How to hire employees in the USA: Process, costs & more in 2026

To hire in the United States of America, businesses have to either set up a local entity, partner with an EOR, or hire an independent contractor to manage the process seamlessly. 

With a civilian labor force of over 150 million people, the United States has a talented workforce across all sectors, from technology and finance to healthcare and manufacturing. American workers are most suited for businesses seeking to expand their global workforce.

However, the process of hiring in the United States of America is not as simple as it seems. With federal wage and tax regulations, state regulations, and stringent worker classification rules, engaging employees in the United States of America requires a steep learning curve to ensure compliance.

In this guide, we will take you through everything you need to know about engaging local talent, onboarding procedures, essential labor regulations, and how to remain compliant during the hiring process.

An Employer of Record (EOR), like Payoneer Workforce Management, helps streamline the process so you can focus on the core business.

Hiring employees in the United States of America? Payoneer Workforce Management assists with onboarding, tax obligations, employment contracts, and more. Book a demo today!

How to hire in the United States of America?

There are a few options to choose from when you want to hire in the United States of America. You can either set up a local entity in the country, hire an independent contractor, or partner with an EOR provider. Choose the option that seems most suitable for your business. With an EOR provider, such as Payoneer Workforce Management, businesses can enjoy seamless talent engagement in the country. 

Here are the details and a brief comparison of the three options:

Setting up a local entity	Engage independent contractors	Partnering with an EOR
– With a legal entity in the U.S., the business can have control over the management of the local workforce.  – The business has the option to form either an LLC, a C Corporation, or a branch office. – The process involves business registrations with the federal and state governments, obtaining an EIN from the IRS, and other requirements. The process is quite resource-intensive. – Ideal for long-term plans to establish a large presence in the U.S.	– Ideal for businesses looking to hire for project-based work. Must follow special regulations in the U.S. governing worker classification.  – Misclassifying employees as contractors can lead to fines & penalties imposed by the IRS and the Department of Labor. – Use a contractor management tool to help onboard contractors compliantly and reduce costly classification mistakes.	– Legally employ workers on behalf of your business with an Employer of Record (EOR). – Businesses can enter the U.S. market and engage employees without establishing a local presence. – The EOR partner helps with employment matters in the USA, including employment contracts, payroll, taxes, benefits, and compliance. – The EOR helps simplify the process of engaging talent in the United States and supports local compliance.

Here is a working example of hiring in the USA through an EOR. For instance, a German company is looking to hire a Marketing Manager in Texas, USA, without opening a US subsidiary. One of the quickest solutions for the German company is to partner with an EOR. 

After candidate selection, the EOR issues the employment contract. Moreover, the EOR manages payroll, tax withholding, and compliance. Most importantly, the employee can start working within a few days rather than months. 

The German company successfully and legally employs the employee in the USA without creating a local entity. 

Where to find employees in the United States of America?

To find the right employees in the USA, businesses have to tap into a diverse range of recruitment channels. From major job boards to university career fairs, staffing agencies, and professional networks, employers have numerous avenues to source talent. Choosing the right mix of platforms depends on the industry, role, and hiring timeline. 

Here are some of the most popular options:

1. Using LinkedIn or other job posting sites such as Indeed, Glassdoor, or ZipRecruiter is a good option. Employers must communicate the job requirements and benefits clearly when advertising the job post. 
2. There are industry-specific job posting sites as well, like Dice (for tech-based jobs) and Idealist (for non-profit jobs). 
3. The United States has various degree-granting institutions, making campus recruiting programs and internship pipelines a great way for companies to build relationships with young talent. 
4. Staffing and recruitment agencies often have a pool of pre-screened candidates and understand the local labor market conditions. They can also be used to fill both temporary and full-time positions.

What happens if you hire in the United States of America without an EOR?

