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As the world’s largest economy with a gross domestic product (GDP) of USD 20.5 billion, the U.S. presents rich opportunities for international business. Its encouragement of free enterprise and the relative ease of doing business in the country make the U.S. a profitable place for companies to grow.
As you consider scaling in the U.S., expert advice can help you make successful choices. We’ve developed this guide to hiring employees in the U.S. so you can get the most value from your new teams.
What to know before hiring in the U.S.
Before hiring, your company will need a firm foundation of knowledge about topics like at-will employment, payroll and taxes, working hours, benefits, workforce makeup, and how to navigate federal and state regulations.
1. At-will employment and termination
Most companies in the U.S. operate on an at-will basis. Employees can leave their jobs at any time, for any reason. Companies can terminate their employees at will, with a few exceptions, without giving notice or providing redundancy pay.
Many companies do give notice as a courtesy, but the law does not require it. Some companies also negotiate severance pay, especially for higher-level executives.
The practice of at-will employment means signing formal employment contracts is not a common practice in the U.S. Some companies use them, especially for key executives or other important members of a firm. However, contracts are not standard.
The one exception to this general at-will rule is the state of Montana. In most circumstances, a company wishing to fire an employee in Montana must demonstrate just cause for the termination.
2. Payroll and taxes
When companies begin hiring new employees in the U.S., they must add them to their payrolls. They must withhold taxes and send them as employee contributions to Social Security programs. They must also contribute directly to Social Security for each employee. The current percentages for these contributions are 6.2 percent for employees and 6.2 percent for employers.
Your employees will also need to pay state and federal income taxes. Federal income taxes are divided into several tax brackets, with higher earners paying more in taxes. The tax percentages in these brackets range from 10 percent, the lowest, up to 37 percent, the highest. Tax rates vary by state.
3. Standard working hours
The standard workweek in the U.S. consists of 40 hours — eight hours per day, five days per week. However, variations on this schedule are common. Some companies require four 10-hour workdays with three days off. In the healthcare and extraction industries, even longer shifts are standard. Some companies operate on 35-hour workweeks, and some employees work part time.
Overtime is permissible in the U.S. within certain guidelines. Employees generally fall into two categories: exempt and nonexempt.
Exempt employees are excluded from overtime rules. These are generally salaried employees in specific executive, creative, or professional positions. They do not receive overtime pay even if they work more than 40 hours per week. Nonexempt employees are included in overtime rules. They must receive overtime pay for work beyond 40 hours.
Generally, employees working more than 40 hours in a week must receive 150 percent of their usual wages for any overtime hours. An employee making USD 10 per hour would make USD 15 per hour in overtime.
4. Employee benefits
Employee benefits in the U.S. can be a complicated subject. U.S. federal labor law does not guarantee employees the benefits available to many other employees worldwide. State laws step in to fill the gaps in some cases.
Healthcare benefits generally account for about 7.3 percent of total compensation. The Affordable Care Act (ACA) requires companies with more than 50 employees to provide their full-time workers with affordable minimum essential coverage. Smaller companies are eligible for small-business purchase options and tax credits.
The ACA also steps in to provide subsidized insurance for individuals who are not eligible for health insurance from any other source.
The average person in the U.S. pays USD 1,122 every year in out-of-pocket healthcare expenses. Only Swiss residents pay more. Without employer-subsidized health insurance, even basic medical care would be prohibitively expensive for many people. Your company will likely need to set aside a significant portion of its budget for health insurance coverage for its new hires.
As a whole, U.S. employees are not entitled to paid sick leave or vacation time. The U.S. has designated 10 federal holidays, but only federal employees are required to receive those days off.
Though the federal government does not mandate sick leave for employees, these states do:
- New Jersey
- New Mexico
- New York
- Rhode Island
Some municipalities mandate sick leave, as does Washington, DC. If your company operates in those areas, you will need to provide the required leave or risk noncompliance penalties. Some states mandate paid vacation and parental leave as well.
