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Globalpedia

Employer of Record (EOR) in UsUnited States

Population

333,287,557

Languages

1.

English

Country Capital

Washington, D.C.

Currency

U.S. dollar ($) (USD)

G-P’s Employer of Record (EOR) model allows your company to start hiring talent in minutes via our global entity infrastructure. Unlike a Professional Employer Organization (PEO), G-P allows your company to expand your global footprint without the hassle of entity setup and management.

Our global employment products, including G-P Meridian Prime™ and G-P Meridian Core™, are backed by the largest team of HR and legal experts in the industry. We handle the growing complexities of compliant global expansion — so you can focus on opportunities ahead.

As a global EOR expert, we manage payroll, employment contract best practices, statutory and market norm benefits, employee expenses, as well as severance and termination. You’ll have peace of mind knowing you have a team of dedicated employment experts assisting with every hire. G-P allows you to harness the talent of the brightest people in 180+ countries around the world, quickly and easily.

Hiring in the U.S.

Contract negotiation is part of the process when a company wants to hire an employee in the U.S. Employees are likely to do a considerable amount of research on salary trends before they are offered a position and often come to the table ready to negotiate.

Salary information is easily available through sources such as the Bureau of Labor Statistics’ Occupational Outlook Handbook, which also provides expected employment growth for a wide variety of positions. In addition, pay transparency laws in some states require salary information to be included within the job posting – and it’s not uncommon for companies within states that do not require this to also make salary information publicly available.

Employment contracts in the U.S.

In the majority of the U.S. employment is typically on an “at-will” basis. “At-will” means that an employee is free to quit or leave their job at any time, for any reason, without notice. It also means that an employer is free to terminate an employee for any reason, at any time, without notice. “For any reason” does have some exceptions on the part of the employer. An employer can’t fire a person for an unlawful reason, including on the basis of their sex, race, religion, age, mental or physical disabilities, or national origin under the country’s Equal Opportunity Employment laws. Some states prohibit terminations based on additional reasons such as gender and sexual orientation or expression. The only state in the U.S. with limited at-will employment is Montana. In Montana, to terminate a worker after their probationary period of up to 18 months, an employer needs a specific cause.

Although many workers in the U.S. are at-will, the language in an employee’s contract ultimately defines the relationship between employee and employer. For example, an employee might sign a contract with a company that stipulates they can only be terminated for cause. The contract can then detail the causes that could lead to the employee’s termination.

Contracts in the U.S. can take multiple forms. Each type of contract is legally enforceable, but some can be easier to prove than others. For example, a written contract between the employer and employee might be the most desirable for either party. With a written contract, the terms of employment are clearly spelled out, including the person’s salary, benefits, and their expected working hours. A written contract can also describe whether a person is an at-will employee or not.

Oral contracts and implied contracts are also legally enforceable in the U.S. but create more disputes and are more difficult to prove if either party needs to take legal action against the other. When a contract is merely a verbal agreement between an employer and employee, it often comes down to one person’s word against the other’s.

Working hours in the U.S.

The standard U.S. workweek is 40 hours. The average employee works 8 hours a day, 5 days a week (Monday through Friday). However, there is a considerable amount of variation among jobs. Some positions are part-time, meaning a person works less than 40 hours per week. Others require more than 40 hours and might pay overtime to an employee who works more than 40 hours in a single week.

Exempt employees aren’t eligible for overtime, no matter how many hours they work a week. Employees who are exempt from overtime laws typically include those in managerial or executive positions, some administrative positions, creative jobs, and professional positions. Exempt employees receive a salary rather than an hourly wage.

Holidays in the U.S.

The U.S. recognizes 8 holidays as federal holidays:

  • New Year’s Day (January 1st)
  • Memorial Day (4th Monday in May)
  • Juneteenth (June 19th)
  • Independence Day (July 4th)
  • Labor Day (First Monday in September)
  • Thanksgiving Day (4th Thursday in November)
  • Day after Thanksgiving Day (4th Friday in November)
  • Christmas Day (December 25th)

Employees of the federal government are given those holidays off. Banks, the postal service, and government offices are closed on federal holidays as well. State governments may have additional holidays that they observe. While private employers are not required to follow suit, many do observe the same holidays and either offer their employees paid time off for holidays or give them the option of taking those days off.

Vacation days in the U.S.

With few exceptions, vacation leave is not required by law in the U.S. However, it is a common benefit decided on an individual basis between employees and employers.