When you hire in the United States of America without an EOR, it means that the business is operating without a legal employer on record. In the USA’s multi-layered employment environments, not bridging this gap can prove to be costly. Hiring without an EOR is not just an HR issue; it can lead to serious legal, tax, and compliance issues. 

This table compares hiring in the USA with and without an EOR:

Important parameters	Hiring without an EOR	Hiring with EOR
Entity requirement	The business must incorporate a US entity (C-Corp, LLC, or subsidiary) before hiring in the relevant state.	There is no entity requirement. The EOR’s US entity offers coverage.
Employment contracts	Employment contracts issued by a foreign entity with no US presence are unenforceable legally. This might lead to breach claims.	The employment contracts are fully compliant with federal law (ADA, FMLA, and FLSA) and applicable state law.
Form I-9 & Work Authorization	The USA has strict immigration laws. Hiring without the correct work authorization can lead to audits, fines, and bans from future employer sponsorship.	The EOR handles I-9 verification and E-Verify compliance.
Federal Payroll Taxes (FICA)	There is no mechanism for a foreign country to remit FICA without a US EIN and a registered entity. Non-remittance triggers IRS penalties and interest.	EOR withholds and remits employer plus employee Social Security (6.2%) and Medicare (1.45%) contributions.
Legal employer	For a foreign company, no legal employer exists without a US entity. Hence, payroll cannot be run legally.	The EOR is the registered legal employer.
Worker misclassification risk	As per the US Department of Labor, almost 30% of employers misclassify at least one worker. For a single error, separate cases can open with the DOL, IRS, and state agencies.	An EOR supports proper W-2 employee classification, ruling out misclassification risks and penalties.
Onboarding speed	It takes a few weeks to even months to onboard employees without an EOR. Before a lawful hire, state incorporation, EIN registration, state tax registrations, and benefits setup must all be complete.	It takes just a few days for the complete onboarding process, as the EOR already holds the US entity and state registrations.

Book a demo today to see how Payoneer Workforce Management’s EOR can support you with employment in the U.S.

How do I onboard employees in the United States of America?

Onboarding employees in the United States of America might take a couple of weeks. Here are the five steps that businesses have to follow to onboard employees successfully in the country:

1. Verifying the identity and work authorization by completing Form I-9
2. Collecting the tax withholding form (Form W-4)
3. Handling state-specific requirements with particular paperwork
4. Signing the employment agreement 
5. Enrolling in the applicable benefits

The details are as follows:

1. Verify identity and work authorization

Every U.S. employer is required to complete Form I-9 for each hired individual. 

Employees must complete Section 1 of the form on the first day of employment. Employers must verify identity and employment authorization documents within three business days of the hiring date.

With this form, employees have to submit the following documents: 

List A documents – to verify identity and work authorization	List B documents – to verify identity	List C documents – to verify work authorization
– Valid U.S. Passport or U.S. Passport Card – Permanent Resident Card (Form I-551)Foreign passport with a temporary I-551 stamp or a printed immigrant visa notation – Employment Authorization Document (Form I-766) with photo – Foreign passport with Form I-94/I-94A and a valid work authorization endorsement – Passport from the Federated States of Micronesia or the Republic of the Marshall Islands with Form I-94/I-94A under the Compact of Free Association	– State-issued driver’s license or ID with photo or identifying details – Federal, state, or local government-issued ID with photo or identifying details – School ID card with photo – Voter registration card – U.S. military ID or draft record – Military dependent ID card -U.S. Coast Guard Merchant Mariner Card – Native American tribal document – Canadian government-issued driver’s license	– U.S. Social Security Card – Certification of Birth Abroad (Forms DS-1350, FS-545, FS-240) – Original or certified U.S. birth certificate with official seal – Native American tribal document – U.S. Citizen ID Card (Form I-197) – Resident Citizen ID Card (Form I-179) – DHS-issued Employment Authorization Document

Note: Employees may choose one document from List A or a combination of one document from List B.