Unlike all other 192 United Nations members except Papua New Guinea, Suriname, and some small Pacific Island countries, the U.S. does not require paid parental leave. In some countries, new mothers receive up to a year and a half of paid maternity leave. In the U.S., mothers must receive 12 weeks of maternity leave if they qualify under the Family and Medical Leave Act (FMLA), but their companies can require them to take it unpaid.
FMLA does allow employees at certain larger companies to take 12 weeks of unpaid leave per year for medical or family reasons.
In practice, many companies choose to provide paid or unpaid vacation time, as well as paid sick leave and parental leave. These policies promote safer, healthier workplaces, help employers thank employees for their hard work, and make companies more appealing to talented job candidates.
Companies in the U.S. often offer additional, optional benefits, including dental and vision insurance, retirement plans, pension plans, life insurance, flexible scheduling, and child care assistance. At Globalization Partners, we require the companies that work with us to provide medical, dental, vision, life, and accidental death and dismemberment (AD&D) insurance, as well as 401(k) savings plans. Companies pay the premiums for the insurance plans.
5. Job market and workforce
The job market in the U.S. is relatively stable. During the Great Recession of 2007 to 2009, the unemployment rate reached a high of 9.3 percent. Since 2009, the unemployment rate has been declining steadily. It hit a low of 3.67 percent in 2019 before rising again in response to the Covid-19 pandemic.
The U.S. boasts a relatively skilled and educated workforce. According to the Bureau of Labor Statistics, 25.8 percent of U.S. workers have a high school diploma with no further education. An additional 27.5 percent have an associate’s degree or some college. Another 24.2 percent have a bachelor’s degree, and 14.7 percent have attained even higher education.
6. State and federal regulations
The U.S. differs from many other countries in that its employment regulations are a blend of state and federal laws. For instance, federal law imposes a minimum wage, currently USD 7.25 per hour. However, individual states can impose higher minimum wage laws if they choose.
In Montana, the minimum wage is USD 8.75 per hour. In New York, it is USD 15 per hour. In Wyoming, the state minimum wage is only USD 5.15 per hour. With a few exceptions for businesses like small farms and seasonal operations, most employers must pay whichever is higher, the state or federal minimum wage. A few other exceptions exist for tipped employees and very young employees.
Companies operating in the U.S. must take care to learn the details of federal tax and labor laws as well as the laws in their state. For instance, if a state has worker protection laws that differ from federal regulations, companies must comply with both.
Federal law also requires employees to prove they are eligible to work in the U.S. No matter what state they plan to work in, international employees should be prepared to show valid work visas.
Globalization Partners helps companies comply with U.S. laws by participating in E-Verify, a web-based program that helps employers confirm their employees’ eligibility to work in the U.S. Employees should fill out an I-9 that will be submitted to E-Verify to ensure compliance with U.S. Citizenship and Immigration Services (USCIS) requirements.
The cost of hiring an employee in the U.S.
The cost to hire employees in the U.S. is not a fixed figure. It will vary among different companies and industries. Your company should remember to budget for both the direct and indirect costs of hiring, including:
- Formal business establishment
- Job advertisements
- Managing recruitment
- Candidate interview process
- Payroll and taxes
- Other benefits
- Commissions and bonuses
Thirteenth-month bonuses are not standard in the U.S., though some companies offer end-of-year bonuses for a job well done. Companies may also offer smaller bonuses, such as employee-of-the-month prizes or peer recognition awards, throughout the year.
Hiring practices in the U.S.
When your company is hiring someone in the U.S., you may find the process very similar to the one in your country. Familiarizing yourself with essential U.S. hiring practices is always a good idea. That way, you can ensure you meet your candidates’ expectations and remain competitive as an employer.
Below are general hiring practices to keep in mind:
- Be prepared to negotiate: In the U.S., especially for salaried positions, employees commonly research the roles they apply to. They might determine the fair market rate for someone with their skills and qualifications or learn typical salaries for comparable positions. When your company makes employment offers, be prepared for your candidates to negotiate the terms of their salaries, benefits, or other perks. These conversations are a normal and expected part of the hiring process.
