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Employer of Record in United States
Hire employees in the United States through an Employer of Record (EOR) without setting up a local entity. This comprehensive guide explains United States's labour laws, payroll, taxes, benefits, and compliance requirements so you can build a compliant United States workforce with confidence.
What is an Employer of Record in United States?
An Employer of Record in United States is a third-party organisation that legally employs workers on behalf of foreign companies. The EOR takes full legal responsibility for the employment relationship under United States's law, while the client company directs the employee's daily work and performance.
This arrangement allows international businesses to hire United States professionals quickly and compliantly without establishing a local entity. It is particularly useful for startups, growing businesses, and enterprises exploring the United States market for the first time. The EOR manages all employment obligations, including contracts, payroll, tax filings, social contributions, benefits, and ongoing compliance with local labour laws.
Why Hire in United States?
The United States is the world's largest economy by nominal GDP (~USD 27 trillion) with a population of approximately 336 million. The U.S. labour market is exceptionally large (168 million workers), diverse, and dynamic, with world-leading clusters in technology (Silicon Valley, Seattle, Austin, Boston, NYC), finance (Wall Street, Chicago), healthcare and biotech (Boston, San Diego, San Francisco), entertainment (Los Angeles), and aerospace (Seattle, LA, Atlanta). The U.S. is a federation of 50 states plus DC and territories.
The U.S. employment system is uniquely employer-friendly among OECD jurisdictions, characterised by at-will employment (49 of 50 states), no mandatory paid annual leave, no federal mandatory paid sick leave (though 18+ states/DC and many cities have mandates), no statutory severance, and no statutory probation period. Federal floor (FLSA, Title VII, ADA, FMLA, ADEA, OSHA) is supplemented by frequently more-stringent state laws. Multi-state employers face complex compliance obligations.
Top employers in the United States include Walmart, Amazon, Apple, UnitedHealth, Berkshire Hathaway, the U.S. Federal Government, McDonald's, Target, Kroger, Home Depot, JPMorgan Chase, AT&T, Microsoft, Google/Alphabet, Meta, IBM, and the major universities and hospital systems. The Department of Labor, IRS, and 50 state labour and tax authorities oversee compliance. The 2026 increase in the Social Security wage base to USD 184,500 and Roth catch-up rule for high earners are key planning issues.
What Are the Quick Facts About United States?
Before hiring in United States, it helps to understand the basic country profile at a glance.
| Category | Details |
|---|---|
| Capital | Washington, D.C. |
| Official Language | English (de facto national language; no constitutional official language at federal level); Spanish, Chinese, Tagalog, Vietnamese, French and many other languages widely spoken |
| Currency | United States Dollar (USD) |
| Time Zone | Six standard time zones from UTC-5 (Eastern) to UTC-10 (Hawaii); Daylight Saving Time observed in most states March to November |
| Population | Approximately 336 million |
| Status | Federal constitutional republic; founding member of the United Nations, World Bank, IMF, NATO, and OECD; member of USMCA (formerly NAFTA) with Canada and Mexico; world's largest economy by nominal GDP |
| Major Industries | Information technology and software (Silicon Valley, Seattle, Austin, Boston), financial services (New York, Chicago), healthcare and pharmaceuticals, aerospace and defense, automotive (Detroit), entertainment and media (Los Angeles), professional services, advanced manufacturing, agriculture, energy |
| Workforce Profile | Highly diverse, multilingual workforce of approximately 168 million; world-leading specialisation in technology, finance, healthcare, biotech; strong at-will employment culture in most states; significant variation by state in labour protections; ~10% union density |
What Are the Employment Laws in United States?
Employment relationships in United States are primarily governed by the Federal: Fair Labor Standards Act (FLSA) of 1938 (minimum wage, overtime, child labor); Title VII Civil Rights Act of 1964; ADEA, ADA, FMLA, OSHA, NLRA, ERISA; plus 50 state labor codes (e.g. California Labor Code, New York Labor Law). This legislation regulates every aspect of the employment relationship, including contracts, working hours, leave entitlements, termination procedures, and workplace rights.
