The USA has one of the most productive workforces in the world. For a hiring manager, USA’s highly literate population is a lucrative talent powerhouse, especially for those eyeing senior talent. The United States’ employment laws vary widely from state to state, with modifications made to the general federal laws. Hence, paperwork and compliance needs in the US are vast. An EOR can help companies navigate compliance risks when hiring in the USA.

Although the USA is one of the most employer-friendly countries, labor laws in the country constantly change. Compounding an employer’s woes are the state to state variations in labor laws. As political administrations change at both the federal and state levels, labor laws can also change. Recent years have seen frequent changes in areas such as minimum wage, family leave policies, and rules around gig work.

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Gloroots’ EOR in the USA can help navigate this changing landscape. We save the time spent on doing research to compliantly pay employees. 

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In addition to helping navigating compliance, EORs also helps with payrolling, benefits administration, and compliant separations for a fixed fee. This saves you the cost of hiring a legal team to craft compliant employment contracts. Additionally, this reduces repetitive, labor-intensive manual tasks for the Human Resources department.

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Generally, EOR services in the USA can cost you anywhere from $400 to $1000 per month per person depending on services you want. Typically, EORs charge fees in one of two ways - either a fixed price or a percentage of the employee’s salary. When partnering with an American EOR, always ask this when prospecting as each pricing model has its benefits. 

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At Gloroots, we charge a flat fee. This means that employers pay a fixed fee for each employee every month. There are no extra charges whatsoever, and hence no nasty surprises on your hiring budgets.

USA treats contractors, sole proprietors, self-employed individuals and full-time workers differently and there are significant risks associated with misclassification.

Payroll Cycle:

Each state has its laws governing the frequency of payroll. In most states, paying employees once or twice a month is required. In some circumstances, weekly payment may be necessary.‍

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Minimum Wage:

The federal minimum wage is set at USD 7.25 per hour as of 2022. Under state law, employees may be entitled to higher salaries, as many states have minimum wage requirements.

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Sick Pay:

The Family and Medical Leave Act (FMLA) permits workers who qualify to take up to twelve weeks of unpaid sick time per year. The worker is shielded from termination during this time.

Employees may request leave for the following reasons:

• Giving birth and caring for a newborn child
• Adoption of a child
• To take care of an immediate family member who is seriously unwell
• Personal injury or illness​

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Employees must have worked for the employer for at least a year, putting in at least 1,250 hours, in order to be eligible for medical leave. Additionally, work had to be done at a location with more than 50 personnel that was applicable to a 75-mile radar.

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In accordance with state or municipal legislation relevant to the location where they conduct business, employers may be required to offer sick pay.

Tax and Social security contribution:​

Employer Tax :

• 21% corporate tax
• each state levies different VAT rates

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Social Security :

At least 13.65% of an employee’s salary, including:

• 6.2% OASDI (Old-Age, Survivors, and Disability Insurance) on income up to USD 147,000
• 1.45% Medicare
• 6% FUTA (federal unemployment tax) on first USD 7,000 additional state unemployment taxes, rates vary between states
• further contributions may be levied at the state level

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Employee Tax :

Individual income is taxed at the federal and state level.

Federal income tax rates range from 10% to 37% *

Social Security :

7.65% to 8.55% of employee’s salary, including:

• 6.2% OASDI on income up to USD 147,000
• 1.45% Medicare
• additional 0.9% Medicare on income exceeding certain thresholds

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Notice Period:

Employers are only required to provide 60 days' notice in specific collective dismissal situations as specified under the Worker Adjustment and Retraining Notification Act (WARN).

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Probation period:

The probationary period should not exceed 60-90 days.

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Employment Termination and Severance:

In the United States, labor law permits so-called "at-will" termination, which means that employers can fire employees at any time, for any reason, as long as the reason for the firing is not illegal, such as discrimination or whistleblowing. When ending an employment relationship, neither employers nor employees are required to adhere to a notice period.

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Employers are only required to provide 60 days' notice in specific collective dismissal situations as specified under the Worker Adjustment and Retraining Notification Act (WARN).

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Severance pay is not required unless the employee's employment contract or any applicable collective agreement is provided. The majority of businesses, however, base their decision to provide severance compensation on the employee's length of service.

When hiring globally, ensuring compliance comes with its own set of battles. Employers must ensure all hiring and onboarding activities adhere to employment laws, payroll procedures, DE&I compliance, GDPR and similar data protection, etc. If you think it is hard to set up local entities and start hiring, keeping up with a dynamic compliance landscape is far harder. 

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Gloroots helps you minimise all these efforts by providing a single window to manage all these tasks. Our in-house experts fully shield you from cross-border employment and payroll compliance risks. They do this by helping you with generating employment contracts, on-time payments, compliant benefits, while you focus only on screening talent. 

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Our promise is a stress-free global employment experience for both you and your employee.

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Contact our experts today to kickstart your global hiring campaign.

Growing a team means hiring the right employees at the right time and for the appropriate positions. Employers in the United States must have a local legal organization and use local resources to handle compliance, payroll, tax, and benefits management. The complexity of employment regulations in the United States makes compliance with employment laws demanding.

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With Gloroots’s global Employer of Record (EoR) service, you can let Gloroots do the heavy lifting of payroll, tax, benefits, and compliance and concentrate on what matters to you most: your employees and company growth.