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EOR IN United States of America (USA)
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A guide to employing and growing your team in United States of America (USA)
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The United States of America is the world’s largest economy. The United States labor market is highly decentralized, with employment laws split between federal and state jurisdictions. Most employment is “at-will,” meaning either party can terminate the relationship at any time for any legal reason. The federal minimum wage remains $7.25 per hour, though over 30 states and numerous cities have established significantly higher rates (e.g., California at $16.00+). In 2026, many states have implemented annual inflation-based adjustments to their local minimum wages. Professional sectors often offer comprehensive benefits packagesincluding health insurance and 401(k) retirement plansto remain competitive, as these are not universally mandated by federal law.
Employer Contributions
Social Security (FICA): 6.2% (Capped at $184,500 of earnings)
Medicare (FICA): 1.45% (No wage cap)
Federal Unemployment (FUTA): 0.6% (Effective rate on first $7,000)
State Unemployment (SUTA): 0.5% – 12% (Varies by state and employer experience)
Total Employer Contribution: ~8.25% – 12%
Employee Payroll Taxes
Social Security (FICA): 6.2% (Capped at $184,500)
Medicare (FICA): 1.45%
Additional Medicare Tax: 0.9% (On earnings above $200,000)
Total Employee Contribution: 7.65%
Employee Income Tax Rates
Up to $12,400: 10%
$12,401 – $50,400: 12%
$50,401 – $105,700: 22%
$105,701 – $201,775: 24%
$201,776 – $256,225: 32%
$256,226 – $640,600: 35%
Above $640,600: 37%
Statutory Leave
There is no federal law requiring paid vacation or sick leave. However, the Family and Medical Leave Act (FMLA) provides eligible employees at companies with 50+ staff with 12 weeks of unpaid, job-protected leave for serious health conditions or a new child. Many states (e.g., New York, California, Washington) have enacted their own Paid Family Leave programs funded through payroll deductions.
Pregnancy and Maternity Leave
Under the federal Pregnant Workers Fairness Act (PWFA) and PUMP Act, employers must provide reasonable accommodations for pregnancy and lactation. While federal law does not mandate paid maternity leave, 14 states and D.C. provide state-funded paid family leave typically ranging from 8 to 12 weeks at a portion of the employee’s salary.
Paternity Leave
Similar to maternity leave, there is no federal paid requirement. Eligible fathers can use 12 weeks of unpaid leave under FMLA. State-funded programs in progressive states are gender-neutral and offer paid bonding time for both parents.
Work-Related Injury Leave
Jury Duty: Employers must allow time off, but federal law does not require payment (though many states do).
Voting Leave: Varies by state; many require 1-3 hours of paid time off if the employee cannot vote outside working hours.
Bereavement: Not federally mandated; usually governed by company policy.
Termination Process
Most employees are “At-Will,” allowing for termination without cause or notice, provided it is not discriminatory or retaliatory. For mass layoffs (100+ employees), the WARN Act requires 60 days’ advance notice. Severance pay is not legally required unless specified in an employment contract or a collective bargaining agreement.
Notice Period
Because of the at-will doctrine, there is no legal requirement for a notice period for either party. However, it is standard professional courtesy to provide 2 weeks’ notice for resignations. Contracts for executives often specify 30 to 90 days
Probation Period
Probationary periods (often 90 days) are common in the U.S. but have no specific federal legal status. They are primarily used by employers to determine benefit eligibility and to evaluate fit before an employee is fully integrated into the company’s internal seniority or bonus systems.