Before hiring employees in the United States, there are some key things you’ll need to know. Firstly, there’s no legally-required notice period for termination in the US, and either party can end an employment contract at will for any lawful reason at any time.
In the US, employment contracts are unusual for non-executives. Offer letters alone are enough to provide notice of job particulars. It’s also important to be aware that provisions like minimum wage, overtime rules and pay, and paid time vary by state.
We know keeping track of all this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform.
Get an overview of what you need to know when hiring in the United States below.
In the US, employees typically work 40 hours per week.
Eligible employees are paid overtime (one and half times their regular rate of pay) for all hours over 40 in a workweek or, in some states, if they work more than 8 or 12 hours in a single workday. In some states, employees are also entitled to overtime for work performed on the seventh consecutive day of work. And, in California, employees who work more than 12 hours in a day, or who work more than 8 hours on a seventh consecutive day of work, are entitled to double their regular rate of pay.
Employment contracts are unusual for non-executives. Offer letters will suffice to provide notice of job particulars.
Formal probationary periods are not common in the United States because employers can ordinarily terminate employment without cause at any time, without notice or severance obligation.
Employees are employed ‘at will’ and employers are not legally mandated to provide them with a formal notice period for termination. Therefore, either party can terminate the employment relationship with no notice, provided it is not for an unlawful reason. However, some employment agreements can specify a notice period.
Employers' ability to enforce non-compete agreements varies from state to state.
Right now, no state law requires an employer to pay its former employees remuneration during the period of the non-compete agreement. However, some employers can choose to compensate their former employees for this with an amount that varies by state and position.
There is no statutory requirement to pay employees for time off for vacations or holidays in the United States. The typical amount of vacation, sick leave, or paid time off (PTO) varies from 10-20 days per year.
Some private employers might also provide PTO for federal holidays. In addition, many states have their own public holidays that employers may recognize.
Employers in the United States are not legally mandated to offer paid sick leave. However, under the Family Medical Leave Act (FMLA), eligible employees are entitled to up to 12 weeks of unpaid, job-protected leave per year if they have worked.
To be eligible, employees must:
And the employer is either:
Employees in the US are entitled to up to 12 weeks of unpaid, job-protected parental leave under the FMLA.
Both parents are entitled to the same period (12 weeks) unless they work for the same employer, in which case, childcare-related leave must be split between them.
Employers in the United States are required to make social contributions of 10-15% for each employee’s salary.
The breakdown is as follows:
Employees in the United States are taxed between 10% and 37% depending on their income bracket. Employees also make social security contributions totalling 13.65%.
Severance pay is not legally mandated in the US and is typically a matter of agreement between an employer and an employee. When agreed upon, it can be included in employment contracts. Some employers choose to offer severance pay based on the employee’s length of service.
Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast.
We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities.
With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.