Hiring guide in United States of America

What should I know about hiring in the USA?

When it comes to hiring in the USA, there are a few things that you should keep in mind. First and foremost, it’s essential to remember that the USA has several employment laws you must be aware of. 

These laws vary from state to state, impacting everything from the minimum wage you are required to pay your employees to the amount of vacation time they are entitled to.

Additionally, the USA has a very competitive job market. This means that you must ensure that your company can offer competitive salaries and benefits to attract the best employees. 

Finally, it’s essential to remember that the USA has complex laws and regulations, so it’s crucial to make sure that you have a good understanding of them before you begin the hiring process.

Why is the USA a good choice for finding remote employees?

There are plenty of reasons to hire remote employees in the United States. For one, the talent pool is deep. You can find workers with all kinds of skills and experience levels in every corner of the country.

Another reason is the time zone difference. If you have a business based in the US but want to reach a global market, hiring remote employees in different time zones can help you keep your business running 24/7.

And then there are the cost savings. Hiring remote employees can be a lot cheaper than hiring in-office staff since you don’t have to worry about things like physical space and office setups.

How can Native Teams help you hire in the USA?

When it comes to hiring in the United States, there are many things that companies need to take into account. One of the most important things is making sure that they are hiring in compliance with the country’s labour laws and regulations.

This is where Native Teams can come in and help out! Our Employer of Record services allows businesses to employ people legally in any country without the need to set up a new legal entity and in full conformity with local employment laws. As an added bonus, we can ensure that your company’s hiring process, payments, and benefits for your new employees are in line with all US laws and regulations.

 Hire your first USA employee with Native Teams.

Legal requirements for hiring in the USA

The following are the most important legal requirements for hiring employees in the USA:

Legal framework

Types of employment contracts

Employment contracts in the USA are legal agreements establishing the terms and conditions of the employment relationship. They can be categorised broadly into written, oral, and implied agreements, each delineating specific rights and obligations for both parties.

Written contracts are the most formal type, typically including details for the job role, compensation, benefits, duration of employment, grounds for termination, and dispute resolution mechanisms.

While less formal, oral employment contracts are still legally binding in many circumstances. They are based on verbal commitments between the parties and cover aspects such as job duties and pay. However, the lack of written documentation can lead to challenges in providing specific terms of the agreement in case of a dispute. Finally, implied contracts arise from the conduct of the employer and employee or from the employment policies and practices of the organisation. An example of an implied contract is an employer’s handbook that outlines specific procedures or termination processes that create implied contractual obligations. Such implied terms are not formally documented but are still legally binding.

Content of an employment contract

The contents of employment contracts in the USA can vary depending on factors such as the nature of the job, the industry, and the specific needs of the employer and the employee.

However, employment contracts must specify the job title, duties, and responsibilities of the employee, the compensation package (salary, bonuses, benefits, and other forms of remuneration), and the work schedule (hours of work, overtime expectations, and minimum wage and overtime pay provisions). Some contracts in the USA may highlight the duration of the employment, whether at-will or for a fixed term, and the conditions under which it can be terminated. 

Some employment contracts include confidentiality and non-compete clauses, dispute resolution mechanisms, and clauses addressing compliance with federal laws.

Download a free employment contract for the USA through Native Teams.

Working hours 

Working hours in the United States are primarily regulated by the federal labour law. Under the Fair Labour Standards Act (FLSA), the standard workweek consists of 40 hours, and any time worked beyond this threshold qualifies for overtime pay. Overtime pay must be at least one and ½ times the regular pay rate.

Employment contracts in the USA often detail working hours, including start and end times, break periods, and overtime policies. These contracts must be aligned with the federal standards.

Night work

Night work in the USA is governed by a combination of federal labour laws and state-specific regulations. While the FLSA dictates the terms and conditions of night work, there is no specific provision that mandates additional pay for night work unless it involves overtime. 

However, employers often provide shift differentials as an incentive for night shift workers as a common practice, for typically hours worked between 11 pm and 7 am. 

State laws can also impose additional requirements on night work, which vary significantly from one state to another.

Breaks and types of leaves

Even though breaks and leaves in the USA are governed by federal labour laws, specifics can vary depending on the state regulations and company policies. 

While the FLSA is the primary federal law that governs breaks and leaves, it does not mandate meal or rest breaks. However, employers provide short breaks from 5 to 20 minutes that must be compensated as working time, as well as meal breaks of 30 minutes and more, which can be unpaid if the employee is relieved from duties.

The Family and Medical Leave Act (FMLA) entitles eligible employees to up to 12 weeks of unpaid, job-protected leave per year for specific family and medical reasons, including childbirth, serious health conditions, and caring for a family member with serious health conditions.