Written employment contracts are mandatory in United States and must be drafted in English (no statutory requirement; English standard); written contracts not legally required for most employees; offer letters and employee handbooks are typical. Every contract must specify the job description, salary, working hours, probation period, benefits, and termination terms. Both fixed-term and indefinite-term contracts are permitted under United States's law. Fixed-term contracts cannot exceed No federal cap on fixed-term contracts; at-will employment is the default in 49 of 50 states (Montana being the exception); fixed-term contracts must be honored to their term, including any renewals.
The standard probation period for most roles is capped at No statutory probation period at federal level; 90-day introductory periods are common but legally meaningless under at-will employment; Montana the exception. During probation, either the employer or the employee may terminate the relationship with shortened notice as specified by law or the employment contract.
What Are the Working Hours and Overtime Rules in United States?
The standard workweek in United States is 40 hours per week is the FLSA threshold for overtime; many states and industries have additional rules (e.g. California 8 hours/day overtime trigger). The maximum weekly working time, including overtime, is No federal maximum; FLSA requires overtime above 40 hours/week for non-exempt employees; California, Alaska, Nevada, etc. have daily overtime triggers. Rest periods and overtime premiums are also regulated by law.
| Factor | Standard |
|---|---|
| Standard Workweek | 40 hours per week is the FLSA threshold for overtime; many states and industries have additional rules (e.g. California 8 hours/day overtime trigger) |
| Maximum Weekly Hours | No federal maximum; FLSA requires overtime above 40 hours/week for non-exempt employees; California, Alaska, Nevada, etc. have daily overtime triggers |
| Weekday Overtime Pay | +50% premium (i.e. 1.5x base = time-and-a-half) for non-exempt employees over 40 hours/week federally; California requires daily overtime above 8 hours; double-time above 12 hours |
| Weekend/Holiday Overtime | No federal weekend premium; some states and CBAs require enhanced rates |
| Night Work Premium | No federal night premium; some states and union contracts include shift differentials |
| Minimum Daily Rest | No federal minimum daily rest; some states (e.g. California) require meal/rest breaks of 30 mins after 5 hours and 10 mins per 4 hours |
| Minimum Weekly Rest | No federal weekly rest mandate; some states require one day of rest in seven (e.g. New York, California, Illinois) |
What Leave Entitlements Apply in United States?
United States employees enjoy comprehensive leave entitlements, including annual leave, public holidays, sick leave, maternity leave, and paternity leave.
| Leave Type | Entitlement |
|---|---|
| Annual Leave | No federal mandate for paid annual leave (uniquely among OECD nations); paid time off (PTO) is set by employer policy; typical norms 10-20 days/year for full-time; some states (e.g. California) accrue mandatory paid sick leave |
| Public Holidays | 11 federal holidays observed by federal government and most large employers; private sector observance varies by company policy |
| Sick Leave (Short-term) | No federal paid sick leave mandate; FMLA provides 12 weeks unpaid job-protected leave (50+ employees); 18 states and DC plus many cities mandate paid sick leave (e.g. CA 1 hour per 30 worked, NY based on employer size) |
| Sick Leave (Long-term) | FMLA: 12 weeks unpaid in 12-month period for own or family member's serious health condition (50+ employees within 75 miles, employees with 12+ months tenure); paid family leave available in CA, NJ, NY, RI, WA, MA, CT, OR, CO, DC, DE, MD |
| Maternity Leave | No federal paid maternity leave mandate; FMLA provides 12 weeks unpaid job-protected leave (50+ employee threshold); 13 states have paid family leave (e.g. CA up to 8 weeks at ~70-90% of wages, NY 12 weeks at 67%) |
| Maternity Pay | 100% of wage where state PFL applies (rates vary by state, typically 60-90% of wages); 0% under federal FMLA which is unpaid only; many large employers offer paid parental leave as benefit |
| Paternity Leave | Same FMLA framework (12 weeks unpaid) applies to fathers and same-sex partners; state PFL programs include fathers; many tech and finance employers offer 12-26 weeks paid parental leave |
Public Holidays Observed: New Year's Day (1 January), Martin Luther King Jr. Day (3rd Monday in January), Presidents' Day (3rd Monday in February), Memorial Day (last Monday in May), Juneteenth (19 June, federal holiday since 2021), Independence Day (4 July), Labor Day (1st Monday in September), Columbus Day / Indigenous Peoples' Day (2nd Monday in October), Veterans Day (11 November), Thanksgiving (4th Thursday in November), Christmas Day (25 December). When federal holidays fall on weekends they are typically observed on Friday or Monday. State and city holidays vary widely.