- Distinguish correctly between contractors and employees: Like many countries, the U.S. has different laws governing employees and contractors. The consequences for misclassification can be severe — years’ worth of back taxes and unpaid benefits, as well as financial penalties. Ensuring proper classification helps you avoid losses and provide fair compensation and benefits for your workers.
- Maintain equitable practices: Even though the U.S. generally operates with at-will employment, your company cannot always hire and fire at will. Equal opportunity laws prevent employers from discriminating on the basis of certain protected characteristics such as race, sex, age, sexual orientation, religion, or handicap.
What does a company need to hire in the U.S.?
One of the first steps to hiring in the U.S. is establishing a formal business entity. Many international companies choose to set up subsidiaries, which are extensions of their companies that they continue to control and be liable for.
Setting up a subsidiary is a tremendously time-intensive and labor-intensive process. If you choose to set up a subsidiary in the U.S., you will need to complete tasks like these:
- Selecting the right type of entity, such as a corporation or limited liability company (LLC)
- Choosing one of the 50 states in which to incorporate
- Registering your company name
- Locating and registering physical premises
- Opening a corporate bank account
- Obtaining a taxpayer identification number from the Internal Revenue Service (IRS)
- Complying with state and federal licensing regulations
The exact requirements for your formal establishment will vary with the type of entity you choose and the state in which you choose to incorporate. You will likely want to partner with employment experts who can help you navigate the complex web of federal and state laws.
Establishing a U.S. subsidiary can take weeks, if not months. Your company might alternatively elect to partner with a solution known as a global Employer of Record.
Because an Employer of Record like Globalization Partners already has an established presence in the U.S., your company can rely on our recruiting and hiring expertise. We act as the legal employer for your workers, freeing you from the necessity for lengthy, expensive setup requirements. Our global employment platform and in-country experts will ensure your company is compliant with local and federal regulations.
Hiring remote employees in the U.S.
When your company is ready to begin recruiting and interviewing, the distance between the two countries may present a challenge. You may need to rely on remote hiring if travel to the U.S. proves infeasible. Here are a few tips to streamline and simplify the process:
- Present a polished, coordinated front: Your company can boost its image by implementing as polished and professional an experience as possible. Try to outline the flow of your interview topics beforehand, and be sure you know how to use your remote meeting platform to avoid technical challenges and delays.
- Maintain flexibility: Especially if the U.S. and your country are in vastly different time zones, scheduling may require some negotiation. If you can, try to allow your candidates to choose interview times that work for them. They will likely appreciate your flexibility and view your company as a congenial place to work.
- Invest in quality onboarding: In some instances, your company may turn to remote onboarding as well. Onboarding is critical for introducing your new team members to your company culture and clarifying expectations. Be sure to implement comprehensive onboarding practices that give your employees the tools and insights they need to become fully integrated team members.
Additional tips for hiring in the U.S.
Below are a few more tips for successful U.S. hiring:
- Use English in communications: English is the official language in the U.S., and only 20.8 percent speak a language other than English at home. Communicating in English helps your company seem conversant in U.S. norms and sets you up for effective communications.
- Use local U.S. currency: Likewise, when you provide salary and benefit information to your new team members, use U.S. dollars. Many Americans have little experience with international currency conversions. Using U.S. dollars increases clarity for your U.S employees about their compensation.
Simplify building U.S. teams with Globalization Partners
When you’re ready for your company to grow in the U.S., Globalization Partners is here to help. Our comprehensive and AI-driven global employment platform enables you to manage and pay employees with just a few clicks, saving you valuable time. Otherwise complicated and time-consuming processes like payroll setup, onboarding, and maintaining compliance with country-specific laws are simple and quick.
To know more about G-P Recruit, visit our website and let us know how we can help you find the best talent, in the right location, at the right cost.