U.S. sick leave

The U.S. generally does not require employers to provide employees with paid sick leave. If an employee does need to take time off due to illness, they are allowed to up to 12 weeks of unpaid sick leave per year, under the Family and Medical Leave Act (FMLA). The Act applies to companies with more than 50 employees within a 75-mile area. To qualify for leave under FMLA, an employee needs to have worked at least 1,250 hours with a company over the previous 12 months.

Although employers aren’t legally required to offer paid sick leave to their team, it is one of the more common benefits for employees in the U.S. Paid time off for illness is more common at larger companies and at companies in the public sector. Some states and municipalities in the U.S. do have specific paid sick leave laws, even though the federal government does not. The laws vary from state to state or among counties or cities in the same state, and might cover full-time, part-time, and seasonal employees in some areas or only full-time employees in others.

Maternity/paternity leave in the U.S.

When a person gives birth or adds a child to their family, they are allowed to take up to 12 weeks of unpaid time off, under the FMLA, provided the employer has at least 50 employees within 75 miles and provided the employee has worked at least 1,250 hours over the past 12 months.

The U.S. is one of the only countries in the world that does not require paid parental leave. Although paid time off for maternity or paternity leave is not legally required at the federal level in the U.S., a few states do mandate paid parental leave. Additionally, some companies offer it as a way to be competitive and foster a workplace that’s desirable to talent.

Health insurance in the U.S.

Although employers in the U.S. aren’t required to provide health insurance benefits to employees, the Affordable Care Act (ACA) penalizes certain employers who fail to do so. The rules and expectations for health insurance vary based on the size of the employer. Generally, companies that employ more than 50 people are expected to follow different rules compared to companies that employ less than 50 people.

The ACA also introduced tax credits for small businesses to help make the cost of health insurance coverage more affordable.

U.S. supplementary benefits

An employer might offer additional employee benefits that are not required by law in the U.S. Some common supplemental benefits an employer might make available are:

  • Defined benefit plans, also called pensions.
  • Defined contribution plans, such as 401(k) or 403(b) retirement plans.
  • Flexible scheduling.
  • Life insurance benefits.
  • Childcare assistance.

Bonuses

In the U.S., bonuses are not required by law. Bonuses are payments employers make to employees in addition to their normal earnings to incentivize them to achieve certain outcomes or accomplish specific goals. An employer might reward an employee for going above and beyond with their work or for succeeding during a particularly challenging situation. Companies also often offer their team members bonuses at the end of the year or during the winter holidays. These bonuses might be based on the employee’s overall performance during the year or on how well the company itself has performed.

Although many bonuses are in the form of cash, they do not have to be. Some companies award their employees with gift cards or other types of prizes for a job well done.

Termination/severance in the U.S.

At-will employees in the U.S. can be terminated at any time without notice, and for any reason so long as the reason is not unlawful. Although some employers might give notice, it is not legally required to do so. An employee who wishes to leave their position might also give notice, such as 30 days or 2 weeks, but is not legally required to do so.

If an employee is terminated “through no fault of their own,” such as due to budget cuts at a company, they might be eligible to receive unemployment compensation from the government. A person needs to meet specific requirements to qualify to receive unemployment benefits, such as actively looking for a new job. The compensation is not meant to be permanent and usually expires after several months.

Employees who have health insurance from their employers are not immediately cut off from their policies after being terminated. Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), a former employee can continue to use their former employer’s health insurance for 18 months at an increased amount. They are also entitled to a special enrollment period and can begin to search for an individual or family policy on their own.

While severance is not legally required, some employers negotiate a severance package with the employees they are laying off in exchange for a release, or an employee may negotiate these terms with a company when they are first hired.

Paying taxes in the U.S.

Employers in the U.S. are responsible for withholding certain taxes from their employees’ pay and paying certain taxes every quarter. Payroll taxes in the U.S. include Social Security tax and Medicare tax, which is paid by both the employee and the employer. The rate for Social Security tax is 6.2%, and the Medicare tax rate is 1.45% for both employee and employer. Employers are also responsible for paying Federal Unemployment Tax for each employee.

Although employers in the U.S. are not required to withhold federal income tax from their employees’ pay, many do as a convenience for their team members. Depending on the location of the employer, many also withhold state and local income taxes.

Why G-P

At G-P, we help companies unlock the power of the everywhere workforce through our industry-leading Global Growth Platform™. Let us handle the complex and costly tasks involved in finding, hiring, onboarding, and paying your team members, anywhere in the world, with the speed and guaranteed global compliance your business needs.

Contact us today to learn more.

Disclaimer

THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.

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