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Employer of Record (EOR) in UsUnited States






Country Capital

Washington, D.C.


U.S. dollar ($) (USD)

Your company is interested in opening a business in the United States and is ready to start hiring a team to build up your presence in the country. The only problem is that you haven’t yet established a subsidiary or U.S.-based branch of your business. That’s where G-P’ Professional Employment Organization (PEO) services and comprehensive solutions step in.

We will act as the employer of record for your team in the U.S, handling the process of recruiting and onboarding employees and providing payroll and benefits so that your company remains in compliance with the tax rules and labor law of the United States. Our PEO services help your company remain compliant while also helping to smooth out any cultural differences.

When it comes to business laws, the United States is notably different from other countries. Labor and tax laws are a mixture of federal rules and regulations and state laws. The requirements for hiring a person who lives in Pennsylvania can be notably different from the requirements of hiring an individual in California. We’re here to help your company make sense of the United States’ often confusing laws and to help you get a great start in the country. Learn more about how to do business in the United States and what labor laws employers must know.

Hiring in the U.S.

The American workplace has changed considerably in recent years. It was once fairly common for employees in the U.S. to belong to unions. But, over the past few decades, membership in unions has dropped from 20.1% of U.S. workers over the age of 16 to 10.5% of workers. Union membership has declined even as the majority of Americans say that they support people’s right to unionize.

Workplaces have also undergone a shift as younger employees began entering the workforce.  Millennials, people in their 20s and 30s, make up the largest portion of the U.S. workforce. According to surveys and polls, millennial workers are more likely to change jobs than previous generations. They are also less likely to be engaged with their work than other generations. Businesses looking to hire in the U.S. should be particularly attuned to the needs of the millennial employee and to the sorts of benefits and opportunities that can make a position more attractive to them.

Another recent shift in the U.S. has been in the practice of recruiting and hiring team members. Many companies have shifted from hiring from within or promoting team members to looking to outside hires. In the 1970s, nearly 90% of positions were filled by promoting from within or by having existing employees make a lateral move into a position. In the 21st century, one-third of positions are filled by people who already work at a company.

Negotiation is part of the process when a company wants to hire an employee in the United States. Employees are likely to do a considerable amount of research on salary trends before they are offered a position and are likely to 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 provides salary information and expected employment growth for a wide variety of positions. Because the information is readily available, U.S.-based applicants are likely to be relatively direct when asking for a particular salary or when negotiating other terms of the contract, such as benefits or paid time off.

Employment contracts in the U.S.

Employment Contracts in the U.S.

In the majority of the United States, 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. It also means that an employer is free to terminate an employee for any reason, at any time. “For any reason” does have some exceptions on the part of the employer, though. An employer can’t fire a person on the basis of their sex, gender, race, religion, age, sexual orientation, mental or physical handicaps, or national origin under the country’s Equal Opportunity Employment laws. The only state in the U.S. without “at-will” employment is Montana. In Montana, a worker needs to be let go from a position for a specific cause.

Although many workers in the U.S. are “at-will,” there are cases where people have contracts that clearly outline the relationship between employee and employer. For example, an employee might sign a contract with a company that stipulates that they can only be terminated for cause. The contract can then detail the causes that could lead to a person’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 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 the length of the employment. 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 United States but are more difficult to prove if either party needs to take legal action against the other. When a contract is merely a spoken agreement between an employer and employee, the situation can become a case of 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 eight hours a day, five days a week. There is a considerable amount of variation among jobs, though. 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.

Under the Fair Labor Standards Act (FLSA), non-exempt employees who work more than 40 hours during a single week needs to be paid one and a half times their usual pay rate. An employee who usually earns $20 per hour would earn $30 per hour when working overtime.

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, administrative positions, creative jobs, and professional positions. Usually, exempt employees receive a salary rather than an hourly wage.

Holidays in the United States

The United States recognizes 10 holidays as federal holidays:

  • New Year’s Day
  • Birthday of Martin Luther King, Jr.
  • Washington’s Birthday
  • Memorial Day
  • Independence Day
  • Labor Day
  • Columbus Day
  • Veterans Day
  • Thanksgiving Day
  • Christmas Day

Employees of the federal government are given those holidays off. Banks, the postal service, and government offices are closed on federal holidays as well. 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.

While workers in other countries around the globe are happy to take several weeks to a month off from work each year, Americans are notorious for not taking vacations. In many cases, it could be because they don’t have access to paid time off for vacation. Vacation leave is not required by law in the U.S. Instead, it is a benefit decided on an individual basis between employees and employers.

Even employees who have access to paid time off for vacation are often reluctant to take it. One survey of employed Americans who had paid vacation time found that 52% still had unused paid time off at the end of the year.

U.S. Sick Leave

The United States 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 United States. More than three-quarters of U.S. workers have access to some sort of paid sick leave. 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 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 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. Out of a list of 41 countries, most require at least two months of paid leave to new parents. Some countries go above and beyond, offering new parents a full year and a half of paid time off after the birth of a child.

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 make themselves a desirable place to work.

Health Insurance in the United States

Although employers in the United States 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 United States. Among the other benefits that 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
  • Child care assistance


Bonuses are payments employers make to employees in addition to their normal earnings. An employer might award an employee for going above and beyond with their work or for succeeding during a particularly challenging situation. Some companies run “employee of the month” programs and provide the winners with a cash bonus. 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. Although some employers might give notice, it is not legally required for them to do so. An employee who wishes to leave their position might also give notice, such as 30 days or two 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 receive unemployment, such as being 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 health insurance for a certain number of months. They are also entitled to a special enrollment period and can begin to search for an individual or family policy on their own.

Some employers negotiate a severance package with the employees they are laying off. Severance is not legally required but can be something an employee negotiates with a company when they are first hired.

Paying Taxes in the United States

Employers in the United States 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 income tax and local income taxes. G-P’ comprehensive services include calculating and withholding the appropriate taxes from each employee, allowing your company to be in compliance with U.S. tax rules.

Why G-P

If your company is interested in expanding into the United States, it doesn’t have to go through the hassle and expense of establishing a subsidiary or branch office. G-P’ comprehensive PEO services include acting as the employer of record for any U.S.-based employees your company hires. We will handle payroll, onboarding, recruitment, and benefits, streamlining the process for your company and allowing you to begin operations in the U.S. quickly.

Contact us today to learn more about how our PEO services can help your company succeed in its expansion.


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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