What Is the Minimum Wage and Average Salary in United States?
The federal minimum wage in the United States is USD 7.25 per hour (~EUR 6.70), unchanged since July 2009 — the longest period without a federal increase in U.S. history. Most states and many cities have set higher minimum wages: as of 2025-2026, California, Connecticut, Massachusetts, New York, New Jersey, Washington, and others are at USD 15-17/hour; some cities (Seattle, San Francisco, NYC, Denver) exceed USD 18-20/hour. Tipped employees may be paid USD 2.13/hour federally provided tips bring them to the full minimum wage. The One Big Beautiful Bill Act of 2025 (OBBBA) introduced new tax provisions including limited tip and overtime tax exemptions for 2025-2028. Note: figures are indicative; an EOR confirms applicable federal, state, and city minimum wage and any prevailing wage requirements before contracting.
| Salary Category | Monthly Amount (USD) | EUR |
|---|---|---|
| Customer Support / Call Center | USD 35,000 - USD 55,000 | Variable by state; remote-first roles common |
| Junior Software Engineer | USD 75,000 - USD 130,000 | Higher in SF Bay, Seattle, NYC, Boston |
| Mid-Level Software Engineer | USD 130,000 - USD 220,000 | Total comp including stock; FAANG and elite firms higher |
| Senior Engineer / Tech Lead | USD 220,000 - USD 450,000+ | Total comp; stock-heavy at public tech companies |
| Compliance Officer (Banking) | USD 90,000 - USD 200,000 | FINRA, OCC, FDIC regulated; New York concentration |
| Senior Banker / Trader | USD 250,000 - USD 1,500,000+ | Total comp incl. bonus; Wall Street, Chicago, Boston |
| VP / Director | USD 200,000 - USD 600,000+ | Significant stock and bonus components |
Salaries paid via direct deposit (most common), check, or pay card; pay frequency ranges from weekly to monthly depending on state law and industry. Federal withholding (income tax, FICA), state withholding, and any local taxes are deducted by the employer. Form W-4 governs employee withholding. Employers file Form 941 quarterly; W-2 annually. Retroactive Roth catch-up rule from 2026: employees age 50+ earning over USD 145,000 in prior FICA wages must make 401(k) catch-up on Roth basis. 13th-month salary is NOT mandatory or customary in the U.S. Performance bonuses, signing bonuses, retention bonuses, and equity grants (RSUs, stock options, ESPP) are very common — particularly in technology and finance. The OBBBA of 2025 introduced a temporary tax exemption for tipped income and overtime pay (subject to limits) for tax years 2025-2028.
How Do Taxes and Social Contributions Work in United States?
United States requires both employers and employees to contribute to social security, and personal income tax is withheld at source by the employer.
