Employer Of Record In The United States

State-by-state adjustments to the main federal legislation result in significant differences in the employment laws in the United States. As a result, the US has extensive documentation and compliance requirements. 

All facets of employment in the USA are handled by solutions for USA EOR. Be it setting up your remote crew, handling their compensation and benefits, upholding compliance, or supporting a global network. To find out more about our automated solutions, give us a call.

Working with a reputable Employers of Record (EOR) may be quite beneficial if you want to grow your business in the United States.

Overview of the United States

• Capital: Washington, D.C.
• National Language: English
• Population: 331,449,281 
• Total land area: 3,531,905 square miles
• Currency: United States dollar (USD) ($)
• Per capita GDP: $68,309
• Real GDP growth: 6.4
• Inflation rate: 2.3
• Average hourly earnings: 30.17
• Consumer Price Index: 0.8
• Productivity: 5.4
• Employment Cost Index: 0.9

Employment Landscape In The United States

The United States’ Employment Cost Index was last assessed at 0.90. Four times a year, the Bureau of Labor Statistics of the U.S. The Department of Labor assesses the change in the cost of labour. It represents the price of employing new employees for any firm in the nation. With a population of more than 330 million people and a current employment rate of 57.90 percent, employing firms in the United States give local and foreign businesses access to the nation’s creative knowledge base.

Entitlement	Explanation
Statutory Working Hours	8 hours a day and 5 days a week
Federal minimum wage	$7.25 an hour
Rest period	For a 7 to 8-hour job, there is a paid 10-minute break after every four hours of work (in many states).
Public Holidays	New Year’s Day Martin Luther King Jr. Day Washington’s Birthday Memorial Day Juneteenth Independence Day Labor Day Columbus Day Veterans Day Thanksgiving Christmas Day

 

Parameters	Information
Weekly working hours	An average employee puts in 40 hours of work every week, or eight hours per day, five days a week. Yet a part-time employee’s schedule necessitates working fewer than 40 hours each week.
Overtime	The Fair Labor Standards Act (FLSA) mandates that an employee who works more than eight hours per day be compensated at a rate that is 1.5 times the average hourly wage. An employee earning $20 per hour, for instance, would receive $30 per hour in overtime. Because they are paid on a salary rather than on an hourly basis, full-time managers and executives are immune from overtime laws.
Public Holidays	Employers in the US are free to choose whether or not their staff members will be working on a holiday. Employers are free to direct staff to work on holidays without having to pay them a holiday or overtime charge.
Sick Leave	In contrast to other nations, American workers are not allowed to take as many long-term breaks each year. Employers gain from this, while employees are dissatisfied with the absence of government regulations in this area. According to research, 52% of American workers have unused vacation time at the end of the year. The Family and Medical Leave Act (FMLA) is the fundamental federal statute that controls sick leave programs throughout the nation. In accordance with this, certain full-time employees have the right to an annual leave of up to 12 weeks for personal or medical situations, including pregnancy. There are various maternity leave regulations in several states, including California and New Jersey. According to their convenience, a corporation may offer compensated or unpaid FMLA breaks. There are no stringent laws governing the topic at the federal level.
Personal Information	The Health Insurance Portability and Accountability Act (HIPAA) protects the privacy of employees’ personal information, including their social security numbers and medical data. To protect employee data, state governments may also establish their own privacy laws. A number of Federal Acts have been put into place in addition to HIPAA to safeguard particular categories of information. For instance, the Genetic Information Non-discrimination Act is in place to safeguard genetic information, while the Fair and Accurate Credit Transactions Act protects credit information.

Contractors Vs Full-time Employees

Employers of Record in the US employ full-time employees or contractors depending on their particular requirements. While some companies choose to recruit full-time workers, others prefer to use contractors since it relieves them of the obligation to offer benefits like health insurance, paid time off, and 401(k) matching. Contractors are hired by businesses for a specific project or period rather than a permanent employment with benefits. In certain countries, they are also referred to as freelancers or independent employees. Contractors are people who work for businesses on a temporary or ongoing basis. They can also be limited liability organisations, partnerships, or individuals. As long as they fulfil deadlines, contractors are not legally obligated to work for a single organisation like full-time workers are. 

For both contract workers and full-time employees, different labour regulations apply in the US.

Here are some of the differences between a contract and a full-time employee in the United States.

