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Learn about local payroll, taxes, and employment laws in USA
Minimum Wage Standards
The federal minimum wage in the United States is $7.25 per hour, as established by the Fair Labor Standards Act (FLSA). This rate has been in effect since July 2009.
Many states and municipalities have enacted higher minimum wages. Employers must pay the higher of the federal, state, or local minimum wage applicable to their location.
Income Tax Structure
The federal individual income tax uses a progressive bracket system ranging from 10% to 37%. Tax rates apply to taxable income after deductions. State income taxes may apply in addition to federal taxes.
| Taxable Income (Single Filer) | Federal Income Tax Rate |
|---|---|
| Up to $11,600 | 10% |
| $11,601 - $47,150 | 12% |
| $47,151 - $100,525 | 22% |
| $100,526 - $191,950 | 24% |
| $191,951 - $243,725 | 32% |
| $243,726 - $609,350 | 35% |
| Over $609,350 | 37% |
Employer Contributions
Employers in the United States are required to contribute to FICA (Federal Insurance Contributions Act) taxes and FUTA (Federal Unemployment Tax Act) on behalf of their employees.
Mandatory Employer Contributions:
- Social Security (OASDI): 6.2% on wages up to the annual wage base
- Medicare: 1.45% on all wages (no cap)
- Total FICA: 7.65%
- FUTA: 6% on the first $7,000 of each employee's wages (effective rate typically 0.6% after state credit)
Employee Contributions:
- Social Security (OASDI): 6.2% on wages up to the annual wage base
- Medicare: 1.45% on all wages (no cap)
- Total FICA: 7.65%
- Additional Medicare Tax: 0.9% on wages exceeding $200,000
Important Note: These figures represent federal requirements only. State and local taxes, workers' compensation insurance, and other contributions may apply depending on the jurisdiction. Contact our team for accurate calculations tailored to your situation.
Overtime & Working Hours
Under the Fair Labor Standards Act (FLSA), non-exempt employees must be paid at least 150% of their regular hourly rate for all hours worked beyond 40 in a workweek.
Standard working hours: 8 hours daily, 40 hours weekly. The standard workweek runs Monday through Friday. Some states have additional daily overtime requirements.
Maternity Leave
The Family and Medical Leave Act (FMLA) provides eligible employees with up to 12 weeks of unpaid, job-protected leave per year for the birth and care of a newborn child.
To be eligible, employees must have worked for a covered employer for at least 12 months, have at least 1,250 hours of service during the previous 12 months, and work at a location with 50 or more employees within 75 miles. There is no federal mandate for paid maternity leave, though some states have enacted paid family leave programs.
Paternity Leave
Under FMLA, eligible fathers are entitled to the same 12 weeks of unpaid, job-protected leave for the birth or placement of a child. The same eligibility requirements apply as for maternity leave.
There is no federal mandate for paid paternity leave. Some states and employers offer paid paternity leave as part of their benefits packages or state-mandated paid family leave programs.
Sick Leave
There is no federal mandate for paid sick leave in the United States. Sick leave policies vary significantly by state, municipality, and employer.
Several states and cities have enacted paid sick leave laws requiring employers to provide a set number of paid sick days per year. Many employers voluntarily provide paid sick leave as part of their benefits package.
Bereavement Leave
There is no federal mandate for bereavement leave in the United States. Bereavement leave policies are determined by individual employers.
- Most employers offer 3-5 days for immediate family members
- 1-3 days for extended family members is common
- Some states have begun enacting bereavement leave requirements
Termination Framework
The United States follows the at-will employment doctrine, meaning either the employer or the employee can terminate the employment relationship at any time, for any reason (or no reason), with or without notice, as long as the reason is not illegal.
Exceptions to at-will employment include:
- Discrimination based on race, color, religion, sex, national origin, age, disability, or genetic information (Title VII, ADA, ADEA)
- Retaliation for whistleblowing or filing complaints
- Breach of an express or implied employment contract
- Violation of public policy
- Union-related terminations (NLRA protections)
Legal Requirement: While at-will employment allows termination without cause, employers must ensure terminations do not violate federal, state, or local anti-discrimination laws. Documentation of performance issues and consistent application of policies is strongly recommended.
Notice Period Requirements
There is no federal requirement for a notice period in the United States under at-will employment. However, the WARN Act (Worker Adjustment and Retraining Notification Act) requires employers with 100 or more employees to provide 60 days' advance notice of mass layoffs or plant closings.
