Using an Employer of Record in the United States (US)

If you’re looking to hire and engage talent in the United States (US), it’s important that you understand and comply with local labor and employment laws.

This process can be complicated, but working with an Employer of Record (EOR) in the United States, like Payoneer Workforce Management, can help.

Find out more about hiring and paying employees in the United States with Payoneer Workforce Management, or keep reading to learn how working with an Employer of Record in the United States can benefit your business.

How to hire employees in the United States

There are three main ways to hire employees in the United States:

1. Set up a local entity: If you choose to set up a local entity in the United States, you’ll maintain full operational control of the business, but there are high setup costs involved.

2. Hire independent contractors or freelancers: This is a flexible option if you require talent for a short-term project. However, be careful not to misclassify employees as contractors or freelancers, or you could risk financial penalties.

3. Hire employees through an EOR in the United States: When you work with an Employer of Record in the United States, you can employ local talent without setting up a local entity. An EOR can help you manage United States payroll, taxes, benefits, and navigate local compliance requirements.

Payoneer Workforce Management enables compliant onboarding of talent in 160+ countries without having to set up a legal entity.

How to onboard employees in the United States

The process of onboarding employees in the United States involves several essential steps, such as issuing compliant contracts, collecting key employee documents and information, and setting up payroll and benefits.

When hiring through an Employer of Record in the United States, general onboarding process include:

• Enrollment in payroll and benefits: The local talent must be enrolled with payroll and benefits, as per local legal entitlements.
• Device shipment and configuration: It can take around 12 to 14 days for a new device shipment.
• Orientation: Arrange an orientation session during the local hire’s first week to explain company procedures, the onboarding process, and their responsibilities in their new role.
• Introduction to team and colleagues: Schedule time for the local talent to get to know the team and wider business colleagues.

Payoneer Workforce Management enables companies to compliantly engage talent across borders through its technology platform.

Pay employees in the United States (US)

To keep your business compliant with local labor laws, it’s important to pay employees in the United States on time and accurately. 

Here are the key details you need to know about United States payroll management.

Key payroll information

Here is some key information about running payroll in the U.S.:

• Payout currency: U.S. Dollar (USD)
• Pay date: 15th and last working day of the month
• Federal minimum wages: USD 7.25 per hour (each state also has its own minimum wage)

Income tax

The United States has a progressive, federal income tax, and rates vary by income. Here are the federal tax rates for single filers in the U.S.:

Income range (USD)	Federal income tax rate
0 to 11,925	10%
11,925 to 48,475	12%
48,475 to 103,350	22%
103,350 to 197,300	24%
197,300 to 250,525	32%
250,525 to 625,350	35%
626,350 and above	37%

Each state also has its own income tax regulations. Some states have a flat-rate income tax on all income levels, some have progressive rates, and some do not collect income taxes at all. Always check the regulations in your employee’s state.

Social security

In the U.S., employers are responsible for withholding an employee’s Social Security and Medicare contributions from their salary.

Social security provides financial protection to employees, including retirement, disability, and survivor benefits. 

Contribution type	Employer rate	Employee rate	Total
Social security	6.2%	6.2%	12.4%
Medicare	1.45%	1.45%	2.9%

Other employer costs

There will be additional employer costs related to variable components of an employee’s salary, such as annual benefits.

Other employee benefits

Here are some of the additional benefits your U.S. employees may be entitled to:

• Public health insurance: There are several types of public healthcare available in the U.S, including health insurance, health plans (HMOs), and public programs like Medicare and Medi-Cal.
• Private health insurance: Private health insurance can cover medical, vision, and dental care for employees. Premiums start from USD 552 per annum for employees, and plans can cover both them and their families.

When you choose to work with an Employer of Record, United States employees can be paid easily and compliantly. Payoneer Workforce Management’s unified, all-in-one platform gives you a single dashboard to manage your entire global workforce.

Employment laws in the United States

Here are key employment laws in the United States.

Working hours

In the United States, the standard workweek is 40 hours.

Overtime hours

Overtime pay is mandatory under federal law (FLSA) and in some states. Some exemptions are in place for specific roles where the salary already accounts for overtime hours.

Probation period

Probationary periods are not statutory in the United States, as employment is at will. 

Notice period

Notice periods vary depending on the type of employment. While both the employer and employee can terminate employment immediately in the U.S, a 2-week notice period is standard practice both during and after the probation period.

Stay compliant with local labor laws using Payoneer Workforce Management’s infrastructure.