Annual leave

In the United States, there is no federal law that mandates paid annual leave for employees. Instead, it’s primarily governed by employer policies and contractual agreements. Most employers offer some form of paid annual leave, but the amount and the conditions under which it can be taken vary widely from one employer to another.

Public holidays

Public holidays in the USA are not mandated by federal law for private-sector employers. However, their observance depends on employer policies and contractual agreements, with some state-specific variations influencing these practices. Some federal holidays include New Year’s Day, Martin Luther King Jr. Day, President’s Day, Independence Day, Thanksgiving Day, and other holidays.

Salary

In the USA, salary structures and payment practices are primarily regulated by federal labour laws. The FLSA is the central federal law governing wage and payments, including minimum wage, overtime pay, and recordkeeping requirements.

Under the FLSA, every employee must be paid at least the federal minimum wage and entitled to overtime pay for hours worked beyond 40 in a workweek. 

Employment contracts typically outline the terms of salary, including the base pay rate, pay periods, and additional compensation like bonuses and commissions. Employers must ensure that their employment contracts comply with both federal and state regulations to provide fair and lawful compensation to their employees.

To calculate the salary and taxes in the USA, click here.

Sick leave

Sick leave policies in the USA are largely determined by state and local laws, as there is no federal mandate that requires private sector employers to provide paid sick leave. 

Under the FMLA, employees are entitled to 12 weeks of unpaid sick leave per year for certain family and medical reasons. However, paid sick leave policies differ from one state to another, as well as on local levels. Such policies vary in terms of accrual rates, usage, and eligibility requirements.

Methods of employment termination

Termination of employment in the USA is governed by federal labour laws, state regulations, and individual employment contracts. 

Starting from the at-will employment concept, either the employer or the employee can terminate the employment relationship at any time, with or without cause and notice. The termination can occur for various reasons, including performance issues, misconduct, economic downturns, redundancy, or mutual agreement. The method of termination and the accompanying procedures are often detailed in the employment contract, employee handbooks, and company policies.

Paternity and maternity leave

Maternity and paternity leave in the USA are regulated by federal labour laws and often enhanced through contractual agreements. The FMLA provides eligible employees with up to 12 weeks of unpaid, job-protected leave for birth and care of a newborn, as well as for the placement and care of a child for adoption or foster care. This applies to employees who have worked for their employer for at least 12 months and logged at least 1,250 hours during the previous 12 months. 

Employment contracts often include provisions for maternity and paternity leave, outlining the duration of leave, whether it’s paid or unpaid, and any additional benefits. Paid leave is often offered by employers as an additional benefit to attract and retain employees.

Ordinary dismissal by the employer

In the USA, most employee terminations are considered ordinary dismissal by the employer or termination without cause. As the concept of at-will employment is predominant in the country, either the employer or the employee can terminate the employment at any time, for any reason. 

However, there are several federal laws and standards that ensure fair dismissal, prohibiting termination based on race, colour, religion, sex, national origin, age, disability, or genetic information.

In addition, employment contracts and company policies also govern the terms and conditions of dismissal, while state-specific regulations further influence the process with additional requirements and protections.

Notice period and challenging the dismissal

While the concept of at-will employment is applicable in the USA, some provisions like terms of employment contracts, company policies, and federal/state laws can impose requirements for notice periods and mechanisms for challenging dismissals.

Even though notice periods are not governed by federal labour laws, many employers include them in the contract to provide a structured process for ending the employment. Notice periods can vary based on the role, tenure, and specific terms agreed upon in the contract.

Challenging a dismissal typically involves alleging that the termination violated federal/state laws, employment contracts, or company policies. Employees can challenge dismissals under certain federal laws, while state laws offer additional protections.

Rights and obligations of unemployed individuals

In the USA, unemployed individuals have specific rights and obligations governed by a combination of federal labour laws and state-specific regulations. 

Following the Social Security Act, eligible unemployed individuals have the right to Unemployment Insurance (UI), providing temporary financial assistance to eligible workers who have lost their jobs through no fault of their own.

To qualify for UI benefits, individuals must have worked a certain number of weeks or earned a minimum amount of wages during a certain “base period”. The amount and duration of UI benefits vary by state.

Some employment contracts may also contain provisions for unemployment benefits, such as severance agreements, non-compete clauses, or confidentiality agreements that remain effective after termination. Such contractual obligations can influence an individual’s job search and eligibility for unemployment benefits.

Severance pay

Severance pay in the United States is not mandated by federal law for most employees but is typically provided at the discretion of the employer.

While not governed by FLSA, some acts mandate that certain employers provide advance notice or pay in lieu of notice in cases of mass layoffs or plant closures. In addition, employment contracts often include severance pay provisions detailing the conditions under which it will be provided, the amount of severance, and the payment method.