Parameters	Contractors	Full-time Employee
Benefits and Taxation	At the time of their interview, contractors’ fixed pay is set. They get this pay in full, including any applicable taxes. Contractors are responsible for paying their own self-employment and federal income taxes because they are no longer considered employees of the corporation. A contract employee is not entitled to any additional benefits from the firm, such as health insurance or a Flexible Spending Account (FSA). However, these benefits can be purchased separately by contractors.	Due to the fact that full-time workers are covered by the business’s payroll, the employer is legally permitted to withhold the required federal and state taxes from the employee’s compensation before disbursing the remaining amount. Full-time employees often have Social Security tax, Federal income tax, and Medicare tax deducted from their paychecks. The employer may also deduct expenses for extra perks including health savings accounts (HSAs), flexible spending accounts (FSAs), and health insurance in addition to taxes. These deductions are approved by the employee, and it is the employer’s duty to make sure they adhere to all applicable laws and rules.
Goals of Hiring	Employers are aware that the majority of contract workers often look for alternative employment possibilities that provide quick financial gains. As a result, the employer has distinct expectations for a contractor’s productivity and dedication to their task. A business seeks for a contractor with the knowledge and abilities needed to work on a certain task or project for a limited time. However, if all sides agree, an employer may request that a contractor transition to a full-time position.	A full-time employee is expected to be dedicated, committed, and loyal to the company by their employer. They guarantee employee involvement since they know that their services will be needed in the long term to embed corporate values and procedures.
Level of Independence	It is simple to comprehend the great degree of independence provided by a contractor’s professional lifestyle given the nature of their work. They have less financial benefits than full-time workers but greater control over their work. Contrary to full-time workers, contractors are free to determine their hours and working arrangements as long as they provide all necessary documents by the deadline.	Due to the difference in their types of labour, full-time employees are paid more than contract workers. They do, however, have less autonomy at work. This is so that they can follow instructions from their superiors or bosses to complete the necessary tasks.
Flexibility	Multiple businesses employ contractors at once. They are free to juggle several customers while striking a work-life balance that suits them. Contractors can take breaks whenever they need to, but they are not compensated for their holidays.	A full-time employee is required to abide by the employer’s regulations and discipline. They are held to greater standards of loyalty and efficiency because they exclusively work for one organisation.
Training	Most firms do not focus on any special onboarding or training procedures with contractors like they do with full-time employees since they assume that contractors would be professionals and authorities in their field. At the beginning of their employment, the employer gives these workers the knowledge they need to do their responsibilities.	Full-time workers are supposed to be collaborative individuals who comprehend the workings of an organisation. Since they are employed for an extended period of time, the organisations create thorough onboarding and training programs to help them become familiar with the culture, values, objectives, and teams of the organisation.

A recent survey found that in the US, over 99 million persons over the age of 18 had a graduate or postgraduate degree. The percentage of college graduates has risen by 15% in the previous ten years. In addition, 41% of these graduates completed their college studies in less than four years. A company may increase its global reach by hiring from among the 4 million Americans who graduate with degrees each year. We help you work on the legal and technical processes for your business while giving you the chance to take advantage of the knowledge base of the nation.

Recruitment In The United States

If you’re wanting to hire staff in the USA, Our Company offers cutting-edge tools and unrestricted access to a team of experts that manage the legal needs for your company. The USA team of advisers, attorneys, and HR specialists handles all these crucial procedures for you, from selecting the best applicants to establishing the employment agreement. The employing businesses in the USA are required to take care of certain employee entitlements while keeping them on their payroll.

Probation & Termination

Many businesses in the US recruit workers under the “at-will” employment arrangement, which implies there is no set length of employment unless specifically indicated in the employment contract. The employer may discharge the worker in certain circumstances without providing a justification or prior notice. However, Montana has a set of regulations that specify when an employer-employee relationship must end. In the US, unless specifically specified in the contract, the probationary term is typically six months. In Montana, if an employer chooses to let an employee go beyond the probationary period, they must have good cause.

In the US, neither the federal nor state governments demand advance notice from an employee nor an employer when ending a job. However, if an employee is being let go in accordance with the WARN (Worker Adjustment and Retraining Notification Act), the employer is required to provide them early notice. One of the conditions of the act is mass layoffs.

