Employer of Record in The United States

Businesses can only operate smoothly in The United States if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in The United States below, to avoid any compliance issues.

Employment Contract Requirements

In the United States, employment agreements assume various formats since there are no specific regulations mandating written documentation to be valid. However, certain states have enacted wage theft laws requiring employers to communicate basic employment terms to their employees in writing. These include:

• Identification of both parties
• Designated workplace and working hours
• Job roles and responsibilities
• Basic salary (including compensation and benefits)
• Total number of holidays
• Reasons for potential employment termination

Onboarding Process

We can help you get a new employee started in The United States quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Probation Period in The United States

The U.S. lacks a mandated minimum probation period, but employers can set a period between 60 to 90 days. Formal probation periods are uncommon due to at-will employment, allowing employers to terminate without cause, notice, or severance at any time.

In the United States, employers must adhere to the Fair Labor Standards Act (FLSA) regarding working hours and overtime regulations. While there is no cap on the number of hours employees aged 16 and older can work in a given week, non-exempt employees must receive overtime pay for any hours worked over 40 in a workweek, compensated at a rate of at least time and a half their regular pay rate. Exempt employees, such as certain executive, administrative, and professional workers, are not entitled to overtime pay under the FLSA.

Employers should also be mindful of state-specific regulations, as some states impose additional restrictions on working hours and overtime. Compliance with both federal and state labor laws is essential to avoid penalties, ensure proper compensation for employees, and maintain a fair working environment.

As of 2025, the federal minimum wage in the United States remains at $7.25 per hour, unchanged since 2009. However, many states have established higher minimum wage rates to reflect economic conditions and the cost of living. For example, California's minimum wage is $16.50 per hour, while Washington state's is $16.66 per hour. Employers must ensure compliance with both federal and state laws, as 34 states, territories, and districts have set minimum wages above the federal level. Additionally, factors such as employee classification, industry-specific regulations, and local economic conditions can impact wage requirements.

Employers should also be aware of exemptions and variations, such as different wage structures for tipped employees, interns, and trainees. Legislative efforts, including proposals like the Raise the Wage Act of 2023, indicate ongoing discussions about increasing the federal minimum wage to $17 per hour by 2028. As wage laws continue to evolve, businesses must stay informed about changes at federal, state, and local levels to ensure compliance and avoid legal risks. Understanding the relationship between minimum wage, cost of living, and economic policies will be crucial for responsible and fair compensation practices.

Payroll taxes in the United States encompass critical obligations such as federal income tax withholding, Social Security and Medicare contributions (FICA), and Federal Unemployment Tax Act (FUTA) payments. Employers must understand these taxes' requirements, including accurate calculations, timely remittances, and compliance with both federal and state regulations. Non-compliance can lead to penalties and strained employee relationships, highlighting the need for a robust payroll system. Employers should also stay informed about tax rates, wage base limits, and due dates to ensure compliance.

Leveraging payroll management software can simplify these processes, helping businesses consolidate payroll data, calculate taxes accurately, and meet legal obligations in the United States.

In the United States, work permits and visas are crucial for employers hiring foreign workers. The process requires filing petitions, meeting specific eligibility criteria, and adhering to regulations. Common non-immigrant visas include the H-1B for specialty occupations, the L-1 for intra-company transferees, and the O-1 for individuals with extraordinary ability. Immigrant visas such as EB-1, EB-2, and EB-3 allow permanent residence. Employers must ensure compliance with U.S. immigration laws when sponsoring and hiring international talent.

Mandatory Leave Entitlement in The United States

The annual leave entitlement in The United States is 0 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In The United States

The United States observes 11 official national public holidays annually. Additionally, individual states have the authority to designate additional holidays beyond those mandated by the federal government. The national holidays recognised by the federal government are:

Paid Time Off in The United States

In the United States, it is not legally required to compensate employees for time taken off for vacation or holidays. According to the Center for Economic and Policy Research, the U.S. stands as the sole advanced economy worldwide that does not ensure paid vacation days and holidays for its workforce.

Maternity Leave In The United States

Eligibility for maternity leave in the United States under the Family and Medical Leave Act (FMLA) mandates specific criteria. This federal law provides pregnant employees with a 12-week unpaid leave, usually taken continuously unless otherwise permitted by the employer. To qualify, the employee must:

• Have worked at least 12 months with the same employer
• Completed a minimum of 1,250 work hours over the past 12 months
• Work location with 50 or more employees within a 75-mile radius

Paternity Leave In The United States

There are no distinct federal provisions that address paternity leave in the U.S. aside from the parental leave stipulated by the Family and Medical Leave Act.

Sick Leave In The United States

Sick leave in the United States falls under the jurisdiction of the Family and Medical Leave Act (FMLA), providing up to 12 weeks of leave and specifically addressing serious illnesses. Eligibility is determined based on the following:

• Employment at least 12 months with the same employer
• Completion of a minimum of 1,250 work hours over the past 12 months
• Work location with 50 or more employees within a 75-mile radius
• Qualification for sick leave under FMLA involves a serious illness, injury, impairment, or hospitalisation of the employee or an immediate family member or addressed by a healthcare provider

Parental Leave In The United States

Under the Family and Medical Leave Act (FMLA), federal law permits 12 weeks of unpaid parental leave that either or both parents can take within the initial year following the birth or adoption of a child. This leave is typically continuous unless the employer provides an exception. To qualify, the employee must:

• Have worked at least 12 months with the same employer
• Completed a minimum of 1,250 work hours over the past 12 months
• Work location with 50 or more employees within a 75-mile radius

In the United States, employers are required to provide key mandatory benefits such as Social Security, Medicare, unemployment insurance, workers' compensation, and protections under the Family and Medical Leave Act (FMLA), which ensure financial security, healthcare access, and job-protected leave for eligible employees.

Beyond these legal requirements, popular supplemental benefits like health insurance, retirement savings plans (e.g., 401(k)), paid time off, and wellness programs play a crucial role in attracting and retaining top talent. Employers must also navigate a complex legal landscape governed by regulations such as ERISA and the Affordable Care Act (ACA), emphasizing the importance of compliance to avoid penalties and foster a supportive, competitive workplace.

Termination Process in The United States

When terminating an employee, employers must adhere to federal, state, and city ordinances. Termination expenses may encompass compliance with the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), which is a federal law enabling employees to maintain health insurance coverage during unemployment.

Notice Period in The United States

As the United States largely follows oeat-will employment relations, either party may terminate the agreement without cause at any given time. Nevertheless, it is customary that they provide a two-week notice before termination.

Severance in The United States

The United States does not have mandated statutory severance provisions.