Effortless Hiring in United States

Employment Laws

The U.S. employment landscape is governed by a combination of federal and state laws. Key federal statutes include:

• Fair Labor Standards Act (FLSA): This law establishes standards for minimum wage, overtime pay, recordkeeping, and child labor. It protects workers against unfair pay practices and ensures that employees are compensated fairly for their work. The FLSA applies to employers with annual sales of $500,000 or more or those engaged in interstate commerce [1][2].
• Civil Rights Act of 1964: This landmark legislation prohibits employment discrimination based on race, color, religion, sex, or national origin. It aims to ensure equal opportunity in hiring and employment practices.

Onboarding Process

Employers typically require the following during the onboarding process:

• Completion of Form I-9: This form verifies employment eligibility in the United States.
• Submission of Form W-4: This form is used for tax withholding purposes, allowing employers to determine the correct amount of federal income tax to withhold from an employee's paycheck.
• Provision of personal identification documents: Such as a driver's license and Social Security card, to confirm identity and eligibility to work.

Types of Employment Contracts

1. At-Will Employment:

• The predominant form of employment in the U.S., allowing either party (employer or employee) to terminate the employment relationship at any time, for any lawful reason, without prior notice.

2. Fixed-Term Contracts:

• Employment for a specified duration or for the completion of a specific project. These contracts automatically terminate at the end of the specified period.

3. Part-Time and Temporary Employment:

• Positions with limited hours or duration, often used for seasonal work or to fill short-term staffing needs.

Payroll Frequency

• Common payroll schedules include weekly, bi-weekly, semi-monthly, and monthly, varying by employer and industry. According to the Bureau of Labor Statistics (BLS), as of 2024:
• Bi-weekly is the most common pay frequency, with approximately 43% of U.S. businesses paying their employees every two weeks.
• Weekly payments are also prevalent, accounting for about 27% of businesses.
• Semi-monthly and monthly payments are less common, with monthly paychecks being used by only about 4.7% of employees.

Minimum Wage

• As of 2024, the federal minimum wage is $7.25 per hour. However, many states and localities have established higher minimum wages. Employers must comply with the higher rate applicable in their jurisdiction.

Payroll Deductions

1. Federal Income Tax:

• Federal income tax is withheld based on the employee's W-4 form and IRS tax tables. The amount withheld varies depending on the employee's earnings, filing status, and allowances claimed.

2. State and Local Taxes:

• These taxes vary depending on the employee's work location. Some states impose income taxes, while others do not.

3. FICA Taxes:

• Social Security Tax: Employers withhold 6.2% of wages up to an annual limit ($160,200 for 2024).
• Medicare Tax: Employers withhold 1.45% of all wages, with an additional 0.9% for high earners (individuals earning over $200,000).

4. Other Deductions:

• Additional deductions may include health insurance premiums, retirement contributions (such as 401(k) plans), and wage garnishments.

As a trusted Employer of Record (EOR), Cadana eliminates the complexity of payroll administration, saving businesses time and resources while ensuring compliance with United State’s labor laws.

Employee Income Tax

The U.S. employs a progressive federal income tax system, with rates ranging from 10% to 37% as of 2024. The tax brackets for 2024 are structured as follows:

• 10% on income up to $11,000 for single filers.
• 12% on income over $11,000 up to $44,725.
• 22% on income over $44,725 up to $95,375.
• 24% on income over $95,375 up to $182,100.
• 32% on income over $182,100 up to $231,250.
• 35% on income over $231,250 up to $578,125.
• 37% on income over $578,125.

State income tax rates vary widely; some states impose no income tax at all (e.g., Florida and Texas), while others have rates that can exceed 10%.

Employer Contributions

1. FICA Taxes:

• Employers are required to match employee contributions for FICA taxes:
• Social Security Tax: Employers withhold 6.2% of wages from employees and must match this amount, totaling 12.4% for Social Security.
• Medicare Tax: Employers withhold 1.45% from employee wages and also match this amount, resulting in a total of 2.9% for Medicare. Additionally, there is an extra 0.9% Medicare tax that applies to employees earning more than $200,000 in a calendar year; however, employers do not match this additional tax.