In the US, there is no standard severance pay statute that specifies the precise amount of severance compensation that an employer must offer. Based on the specifics specified by the employer and employee in the collective bargaining agreement or the employment contract, the severance compensation is determined. Before firing an employee, several American states demand that businesses inform the employee of any benefits, such as medical insurance and unemployment insurance.

EOR Solution

Every firm may either spend its internal resources or work with us to manage the duties of payroll and hiring if it wants to increase its pool of resources in the United States or use the knowledge base in the nation. You may avoid the bureaucratic and cost burden of leasing a space by using an Employee of Record Solution from us.

When a firm chooses the do-it-yourself method of HR administration in a foreign location, it becomes challenging and expensive to manage and adhere to every rule and regulation of a country. Your business will have more time to focus on other duties by delegating your HR and legal tasks to an EOR provider, while we provide very effective and dependable EOR services for you. Get in touch with us to utilise our services.

Types Of Visas in the USA

Every employee needs a work visa to be able to work in the US. There are several kinds of work visas available to enable a foreign worker to work in the US for a predetermined amount of time. For further information on US work visa criteria and specifics, see the list below.

Type of visas	Explanation
Employment-based green cards	Thousands of job seekers in the USA apply for and are granted green cards or permanent residence status based on their choices for work. These visas fall within the EB-1 to EB-5 categories.
Temporary work visa	Depending on the expertise and job status of the employee or businessperson, many temporary work visa categories exist. Business visitor visas, investment visas, or temporary skilled worker visas are the options available to people.
NAFTA-based visa	Citizens of Mexico or Canada who have received a job offer from the United States may apply for a temporary work visa. The North American Free Trade Agreement (NAFTA) enables citizens of these nations to swiftly and with little paperwork get a visa.
L-1 visa	This is an employment visa for the USA that can be applied for in order to relocate a business there.

Work Permits

In the United States, USCIS (U.S. Citizenship and Immigration Services) is responsible for issuing work permits. It is a kind of identification that attests to a person’s eligibility to work in the US. A USA work permit for foreign nationals may take several days to process, depending on the location and kind of work permit. Through EB-5, O-1, and EB-1 visas, it is also feasible to obtain a USA work permit without having a job offer. By offering job sponsorship, through a network of tenacious agents and experts, and as the local partner of a remote business in the USA, secures your right to work in the country.

Payroll & taxes in the USA

Depending on their company model, employers may decide how to define USA payroll, deductions, earnings, and taxes for their employees. The four types of US taxes – social security, federal employment, federal income, and medicare – are taken care of on the employer’s behalf by our payroll services in the US.

Speak with us to learn more about American payroll and taxes.

Employer Taxation

Tax	Explanation
Corporate Income Tax	21%
Payroll Tax	Federal income tax, state unemployment tax, and social security taxes must all be subtracted from an employee’s pay.
Withholding Tax	The gross amount of royalties, interest payments, and dividends is subject to a 30% tax.
Employer Social Security	Employers pay 6.2% when the base wage is USD137,700

Employee Taxation

Tax	Explanation
Sales Tax	45 states in the US collect sales tax at varying rates.
Employee Social Security	6.2%

The local company’s HR specialists determine the US payroll by taking into account the services provided by a part-time or full-time employee. About 1 in 3 business owners get penalties from the Internal Revenue Service (IRS) for payroll administration problems. In order to protect your firm from significant yearly fines, our organisation maintains compliance with US payroll taxes.

Bonuses

In the US, bonuses are not particularly prevalent. However, some firms provide incentives in the form of vacation money, holiday pay, etc.

There are several options available to foreigners who want to start a business in the United States. Sole proprietorship, S-Corp, C-Corp, limited liability companies, and partnerships are a few of the often used alternatives. Due to the fact that they provide local business proprietors limited liability, LLCs and C-Corps are frequently selected among these. A C-Corporation could be the best option for a startup looking for funding, while small company owners might choose an LLC.

With the aid of a Registered Agent, you must first register your LLC to get things going, which usually takes three days. After that, in order to maintain positive interactions with banks and payment processors, you must establish a physical company address. All official letters and credit cards will be mailed to this physical address.

After you’ve determined your firm address, you may proceed to opening a bank account for your business. However, an Employer Identification Number (EIN) is required for this. We can serve as your local partner and streamline the process for you if you’d like some assistance and don’t want to spend the time and effort working it out on your own.