- No mandatory notice period for individual terminations
- WARN Act: 60 days' notice for mass layoffs (50+ employees) or plant closings
- Many employers provide 2 weeks' notice as a professional courtesy
Severance Compensation
There is no federal law requiring employers to provide severance pay upon termination. Severance packages are commonly offered as negotiated agreements, particularly for senior-level positions or as part of layoff packages.
Common severance practices include one to two weeks of pay per year of service. Severance agreements often include a release of claims, continuation of benefits, and non-compete or non-disclosure provisions.
Employers must pay all earned wages and accrued vacation (where required by state law) upon termination, regardless of whether severance is offered.
Risk Management: Although severance is not legally mandated, offering reasonable severance packages in exchange for a release of claims can significantly reduce the risk of wrongful termination lawsuits and help maintain a positive employer reputation.
Paid Annual Leave
There is no federal mandate for paid vacation in the United States. Paid time off is determined by individual employer policies.
The average for new employees is approximately 10 days of paid vacation per year. Many employers offer increased vacation time based on tenure, with senior employees receiving 15-20 or more days annually.
Public Holidays
The United States observes 11 federal public holidays annually. Private employers are not required by federal law to provide paid time off for holidays, though most do.
Federal public holidays include:
- New Year's Day (January 1)
- Martin Luther King Jr. Day (Third Monday in January)
- Presidents' Day (Third Monday in February)
- Memorial Day (Last Monday in May)
- Juneteenth National Independence Day (June 19)
- Independence Day (July 4)
- Labor Day (First Monday in September)
- Columbus Day (Second Monday in October)
- Veterans Day (November 11)
- Thanksgiving Day (Fourth Thursday in November)
- Christmas Day (December 25)
Onboarding Timeline
The onboarding process is typically completed within 1-3 business days following client execution of the Statement of Work.
Compensation Structure
Salaries in the United States are typically paid on a biweekly (every two weeks) or semi-monthly (twice per month) basis. Some employers pay weekly or monthly depending on the industry and state requirements.
The 13th month salary is not mandatory in the United States. Annual bonuses may be offered at the employer's discretion based on company performance, individual performance, or contractual agreements.
Employment Contract Specifications
The United States operates under the at-will employment doctrine by default. Written employment contracts are common but not legally required for most positions. Offer letters are standard practice and typically outline key terms of employment.
Common contract elements include:
- Job title and description
- Compensation and benefits
- Start date and work schedule
- At-will employment acknowledgment
- Confidentiality and non-disclosure agreements
- Non-compete clauses (where enforceable)
- Intellectual property assignment
Employment relationships without a written contract default to at-will status. Executive and senior-level positions more commonly use formal employment agreements with specific terms for compensation, benefits, and separation.
Probationary Period
There is no federal law governing probationary periods in the United States. However, many employers implement a probationary or introductory period of typically 90 days for new hires.
During the probationary period, employers may conduct performance reviews and assessments. Since employment is at-will, either party can terminate the relationship at any time during or after the probationary period without specific cause.
How it works
Your Global Hiring Process
We take care of employing your team, so you can focus on growing
You choose the talent
You select the candidate you want to hire, anywhere in the world.
We employ them for you
MB Remote becomes the legal employer and handles contracts, payroll, and local labor laws.
Your team starts working
Your employee works directly with you, just like an in-house team member.
We manage compliance
We ensure ongoing payroll, taxes, and legal compliance in the employee’s country.
Frequently Asked Questions
These are the most commonly asked questions about the Employer of Record
Can’t find what you’re looking for? Get in touch with an expert
Is it free to contact MB Remote?
Yes. Contacting us is completely free and without obligation. We’ll discuss your needs and explain how our EOR solution works before anything else.
How long does it take to hire an employee?
Hiring can usually be completed within a few days, depending on the country and local requirements.
What is an Employer of Record (EOR)?
An Employer of Record is a legal entity that employs workers on your behalf. MB Remote handles contracts, payroll, taxes, and local labor law compliance, while you manage the day-to-day work.
Who is the legal employer of the employee?
MB Remote is the legal employer, but the employee works exclusively for you as part of your team.
In which countries can you hire employees?
We support hiring in multiple countries. Contact us to check availability for a specific location.
How does payroll work?
We manage payroll, taxes, and social contributions in compliance with local regulations. You receive one simple monthly invoice.
Is my company still in control of the employee?
Yes. You manage tasks, schedules, and performance. We handle the legal and administrative side.