Minimum wage in the United States

The federal minimum wage in the United States for non-exempt employees is USD 7.25 per hour.

It’s important to note that individual states have their own minimum wage, so always check the local regulations in your employee’s state.

Employment contracts in the United States

Employment contracts in the U.S. should include the following information:

• Employer’s name and address
• Employee’s name and address
• Start date and length of employment
• Job title and duties
• Place of work
• Working hours
• Rate of pay, pay date, and overtime pay

With Payoneer Workforce Management as your EOR partner, you can onboard talent quickly and securely with localized contracts and payroll.

Leave policy in the United States

Here are key details of the United States’ leave policy.

Public holidays

There are 11 annual public holidays in the U.S. View the complete list of public holidays here. Individual states may also have additional public holidays, so it’s best to check local regulations.

Vacation time

While it is not mandatory to offer paid or unpaid vacation leave in the U.S., many employers do. 

Leave carry-forward policies depend on specific state laws. Some states allow employees to carry forward a limited amount of leave.

Maternity leave

New mothers in the U.S. are entitled to 12 weeks of unpaid maternity leave.

Paternity leave

Federal regulations do not address paternity leave, but it is covered under the parental leave allowance under the Family and Medical Leave Act (FMLA).

Childcare leave

U.S. employees are entitled to 12 weeks of unpaid childcare leave.

Sick leave

Employees are entitled to 12 weeks of unpaid leave under the FMLA.

Other leave

Here are some other types of leave in the United States:

• Compassionate leave: Though not federally mandated, many employers offer compassionate leave policies. Some states also mandate that employers must offer bereavement leave to their employees.
• Voting leave: Employees receive up to 2 hours of leave on election day.
• Workers’ compensation leave: This applies to employees injured while working. The duration of leave depends on injury recovery.

Work permit in the United States

The rules for obtaining a work permit in the U.S. depend on the employee’s country of origin. 

Check the government website for more detailed information.

Background checks in the United States

Background checks can be carried out before you hire an employee. These might include checks on employment history, educational history, or social media checks.

You will likely need the employee’s consent before conducting any background checks. You’ll also need to comply with local background check requirements. Always check local regulations before carrying out background checks.

Employment termination in the United States

Employment termination in the U.S. is a complex process, so it’s essential to understand the legal responsibilities you have as an employer.

Employment in the U.S. is at-will. This means that employment can be terminated immediately in any of the following scenarios:

• Employee resignation
• Mutual agreement between the employee and the employer
• Termination during probationary period
• Termination by the employer due to performance issues, misconduct, absence without leave, etc

While employment at will allows either the employer or the employee to terminate at any time, a 2-week notice period is still customary practice in the U.S.

There are no statutory provisions for severance pay in the U.S.

Company registration in the United States

If you want to build a significant workforce in the U.S., you may be considering registering your business there.

There are several complex steps involved in registering a company in the U.S. Check relevant government websites for more information.

If you’re looking for a quicker and more cost-effective way to hire talent remotely, an Employer of Record in the United States can help. 

Payoneer Workforce Management enables compliant onboarding of talent in 160+ countries without having to set up a legal entity.

PEO in the United States

A Professional Employer Organization (PEO) in the United States can support HR and payroll functions, but requires you to have a legal entity in-country. 

On the other hand, an Employer of Record in the United States does not require a legal entity and instead serves as the legal employer for local talent. This typically makes it the better choice for companies new to the American market.

Explore Payoneer Workforce Management’s services in the United States

Payoneer Workforce Management helps growing companies onboard, pay, and manage employees in the United States without setting up a local entity. 

As your EOR in the United States, we offer assistance with employment contracts, benefits administration, taxes, and payroll, while you retain control over daily operations.

Book a demo to learn more about Payoneer Workforce Management.

FAQs

1) What is an Employer of Record in the United States?

An EOR in the United States is a third-party organization that legally employs talent on behalf of your business.

2) How much does it cost to hire in the United States?

The cost of hiring employees in the United States varies by salary level. For example, for an employee with an annual salary of USD 60,000, the employer’s costs will be approximately 17% per year. You can use our cost calculator tool for a more accurate estimate.

3) Why hire U.S. talent through an EOR?

With a United States EOR like Payoneer Workforce Management, you can onboard local employees without setting up a local entity and pay independent contractors in 70 currencies. With transparent pricing, you can get a better vision of expansion spend, which may help you focus on your business growth. Get in touch today to learn more.