The United States is the world's largest talent market and mostly at-will, but employer costs and compliance vary state by state. All-in employer cost runs around 1.1x the gross salary, driven by federal payroll taxes plus state unemployment insurance. Here is what to know before your first US hire.
Employment is primarily at-will and governed by a layer of federal law (the FLSA, FMLA, and ADA) plus state rules on wages, leave, and final pay. There is no national statutory paid vacation, and registration for payroll tax, workers' compensation, and state unemployment is required in every state where you employ someone.
The federal minimum is $7.25 per hour, but most states and many cities set higher floors (California and Washington sit above $16*). The applicable rate is wherever the employee works.
Bi-weekly or semi-monthly is standard. There is no statutory 13th salary, and bonuses are discretionary or contractual.
There are 11 federal holidays, but private employers are not legally required to give paid time off for them. Practice is set by company policy.
Offer letters usually confirm at-will status. Form I-9 work authorization and state new-hire reporting are mandatory. There is no statutory probation period.
Employer costs are modest by global standards, around 11% on top of salary, made up of federal payroll taxes and state unemployment insurance. Health insurance is the big variable, customary but not federally mandated for smaller employers.
Social Security applies up to an annual wage base ($168,600 in 2024*); Medicare has no cap and adds a 0.9% employee surtax on high earners. FUTA applies only to the first $7,000 of wages.
Employees pay federal income tax (10-37%), their matching Social Security and Medicare, and in most states a state income tax. Withholding and deposits are the employer's responsibility, which under EOR means ours.
There is no federal statutory paid vacation. Employers set PTO by policy, with 10 to 15 days common, and some states regulate payout of accrued PTO on exit.
The FMLA gives eligible employees up to 12 weeks of job-protected but unpaid leave. A growing number of states (California, New York, and others) run paid family-leave programs funded by payroll contributions.
There is no federal paid sick leave, but many states and cities mandate accrued paid sick time. Coverage depends on where the employee works.
Jury duty, military service (USERRA), and voting leave are protected. Bereavement and other leave are typically policy-based.
Employment is at-will in 49 states, so either side can usually end it without notice or cause, subject to anti-discrimination law. The federal WARN Act requires 60 days' notice only for large layoffs.
There is no statutory severance. It is offered by policy or negotiated, often in exchange for a release of claims.
The timing of final pay is set by state law, from immediately on termination to the next regular payday, and some states require payout of accrued vacation.
Misclassifying an employee as a 1099 contractor triggers back taxes, benefits, and penalties. Tests vary (the IRS common-law test, California's stricter ABC test), and enforcement is active.
*All figures are estimates from public sources (2025-26), pending ops verification - same basis as the EOR cost calculator. Not tax or legal advice.
Compliant multi-state employment, payroll, tax registration, and benefits, handled. One invoice, flat $399 per month.