If you’re expanding your business into the U.S. for the first time, there are important legal requirements to be aware of. These norms and laws influence hiring practices in the U.S. and many aspects of the employer-employee relationship, including compensation and benefits.
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Here are five things to know about hiring in the U.S.
1. At-will employment and termination in the United States
Most U.S. states have at-will employment. Employers can terminate employees at any time, for any legal reason (or no reason), and employees can leave their jobs at any time, for any reason, without legal penalty. Notice and severance pay are not legally required in most cases, though many employers provide them as a courtesy or for higher-level roles.
Employment contracts aren’t standard for most U.S. employees, except for executives or specialized positions. Most workers are hired without a formal contract. Montana is the only state that doesn’t follow the at-will doctrine after a probationary period. Exceptions to at-will employment still apply, such as terminations that violate anti-discrimination laws, public policy, or an existing employment contract.
2. Payroll and taxes in the United States
Employers have to add employees to payroll, withhold federal (and usually state) income taxes, and remit these to tax authorities. Both employers and employees contribute 6.2% of wages to social security.
Employees are subject to federal income tax withholding. This is progressive and ranges from 10–37%. State income tax rates and brackets vary by state. Some states have no income tax, while others have flat or progressive rates. Employers and employees contribute 1.45% to Medicare, with an extra 0.9% employee-only Medicare tax for high earners.
3. Standard working hours in the U.S.
The workweek in the U.S. is 40 hours, spread across eight hours per day, five days per week. Alternative schedules in healthcare and other industries are common. Some companies offer shorter workweeks or part-time roles. For overtime, the U.S. law distinguishes between exempt and nonexempt employees under the Fair Labor Standards Act (FLSA):
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Exempt employees (usually salaried, in executive, administrative, professional, or certain creative roles) don’t get overtime pay.
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Nonexempt employees are entitled to overtime pay at 1.5 times their regular hourly wage. An employee making USD 10 per hour would make USD 15 per hour in overtime.
4. Employee benefits in the U.S.
Private employers don’t have to provide paid vacation, paid sick leave, or paid parental leave.
The Affordable Care Act (ACA) requires employers with 50 or more full-time employees to offer affordable, minimum essential health coverage. Smaller employers can access the Small Business Health Options Program (SHOP) and can be eligible for tax credits. Employer-sponsored health insurance is a big part of compensation. Out-of-pocket costs for U.S. employees remain among the highest in the world.
The Family and Medical Leave Act (FMLA) provides up to 12 weeks of unpaid, job-protected leave for certain family and medical reasons, but only for employees at companies with 50 or more employees and who meet eligibility requirements.
The U.S. has 10 federal holidays. Private employers aren’t required by law to provide these days off or pay extra for work on holidays.
5. State and federal regulations in the United States
U.S. employment regulations are a blend of state and federal laws. For instance, federal law imposes a minimum wage, currently USD 7.25 per hour. However, individual states can impose higher minimum wage laws if they choose.
In Montana, the minimum wage is USD 8.75 per hour. In New York, it’s USD 15 per hour. In Wyoming, it’s USD 5.15 per hour.
Federal law requires employees to prove they’re eligible to work in the U.S. No matter what state they plan to work in, global employees have to be prepared to show valid work visas.