🇺🇸 Hiring in
United States
What every employer needs to know before hiring in United States — contracts, payroll setup, social security, and HR compliance obligations.
Key Employment Facts — United States
Minimum Wage
$ 7.25
Annual Leave
—
Notice Period (min)
—
Probation Period (max)
—
Maternity Leave
—
13th Month Pay
Not required
How to Hire in United States — Step by Step
Verify your hiring structure
Decide whether to hire via a local legal entity, a Professional Employer Organisation (PEO), or an Employer of Record (EOR). An EOR lets you hire in United States without setting up a local company.
Issue a compliant employment contract
All employees in United States must receive a written employment contract. It must cover job title, salary, working hours, notice period, and leave entitlements before or on the first day of employment.
Register for payroll and tax
You must register with the relevant United States tax authority before making any salary payments. Payroll must be run in local currency and employer contributions must be filed on time.
Enrol in social security
Employers in United States are required to enrol employees in the national social security scheme from day one. Both employer and employee contributions are mandatory.
Run compliant payroll
Pay must meet the statutory minimum wage, be paid on the agreed frequency, and include all mandatory deductions. Keep payslip records for the legally required retention period.
Understand termination rules
Notice periods, severance, and redundancy rules in United States are governed by employment law. Always seek local legal advice before terminating an employment contract.
Contractor Classification Rules — United States
How United States distinguishes employees from independent contractors, and the risks of misclassification.
Classification Test
ABC Test (state level) vs IRS Economic Reality Test (federal) — varies by state and purpose
Key Classification Factors
- ✓Behavioural control — right to direct and control how work is done
- ✓Financial control — business aspects, investment, profit/loss opportunity
- ✓Type of relationship — written contracts, employee benefits, permanency, integral part of business
Misclassification Penalties
IRS back-assessment of federal income tax, Social Security (6.2% employer), Medicare (1.45% employer), and FUTA. State penalties vary. Workers compensation exposure. California: penalties up to USD 25,000 per violation under AB5. DOL civil money penalties.
Off-Payroll / IR35 Equivalent
US has no federal IR35 equivalent but Section 530 of the Revenue Act 1978 provides a safe harbour for employers who have consistently treated workers as ICs with a reasonable basis.
Platform Worker Law
California AB5 (2020) — ABC Test for all workers. Uber and Lyft fought and passed Prop 22 (2020) exempting app-based gig workers in California. DOL 2024 independent contractor final rule reemphasises economic reality test for federal purposes.
Safe Harbour Criteria
Written service agreement, separate EIN (employer identification number), own business entity (LLC, S-Corp), multiple clients, own tools and equipment, own business insurance, invoicing, set own hours.
The US has a fragmented contractor classification landscape — different tests apply for different purposes (federal tax = IRS 3-factor, federal labour = DOL economic reality, state employment = varies). California is the strictest state with the ABC Test under AB5. The DOL 2024 final rule on independent contractors restores the economic reality test, making it harder to classify workers as ICs under federal law. Section 530 safe harbour protects employers who have consistently and reasonably treated workers as ICs. Worker misclassification is a top DOL and IRS enforcement priority — estimated USD 8 billion in lost tax revenue annually.
Work Permits — United States
Main visa and work permit routes for hiring foreign nationals in United States.
TN Visa (USMCA — Canada and Mexico only)
Processing
1–5 days
Validity
36 months
Cost
Varies
Sponsor Needed
Yes
For Canadian and Mexican professionals under the USMCA (formerly NAFTA). Listed professions only (engineers, accountants, lawyers, scientists, etc.). Canadians apply at the border with employer letter — no cap, no petition. Mexicans require DS-160 and consular interview. Annual cap-free and renewable indefinitely.
Official source ↗L-1 Visa (Intra-Company Transferee)
Processing
30–60 days
Validity
36 months
Cost
Varies
Sponsor Needed
Yes
For managers/executives (L-1A, 7 years) and specialised knowledge workers (L-1B, 5 years) transferred within a multinational. No annual cap. Must have worked for company for 1 year in past 3 years. Blanket L available for large multinationals. L-1A is a direct path to EB-1C green card.
Official source ↗O-1 Visa (Extraordinary Ability)
Processing
30–60 days
Validity
36 months
Cost
Varies
Sponsor Needed
No
For individuals with extraordinary ability in sciences, arts, education, business, or athletics (O-1A) or extraordinary achievement in motion picture/TV (O-1B). No annual cap. Evidence of sustained national/international acclaim required (awards, publications, media coverage, high salary). Agent or employer petitioner.
Official source ↗H-1B Visa (Specialty Occupation)
Processing
90–180 days
Validity
36 months
Cost
USD 10
Sponsor Needed
Yes
Main visa for foreign professionals in specialty occupations (IT, engineering, finance, accounting, architecture, etc.). Annual cap: 65,000 regular + 20,000 for US master's degree holders. Lottery system — demand far exceeds supply (registration fee USD 10 from 2024). Employer must pay prevailing wage. Employer-specific. Extensions and H-1B transfers possible.
Official source ↗EOR Intelligence
Skip the entity setup — hire via EOR in United States.
An Employer of Record handles all local compliance on your behalf.
This guide is for informational purposes only and does not constitute legal or HR advice. Employment law in United States is subject to change. Always consult a qualified local employment lawyer before hiring.
About This Guide
- ✓ Sourced from official government publications
- ✓ Updated monthly — always current rules
- ✓ For guidance only — not legal advice
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