2. Collect tax withholding forms

New employees must complete Form W-4 (Employee’s Withholding Certificate) to calculate federal income taxes withheld. This form captures filing status and additional withholding choices. Most states also require a separate form for state income taxes.

3. Address state-specific requirements

Some states have their own requirements for onboarding that go beyond federal regulations. These may include state tax withholding forms, new hire reporting to state agencies, and required workplace postings about employee rights.

4. Sign the employment agreement

The U.S. is a primarily “at-will” employment environment, but signing an offer letter or employment contract helps to establish key terms. These usually include job title, salary, eligibility for benefits, work location, and any confidentiality or non-compete agreements

5. Enroll in benefits

Private health insurance is not mandatory in the United States, but many employers offer medical, vision, and dental coverage as part of their benefits package. 

What are the key employment laws and requirements in the United States of America?

The key employment regulations in the United States operate at the federal, state, and local levels. From the Fair Labor Standards Act (FLSA) governing wages and overtime to anti-discrimination protections under Title VII, ADA, and ADEA, and more, employers must comply with a layered framework to stay legally protected. 

 You may be required to comply with applicable employment laws as follows: 

• Wage and hour laws: The Fair Labor Standards Act (FLSA) sets the federal minimum wage at $7.25 per hour. However, the minimum wage in many states may be higher.

The FLSA also requires that overtime pay be 1.5 times the regular rate for work in excess of 40 hours in a workweek. Certain executive, administrative, and professional employees are exempt from overtime pay if they meet certain salary and job-duty tests. 

The current federal minimum salary requirement for exemption is $684 per week ($35,568 per year).

• Family and medical leave: The Family and Medical Leave Act (FMLA) requires that employers with 50 or more employees provide leave for up to 12 weeks. Eligible reasons for FMLA include the birth or adoption of a child, the care of a family member with a serious health condition, or the employee’s own serious health condition.

• Workplace safety: The Occupational Safety and Health Act requires employers to provide a workplace free from recognized hazards. The Occupational Safety and Health Administration (OSHA) sets and enforces protective standards.

Employment contracts

Employment contracts in the United States of America define the relationship between an employee and employer. The employment contract mainly outlines the duties and responsibilities, designation, compensation, probation, notice period, leave, and termination conditions. 

There are mainly two kinds of employment contracts that are common in the USA. They are:

• Fixed-term contracts – These contracts are for a fixed time period and are mainly used for particular projects, etc. Unless renewed, the contract ends on the end date that is mentioned. 
• At-will agreements – In this agreement, there is no specific end date of the contract. The contract can be ended by the employee or the employer at any time. 

Here are some of the important points that an employment contract in the USA must contain:

• Identity of the employee and the employer
• Job description with duties and responsibilities
• Working hours and overtime hours (if any)
• Employee benefits
• Leave entitlements
• Probation and notice period
• Termination and conditions
• Dispute resolution, etc. 

Employee benefits

Employees in the United States of America are entitled to several benefits from their employers. Some of the most prominent employee benefits include:

Benefits	Details
Annual leave	There is no mandated paid or unpaid annual leave in the USA. However, many employers provide such leave to employees based on company policy and agreements. However, it has to align with state-based employment laws.
Sick leave	FMLA covers sick leave in the USA. Employees are entitled to up to 12 weeks of unpaid sick leave.
Public holidays	There are 11 public holidays in the USA.
Maternity leave	Female employees are entitled to 12 weeks of unpaid maternity leave. However, state-wise policy might vary for this leave.
Childcare leave	Childcare leave in the USA is similar to that of maternity leave. Employees can get 12 weeks of unpaid leave.
Public health insurance	Public healthcare coverage is of various types in the USA. It includes Health Plans (HMOs), health insurance, and various public programs like Medicare and Medicaid.  – Medicare is administered by the Centres for Medicare & Medicaid Services. This is a federal insurance program. This is mainly for elderly individuals above 65 years of age, people with end-stage renal disease, and younger people with disabilities.  – Medicaid is a joint federal and state-funded program offering health coverage to children, pregnant women, low-income adults, and people with disabilities.
Social security	Employees are entitled to Social Security benefits, such as disability benefits, retirement benefits, and survivor benefits.