Probationary period

The United States has no federal mandate for new hires’ probationary periods, leaving their decision and structure up to employers and their agreement with employees. However, probationary periods are commonly used as a trial phase for new employees to evaluate the employee’s performance, suitability for the role, and overall company fit. 

Probationary periods in the USA typically range from 30 to 90 days, with the duration, evaluation criteria, and rights and obligations defined within the employment contract. While no federal laws govern probationary periods, some state laws may mandate certain requirements and protections.

Prohibition of competition 

Non-compete agreements have been a common feature in employment contracts in the USA, designed to prevent employees from entering into competition with their employer after the employment ends. Such provisions include restrictions from working with competitors, starting a competing business, or engaging in activities that can harm the former employer’s business interests. 

As of April 23, 2024, the Federal Trade Commission issued a final rule banning non-compete clauses nationwide. According to the FTC, non-compete clauses have been shown to suppress wages, restrict the formation of new businesses, and stifle innovation.

However, it’s important to note that some rules of FTC do not apply to some roles, such as senior executives, who can still be subject to non-compete agreements under certain conditions.

Remote working policy

The rise of remote work in the USA has imposed the development of comprehensive remote work policies, which are incorporated into employment contracts and governed by various federal and state regulations.

Employment contracts define the terms and conditions of the remote work arrangement, including working hours, performance metrics, communication protocols, and equipment provisions. They also address issues such as data security, confidentiality, and the use of company resources.

Federal labour laws, such as the FLSA, ensure that remote workers receive the same protection regarding wages, overtime, and working conditions as on-site employees. 

State laws also impact remote working policies, particularly regarding health and safety requirements, reimbursement for home office expenses, and taxation.

Responsibilities within a remote work arrangement

With remote work arrangements becoming increasingly common, so does the need to set clear responsibilities for employers and employees. Such responsibilities are typically outlined in employment contracts, which must comply with federal labour laws regarding wages, hours, overtime, and other conditions. Furthermore, some state-specific regulations can impose additional requirements, especially concerning health and safety, expense reimbursement, and tax implications.

Health and safety at home

Health and safety management in remote work arrangements is a collaborative responsibility between the employer and the employee. 

The primary federal law governing workplace safety is the Occupational Safety and Health Act, obligating employers to ensure their workers have a safe working environment which is reasonably free from recognised hazards. This mandate also includes employees who work remotely.

The application of OSHA to remote work settings applies to the “work environment” over which the employer has control. Employers are encouraged to provide remote employees with guidance on setting up a safe home office space, ergonomic advice, and information on the risks associated with prolonged sedentary work.

Intellectual property rights

Intellectual property rights in the USA are governed by a combination of federal laws and contractual agreements, with state-specific regulations adding certain requirements and protections. These laws primarily include patents, trademarks, copyrights, and trade secrets.

Intellectual property rights, including ownership and usage rights, are defined in employment contracts. The scope and enforceability of such clauses can vary depending on state laws and specific terms outlined in the contract.

Employee data privacy

Unlike GDPR, which applies to the countries in the European Union, the USA lacks a single federal law that governs employee data privacy. Instead, it’s regulated through a combination of federal statutes, state laws, and industry-specific regulations that establish standards for collecting, using, and disclosing employee information. 

The terms of employee data privacy are defined through employment contracts and company policies. Such documents typically outline how personal information is collected, used, stored, and shared.

It’s important to note that state laws can impose additional requirements on employers, offering different levels of protection for employee data.

What are the advantages of hiring employees from the USA vs other countries?

Hiring employees from the USA has several advantages over other countries.

Compared to European countries, US employees are more familiar with American consumer behaviour and cultural norms, which can be an important factor for businesses that target the US market. In addition, labour laws in the USA tend to be more flexible in terms of hiring and termination compared to many European countries, allowing for more agile workforce management.

Another great advantage of hiring employees in the USA is the large, very diverse, and highly skilled talent pool. The US workforce is known for its innovation, entrepreneurial spirit, and commitment to work, which can be a great competitive advantage for any business. 

Finally, with English as a primary language, US employees can facilitate easy communication within global teams and with clients or partners from all around the world.

Why use Native Teams for hiring in the USA?

Native Teams lets you employ team members ‘like a local’ meaning you get all the benefits of a global team, wherever you are based. Here are the reasons why you should use Native Teams for hiring:

• No paperwork: We will handle all the necessary paperwork for you.
• Save on taxes: We help you handle your taxes.
• No company set up: You can expand your business using our company entitles.
• Online onboarding: We’re here to ensure your onboarding process is trouble-free.
• No accounting: We will handle all of your accounting needs, including invoicing, payroll, and more.
• Increase your profit: We assist you in growing your business and maximizing your profits.
• Compliance expertise: we can assist your company in navigating the regulatory environments and ensure you meet all relevant requirements.
• Local support: We can assist you in understanding and complying with the relevant local laws.