terminate employment at any time, with or without cause.

It’s important to note that if a notice period clause is added to a contract which applies to both parties, this is only enforceable for the employer - the employee still has a statutory right to a no-notice termination.

Taxes & Local Employment Costs

Employee Taxes

There are 4 basic taxes in the US, depending on the state:

  • Federal taxes - varies by employee situation
  • FICA Social Security: 6.2% of gross salary
  • FICA Medicare: 1.45% of gross salary
  • State taxes - varies by state and employee situation
  • (E.g. Some states do not have state income tax, California & New Jersey, for example, have a disability fund. Some states have local taxes (e.g. city, county))

Certain visas allow Employees to be exempt from FICA taxes.

Employer Taxes & Contributions

Social Security

As with employee taxes, employer taxes vary depending on the state, city, etc.

Remofirst simplifies this with our Local Partner in the US by setting a flat rate of 12% across the board, which is an average covering all the employer obligations across all states.

Pension (401K)

In this case, the employee makes a choice of what percentage of their salary to contribute for 401K - the employer cannot make this choice for the employee. Employer will always have to match employee contribution, but not more than 4% of gross salary:

  • 3% ER matches 3%
  • 4% ER matches 3.5%
  • 5%+ ER matches 4%

Please note that the employer will match only if the employee contributes, so the employee can either accept or waive this benefit. The 401k match cannot be altered at all. The employee will become eligible to contribute 401K on the first day of the month after 90 days of employment.

In California, it is mandatory to offer 401(k) - this still kicks in after 90 days of employment.

Mandatory Medical Insurance

There is a mandatory amount of benefits the employer has to provide as we have more than 50 employees in the US. Please note that this is a minimal amount, and it is highly recommended to provide more so as to offer a competitive package to employees.

If the employee wants a plan outside of the employer’s budget, the employee can pay the difference themselves.

Types of Leave

Annual Leave (Vacation)

There are no statutory requirements for annual leave (vacation days) in the US.

Sick Leave

Certain states require sick time but most do not. Most employers provide a general amount of PTO which covers sick, vacation and personal days.

Maternity Leave

No statutory requirements.

Paternity Leave

No statutory requirements.

Public Holidays

There are 10 federal holidays in the US, however there is no statutory requirement to grant employees paid time off (some states do).

Benefits

Summary

In the US, the most important benefit for employers to provide is medical insurance. Legally, any large employer (more than 50 employees) must provide “affordable, comprehensive” medical insurance under the Affordable Healthcare Act (ACA)’s Employer Mandate. Other typical optional benefits include Dental, Vision, Life Insurance, Short Term Disability (STD) and Long-term Disability (LTD).

Medical Insurance

There is a mandatory amount of benefits the employer has to provide as we have more than 50 employees in the US. Please note that this is a minimal amount, and it is highly recommended to provide more so as to offer a competitive package to employees.

If the employee wants a plan outside of the employer’s budget, the employee can pay the difference themselves.

Termination Process

Notice Period

Notice periods, if desired, should be negotiated between the employee and employer as well as added to the contract.

It is possible to provide payment in lieu of notice (i.e. employment terminated effective immediately but paid out notice period amount).

Statutory Payments

For certain states, the remaining PTO needs to be paid out, (we are happy to provide more info on this topic when you get in touch). Severance pay is not required in the United States, but some employers provide 1-2 months of pay for every year worked at the company.

Some states require that any amounts owed to the employee must be paid on the date of termination - not on the next available pay cycle.

Additional Information

Employers located outside of the US should be aware of the nuances of healthcare and employment benefits in the United States.

OVERVIEW
Language(s):
English
Currency:
US Dollar (USD)
Capital City:
Washington, D.C.
Population:
335 Million
Cost of Living Rank:
15th
VAT (Valued Added Tax):
Varies by State
Employer TaxES
12%
(estimated)

★  6.2% - Social Security

★  1.45% - Medicare

★  4.35% - State Tax (average)

Get Started in 3 Steps

1

Remote candidate

You've sourced a full-time employee or contractor located in a country where your company is not incorporated.

2

Cost Calculation

Pass us the details of your candidate and we will let you know exactly what it costs to employ your candidate in that country.

3

Onboarding & Admin

Sit back and relax as we onboard your new team member and take care of all the local compliances and admin work.

Same-day onboarding
Best Pricing
Available in 180+ countries
How Remofirst employs in United States (USA)

It can be prohibitively expensive to establish an entity in every country you want to hire talent in, so Remofirst will hire and pay your employee on your behalf while you manage their daily duties. Remofirst will handle formal HR procedures and employment contracts that adhere to local laws, so that you can simply approve invoices via our platform. When you work with an Employer of Record (EOR) you can compliantly hire the best employees around the world.

How employees in United States (USA) get paid
Your employee's hours, time off, holidays, bonuses, and commissions are automatically calculated into payroll. Remofirst will invoice you in either US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), Australian Dollars (AUD), or Singapore Dollars (SGD) around the 15th of each month to make sure your employees in United States (USA) are paid on time in US Dollar (USD). To make it even easier, you can summarize your entire global team's salaries to aggregate them into one payment (instead of many individual payments).
Full-time Employees vs Global Contractors

Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.

Dependable support for employees
Whenever the employee or employer has a question about benefits, Visas, or anything else related to international employment in United States (USA), they can speak with our customer support team to get answers from our team of experts.