Employee Income Tax
| Monthly / Annual Income | Tax Rate |
|---|---|
| Federal income tax (10% bracket, 2026) | Up to USD 12,400 (single) / USD 24,800 (MFJ) — 10% |
| 12% bracket | Up to USD 50,400 (single) / USD 100,800 (MFJ) |
| 22% bracket | Up to USD 107,500 (single) / USD 215,000 (MFJ) |
| 24% bracket | Up to USD 205,000 (single) / USD 410,000 (MFJ) |
| 32% / 35% brackets | Up to USD 261,000 / USD 653,000 (single) |
| 37% top bracket | Above USD 653,000 (single) / USD 783,500 (MFJ) |
| Standard Deduction 2026 | USD 16,100 (single), USD 32,200 (MFJ), USD 24,150 (HoH) |
| State income tax | Varies: 0% (TX, FL, WA, NV, TN, NH, AK, SD, WY) to 13.3% (CA top) |
Social Security and Health Contributions
| Contribution Type | Employer | Employee | Total |
|---|---|---|---|
| Social Security (OASDI) | 6.2% | 6.2% | 12.4% — capped at USD 184,500 in 2026 |
| Medicare (HI) | 1.45% | 1.45% | 2.9% — uncapped |
| Additional Medicare Tax | — | 0.9% | Wages above USD 200K (single) / 250K (MFJ); employer withholds at 200K |
| FUTA (Federal Unemployment) | 0.6% effective on first USD 7,000 | — | After state credit |
| SUTA (State Unemployment) | Varies 0.5%-10% on first USD 7K-USD 60K depending on state | — | Experience-rated |
| State Disability / PFL | Varies (CA, NY, NJ, RI, WA, MA, CT, OR, CO, DC, DE, MD) | Varies | Employee or shared funded |
Note: Contributions are calculated on gross salary up to a statutory ceiling where applicable. Rates are reviewed periodically.
What Are the Mandatory Employee Benefits in United States?
All employees in United States are entitled to statutory benefits under the labour code, and many employers add supplementary benefits to attract top talent.
| Mandatory Benefits | Common Supplementary Benefits |
|---|---|
| Paid annual leave | Private health insurance |
| Paid public holidays | Meal vouchers or allowance |
| Paid sick leave | Transportation allowance |
| Maternity and paternity leave | Performance bonuses |
| Social security coverage | Professional development budget |
| Health insurance | Flexible or remote work options |
| Pension contributions | 13th-month salary (some sectors) |
| Workplace safety protection | Stock options or equity |
How Do Termination and Severance Work in United States?
Termination rules in United States depend on the employee's tenure. The labour code strictly defines notice periods and severance pay.
Notice Periods by Tenure
| Length of Service | Notice Period |
|---|---|
| At-will termination | 0 days notice required by either party in 49 states |
| Montana (post-probation) | Just-cause termination required after probation |
| Mass layoff (WARN Act) | 60 days advance notice required for 100+ employees |
| Plant closing (WARN Act) | 60 days advance notice required for affected sites |
| Some state mini-WARN Acts | Lower thresholds (e.g. NY 50+, CA 75+) |
Severance Pay
| Years of Service | Severance Entitlement |
|---|---|
| Statutory severance (federal) | None — no federal mandate for severance pay |
| Mass layoff (WARN Act) | 60 days pay if notice not given |
| Contractual severance | Common for executives and through severance plans |
| Wrongful termination | Compensatory and punitive damages possible |
| Unemployment Insurance | Funded by SUTA; weekly benefits for 26 weeks |
Legal Grounds for Termination
Employment in United States can be terminated by mutual agreement, voluntary resignation, the natural expiration of a fixed-term contract, just cause due to serious misconduct, or economic and organisational reasons, with proper notice.
Protected Categories
United States labour law offers special protection against termination for pregnant employees, employees on maternity or paternity leave, employees on sick leave, and trade union representatives.
What Are the Work Permit and Visa Requirements in United States?
