United States

Currency CurrencyUnited States Dollar (USD) Working Time Work Week40 hours Employer Taxes Employer Taxes at least 13.65%

Hire in United States

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U.S. employment regulations are very flexible and offer employers a lot of freedom when it comes to negotiating the terms of employment. Employee protection is minimal as employment in the U.S. is “at will”, meaning employers enjoy great flexibility in their hiring and termination processes. Also, there are very few legally enforced benefits which must be granted to employees.

What’s more, U.S. universities enjoy international prestige, with several of the world’s top ten universities being based in the United States, including Harvard and Stanford. Therefore, it’s hardly surprising that many companies decide to go searching for fresh talent in the U.S. employment market.

Basic Facts about the United States

  1. official state name United States of America
  2. capital Washington D.C.
  3. population 332.5 million
  4. languages English
  5. currency United States Dollar (USD)
  6. time zone UTC -4 to UTC -10
  1. Show public holidays
    01 Jan New Year*
    18 Jan Martin Luther King Jr. Day
    15 Feb President's Day
    31 May Memorial Day
    04 Jul Independence Day*
    06 Sep Labor Day
    11 Oct Columbus Day
    11 Nov Veterans Day
    25 Nov Thanksgiving
    25 Dec Christmas Day*

    In addition to these public holidays which are observed on the federal level, there are numerous holidays which are only observed in specific states or regions. *In years where these federal holidays fall on a weekend, they are observed on either the day before or after the weekend they occur on.

Employment Contract

As there are no special regulations, an employment contract in the U.S. can have many different forms. There is no legal requirement for a written contract and many employees are hired without a proper employment contract. Instead, their employment is purely based on a written offer of employment outlining the general terms and conditions that regulate their employment relationship. 

However, it is common for employers to put a written employment contract in place when hiring employees in high positions. In these cases, the employment contract might include the following information:

  • Identification of both parties 
  • Workplace
  • Job description, duties and responsibilities
  • Basic salary as well as other compensation or benefits
  • Working hours 
  • Total number of holidays
  • Causes for employment termination

Employers and employees are basically free to negotiate the terms of employment as they wish as long as they observe existing employment law regulations. Employment agreements can be concluded for either an indefinite period or a fixed term although U.S. law does not set any limits for the duration of fixed-term contracts.

Probation Period

Probationary periods are legally permitted. As there are no official regulations on trial periods, they can range from one up to twelve months. If an employee is subject to probation, this should be clearly stated in his or her offer letter or in the employment contract.

Working time

General working conditions such as working hours and overtime pay are regulated by the Fair Labor Standards Act (FLSA). However, not all employees working in the private sector are covered by its regulations.

Working Hours and Breaks

A standard working week normally comprises 40 hours but regulations on breaks and rest periods differ from state to state. In may states, there are legal provisions for an unpaid 30-minute lunch break after a certain number of hours. Some but not all states also rule that employees must have at least one proper rest day per week.

Overtime

For employees under the FLSA, any work beyond a 40-hour week is considered overtime. According to the FLSA, employers should remunerate any additional hour at a rate of 150% of the employee’s usual wages. There are no limits on how many hours an employee can work on top of normal hours.

Payroll

Payroll frequency is regulated by each state individually. In most states, it is mandatory to pay employees once or twice a month. In some cases, weekly payment may be necessary.

Minimum Wage

As of 2021, the federal minimum wage is USD 7.25 per hour. However, many states have their own minimum wage regulations and employees may be entitled to higher wages under state law.

Sick Pay

Employees who are covered by the Family and Medical Leave Act (FMLA) can take up to twelve weeks of unpaid sick leave per year. During this time, the employee is protected from dismissal. Reasons for which employees can claim leave include:

  • birth and childcare for a newborn baby
  • child adoption
  • need to care for a seriously ill direct family member
  • personal illness or injury

In order to claim medical leave, employees must have worked for the employer for at least twelve months, during which they must have completed at least 1,250 hours of work. In addition, work must have been carried out at a company office counting more than 50 employees – applicable on a 75-mile radar.

Employers may be obligated to provide sick pay under state, county or municipal laws that apply in the area where they operate their business.

Bonuses

There is no legislation on bonus payments.

Taxes and Social Security Contribution

Employees and employers in the United States are subject to the following tax and social security contribution rates:

Taxes
employers

21% corporate tax

different VAT rates are levied by each state

employees

individual income is taxed at federal and state level

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

social security
employers

at least 13.65% of employee’s salary including:

6.2% OASDI (Old-Age, Survivors, and Disability Insurance) on income up to USD 137,700

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 on state level

employees

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

6.2% OASDI on income up to USD 137,700

1.45% Medicare

additional 0.9% Medicare on income exceeding certain thresholds

Read more

Individual income is taxed on federal and state level. State rates vary. Federal tax is levied at seven different rates with thresholds varying depending on the employee’s tax status, i.e. married filing jointly, married filing separately, single or head of household (a single person with a dependent in the home). Rates for individuals are set as follows (as of 2021):

– up to USD 9,950: 10%

– up to USD 40,525: 12%

– up to USD 86,375: 22%

– up to USD 164,925: 24%

– up to USD 209,425: 32%

– up to USD 523,600: 35%

– over USD 523,600: 37%

Additional income tax is levied on state level. 

Employee Benefits

Annual Leave

There is no federal law which mandates employers to provide their employees with paid annual leave nor paid time off on the occasion of the ten federal public holidays. In fact, under federal law, employees are not even entitled to time off on these days.

However, it is common practice among employers to give their employees a paid day off on these occasions as well as to offer between one and three weeks of paid annual leave. In some states, it is mandatory to pay higher rates for work performed on public holidays.

Maternity Leave and Paternity Leave

There are no legal provisions for maternity or paternity leave on federal level other than the regulations applying under the Family and Medical Leave Act (FMLA). See section on sick leave.

Some states have introduced special maternity leave for employees who are not covered by the FMLA.

Parental Leave

There are no legal provisions for parental leave other than the regulations applying under the Family and Medical Leave Act (FMLA). See section on sick leave.

Additional Leave and Benefits

Employers and employees may negotiate further benefits such as paid sick leave, paid vacation days and paid parental leave. Also, it is common to provide employees with additional benefits such as disability, health, life or dental insurance.

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Employment termination

U.S. labour law supports so-called “at will” termination which means that employers can dismiss employees at any time with or without reason – as long as the reason for dismissal is not illegal, e.g. linked to discrimination or whistleblowing. Neither employers nor employees have to respect a notice period when terminating the employment relationship.

The only notice period employers have to observe is 60 days in certain cases of collective dismissal as outlined under the Worker Adjustment and Retraining Notification Act (WARN).

Unless specified in the employee’s employment contract or in any applying collective agreement, severance pay is not necessary. However, most employers decide to offer severance pay based on the employee’s length of service.

Hiring in the United States?

Not sure if you should start with a contractor or go ahead and hire a full-time teammate in the United States? The Lano platform makes it easy to go from freelance to full-time employee. Get expert guidance from the Lano team to compare your options and keep growing.