2. Federal Unemployment Tax Act (FUTA):

• FUTA imposes a tax of 6.0% on the first $7,000 of each employee's wages. Employers can receive a credit of up to 5.4%, reducing the effective FUTA rate to as low as 0.6%.

3. State Unemployment Taxes (SUTA):

• Rates and wage bases for SUTA vary by state, and employers are responsible for paying these taxes based on their state’s regulations.

Types of Leave in the United States

1. Annual Leave

• There is no federal mandate for paid vacation in the United States. Leave policies are determined by employers and can vary widely. According to the Bureau of Labor Statistics, while many employers offer some form of paid time off (PTO), the average amount of paid vacation days is about 10 days per year for private industry workers, with variations depending on tenure and company policy. Some states have laws regarding PTO, but these are not uniform across the country.

2. Parental Leave

• Family and Medical Leave Act (FMLA): This federal law provides eligible employees with up to 12 weeks of unpaid, job-protected leave for specified family and medical reasons, such as the birth of a child or caring for a seriously ill family member. Employees must have worked for their employer for at least 12 months and meet other criteria to qualify for FMLA leave.

3. Sick Leave

• The U.S. lacks a federal requirement for paid sick leave. However, several states and municipalities have enacted laws mandating paid sick leave. For example, California and New York have laws that require employers to provide a certain amount of paid sick leave to employees. The specifics vary by jurisdiction, including accrual rates and usage conditions.

4. Public Holidays

• The U.S. observes 10 federal holidays, including New Year's Day, Independence Day, and Christmas Day. However, private employers are not required to provide paid time off for these holidays. Many employers choose to offer paid holidays as part of their benefits package, but this is at their discretion rather than a legal requirement.

Mandatory Benefits

1. Social Security and Medicare:

• Funded through payroll taxes, these programs provide retirement and healthcare benefits to eligible individuals. Employees contribute 6.2% of their wages to Social Security and 1.45% to Medicare, with employers matching these contributions. High earners may face an additional 0.9% Medicare tax on income exceeding $200,000 for single filers or $250,000 for joint filers.

2. Unemployment Insurance:

• This program provides temporary financial assistance to eligible unemployed workers who have lost their jobs through no fault of their own. Funded by both federal and state taxes, the amount and duration of benefits vary by state.

3. Workers' Compensation:

• This insurance covers medical expenses and lost wages for employees who are injured on the job. Each state has its own workers' compensation laws, which dictate the coverage provided and the process for filing claims.

Supplemental Benefits

Many employers offer additional benefits to attract and retain talent, which can include:

• Health Insurance: Employers often provide health insurance plans that may cover medical, dental, and vision care.
• Retirement Plans: Common plans include 401(k) plans, where employers may match employee contributions up to a certain percentage.
• Paid Time Off (PTO): This includes vacation days, sick leave, and personal days, with policies varying widely by employer.
• Wellness Programs: Initiatives aimed at improving employee health and well-being, which may include gym memberships, health screenings, or mental health resources.

Process

Under the "at-will" employment doctrine, either party (employer or employee) can terminate the employment relationship at any time, for any lawful reason. However, terminations must not violate:

• Anti-discrimination laws: Employers cannot terminate employees based on race, gender, religion, or other protected characteristics.
• Contractual agreements: If an employment contract specifies terms regarding termination, those must be adhered to.

Employers are encouraged to follow best practices, such as providing clear reasons for termination and documenting performance issues or misconduct to protect against potential legal claims.

Notice Period

• There is no federal requirement for advance notice of termination under at-will employment. However, some states may have specific regulations regarding notice periods.
• While it's common practice for employees to provide at least two weeks' notice when resigning, this is not a legal requirement. Employers may also choose to give notice of termination as a courtesy, but they are not obligated to do so unless specified in an employment contract.

Severance Pay

Severance pay is not mandated by federal law. The provision of severance is typically determined by company policy or individual employment contracts. Some employers offer severance packages as part of their employee benefits to ease the transition for terminated employees and mitigate potential legal risks.