The U.S. work-permit framework is among the most complex globally. Foreign nationals require a visa or green card to work; the most common employment-based visas are H-1B (specialty occupation, capped at 85,000/year), L-1 (intracompany transfer, no cap), O-1 (extraordinary ability), TN (USMCA Canadians and Mexicans), and various employment-based green cards (EB-1 through EB-5). USMCA citizens of Canada and Mexico have streamlined access via TN visas.
| Permit Type | Purpose | Issuing Authority |
|---|---|---|
| H-1B Specialty Occupation | Annual cap 65,000 + 20,000 master's; 3-year initial visa | USCIS Department of Homeland Security |
| L-1 Intracompany Transfer | L-1A managers/executives, L-1B specialised knowledge; no cap; up to 7/5 years | USCIS |
| O-1 Extraordinary Ability | For top-of-field professionals in arts, sciences, business; no cap | USCIS |
| TN (USMCA) | For Canadian and Mexican professionals; specified occupations; renewable | USCIS / CBP |
| E-2 Treaty Investor | For investors from treaty countries; no cap; renewable | USCIS |
| Green Card / Permanent Residence | Employment-based EB-1 through EB-5 categories | USCIS |
Processing typically takes H-1B: annual lottery in March; petition processing 4-12 months without premium, 15 calendar days with premium (USD 2,805 fee); L-1: 1-3 months; O-1: 1-3 months; TN: same-day at port of entry; Green Card: highly variable (years to decades by country), depending on documentation and administrative workload. The United States is NOT a member of the EU. The U.S. is a member of USMCA (with Canada and Mexico — replaced NAFTA in July 2020), the OECD, the G7, the G20, NATO, and many other multilateral bodies. EU citizens require a U.S. visa to work; the Visa Waiver Program covers tourist/business stays up to 90 days but does NOT permit employment.
How Do You Hire in United States Through an EOR?
The hiring process through an Employer of Record typically follows five clear stages, from candidate selection to ongoing compliance management.
| Step | Action | Responsibility |
|---|---|---|
| 1 | Identify and select the United States candidate | Client company |
| 2 | Engage an EOR and sign a service agreement | Client + EOR |
| 3 | Issue a written English (no statutory requirement; English standard); written contracts not legally required for most employees; offer letters and employee handbooks are typical-language contract | EOR (legal employer) |
| 4 | Register the employee with tax and social security | EOR |
| 5 | Process monthly payroll and maintain compliance | EOR |
Should You Set Up a Local Entity in United States Instead?
For companies with significant long-term investment plans in United States, establishing a local entity may be a viable alternative to using an EOR.
| Entity Type | Description | Best For |
|---|---|---|
| LLC (Limited Liability Company) | Most common; flexible; pass-through taxation default | Trading, services, IT, manufacturing |
| C Corporation | Separate tax entity; standard for VC-funded startups | Public companies, VC-backed startups |
| S Corporation | Pass-through taxation; up to 100 shareholders; U.S. only | Small businesses, professional services |
| Sole Proprietorship | Single owner; unlimited liability | Self-employed, freelancers |
| Partnership / LP / LLP | General, limited, or limited liability variants | Professional services, real estate |
| Branch / Foreign Qualified Entity | Foreign HQ has full liability; must register in each state | Foreign banks, contractors |
| Branch via EOR | Compliant hiring without setting up U.S. entity | Foreign companies hiring 1-100 staff |
Setting up a U.S. LLC or C Corp varies dramatically by state. Delaware C Corp incorporation takes 1-3 weeks plus federal EIN issuance (1-4 weeks), plus state qualification in every state of operation, plus state and federal payroll registrations (4-8 weeks). For most companies hiring fewer than 50 employees, engaging an Employer of Record is dramatically faster: onboarding in 5-10 business days versus 8-16 weeks for full multi-state entity setup.
EOR vs Local Entity vs Contractor — Which Is Right for You?