Working hours and holidays

Working hours in the USA are 40 hours a week. 

Overtime pay is obligatory for certain job categories under federal law (FLSA). This also applies to certain states in the country. For some job roles, the overtime is bundled within the salary. 

There are 11 public holidays in the USA. They are as follows:

• New Year’s Day 
• Birthday of Martin Luther King, Jr 
• Washington’s Birthday (Presidents’ Day) 
• Memorial Day 
• Juneteenth National Independence Day 
• Independence Day 
• Labor Day 
• Columbus Day 
• Veterans Day 
• Thanksgiving Day 
• Christmas Day 

Payroll tax obligations

Employers must withhold and remit several types of employment taxes. These include:

• Federal income tax based on the employee’s W-4 elections 
• Social Security tax at 6.2% employer share and 6.2% employee share
• Medicare tax at 1.45% each for the employer and employee 
• Additional Medicare Tax of 0.9% on wages exceeding $200,000 
• Employers also pay Federal Unemployment Tax (FUTA) at 6% on the first $7,000 of wages per employee.

Employers must deposit withheld taxes according to IRS schedules using the Electronic Federal Tax Payment System (EFTPS). Most employers file Form 941 quarterly to report these taxes.

State-level variations

State of the union laws may also include additional benefits for employees beyond the federal requirements. 

These include higher minimum wage rates (some states pay more than $15 an hour), paid family and medical leave, paid sick leave, and tougher overtime exemption rules in states such as California, New York, and Washington.

Because each state has its own requirements, managing multi-state compliance can get complicated fast. Here is a working example:  

State	Unique Leave/Benefit
California	State Disability Insurance (SDI), Paid Family Leave (PFL), double-time overtime
Colorado	+4 weeks maternity for complications, domestic violence leave (3 days)
Delaware	Organ donation leave (30 days for state employees)
Illinois	Blood donation leave (1 hr/56 days), school leave (8 hrs), domestic violence leave (4-12 weeks by company size)
Massachusetts	Extended state FMLA (20 weeks vs. 12), jury duty (3 days paid)
New Jersey	Different minimum wage for small employers ($11.10 for ≤5 employees)
New York	Paid prenatal leave (20 hrs from 2025), tiered sick leave by employer size
North Carolina	School volunteer leave (4 hrs/year)
Utah	Paid witness leave when subpoenaed
Washington	State employees get 31 days of paid military leave

Termination and Severance

In the United States, terminations may occur under several scenarios. These include employee resignation, mutual agreement between the employer and employee, termination during the probationary period, or dismissal by the employer for reasons such as misconduct, performance issues, or absence without leave.

Because employment in the U.S. generally follows an at‑will framework, either party may end the employment relationship at any time. Although not legally required, providing a two‑week notice is a common practice across most workplaces.

There are no statutory severance pay requirements in the United States. Any severance offered depends entirely on employer policy, employment agreements, or discretionary arrangements.

Ready to explore Payoneer Workforce Management in the United States of America?

Payoneer Workforce Management is a unified platform that helps employ full-time employees and independent contractors in 160+ countries, including the United States, without setting up a local legal entity.

With the EOR platform, businesses can onboard local talent quickly and compliantly, run and streamline global payroll securely, understand local employment laws, and support taxes, benefits, timesheets, and more.

Hiring and workforce management in the United States of America can get complicated, especially when businesses are managing multiple states, tax jurisdictions, and compliance requirements. 

From fast onboarding to multi-state compliance support, Payoneer Workforce Management gives your business everything it needs to engage employees in the United States of America and beyond.

Book a demo to talk to our experts.