Comparing the three main hiring models helps you choose the right approach for your United States workforce.
| Factor | Employer of Record | Own Legal Entity | Freelancer / Contractor |
|---|---|---|---|
| Setup Time | 5-10 business days from signed engagement letter to first compliant payroll cycle and federal/state withholding registration | Several weeks to months | Immediate |
| Setup Cost | Low | High | Very low |
| Compliance | Handled by EOR | Your responsibility | Misclassification risk |
| Statutory Benefits | Fully provided | Must manage yourself | Typically none |
| Control Over Staff | High | Full | Limited |
| IP Protection | Strong | Strong | Often weak |
| Best For | Small to medium teams | Long-term major presence | Short-term specialists |
What Common Hiring Mistakes Should You Avoid in United States?
Companies new to hiring in United States often encounter several common pitfalls. Misclassifying employees as independent contractors is a significant risk, as United States has clear legal distinctions between the two, and reclassification can lead to penalties and back payments.
Failing to issue written employment contracts in English (no statutory requirement; English standard); written contracts not legally required for most employees; offer letters and employee handbooks are typical is another frequent error, as verbal or foreign-language agreements may not be legally enforceable. Ignoring collective bargaining agreements in regulated sectors can lead to compliance issues, as can miscalculating social security contributions since rates and ceilings are periodically updated.
Skipping proper documentation of probation periods can inadvertently extend employee protections beyond what the employer intended. Finally, providing inadequate notice of termination or failing to follow proper dismissal procedures can expose companies to compensation claims and legal disputes.
Which Industries Are Hiring Most in United States?
Several key industries drive United States's labour market, each offering a distinct talent pool for international employers.
| Industry | Key Roles | Talent Highlights |
|---|---|---|
| Information Technology & Software | Software Engineer, DevOps, Data Scientist, Product Manager | Silicon Valley, Seattle, Austin, NYC, Boston: FAANG, OpenAI, Anthropic |
| Financial Services & Banking | Banker, Trader, Quant, Compliance Officer, Risk Manager | Wall Street: JPMorgan, Goldman Sachs, Morgan Stanley, BlackRock |
| Healthcare & Pharmaceuticals | Physician, Nurse, Researcher, Regulatory Affairs | Pfizer, J&J, Merck, Mayo Clinic, UnitedHealth |
| Aerospace & Defense | Aerospace Engineer, Systems Engineer, Cyber, Program Manager | Boeing, Lockheed Martin, Raytheon, SpaceX |
| Entertainment & Media | Producer, Writer, Director, VFX Artist | Hollywood: Disney, Warner Bros, Netflix, Paramount |
| Automotive & Mobility | Automotive Engineer, Battery Engineer, Production | Detroit Big Three (GM, Ford, Stellantis), Tesla, Rivian |
| Energy & Utilities | Petroleum Engineer, Renewable Energy, Grid Engineer | ExxonMobil, Chevron, NextEra |
| Professional Services | Consultant, Lawyer, Accountant, Auditor | McKinsey, Deloitte, BCG, Bain, PwC, EY, KPMG |
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Disclaimer
This guide is provided for educational and informational purposes only. United States's labour laws, tax rates, and social contribution percentages are subject to change. Always consult a qualified Employer of Record provider, local legal counsel, or certified tax advisor before making hiring or employment decisions in United States.
United States
Hiring in the United States requires a clear understanding of federal and state labour laws, payroll obligations, and statutory benefits. Our country-specific guide for the United States helps employers navigate salary expectations, federal and state tax structures, FICA (Social Security and Medicare) and unemployment insurance contributions, working hours under the FLSA, leave entitlements, at-will employment standards, and termination rules across all 50 states.
Whether you're recruiting healthcare professionals in New York, tech and hospitality staff in San Francisco and Los Angeles, or manufacturing and construction workers across Chicago, Houston, Dallas, Atlanta, Miami, and Seattle, AtoZ Serwis Plus ensures every hire is fully compliant with US federal and state regulations.
From employment contracts and work visas (including H-1B, H-2B, and EB classifications) to onboarding and ongoing HR support, we help you make data-driven hiring decisions and avoid costly compliance mistakes — so you can build a reliable, locally compliant workforce across all 50 states and the District of Columbia.
