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SALARY PAYMENT IN United States Dollar (USD, $)
CONTRACT LANGUAGES English
PAYROLL TAX Varies per state
PAYROLL CYCLE Bi-weekly or weekly
TIME TO HIRE 12 hours
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With the world’s strongest economy, a massive consumer market, and perhaps the world’s most business-friendly legal and regulatory system, the United States of America (US) is a prime expansion destination. Any business looking at hiring employees in the US should carefully consider differences in federal and state legislation and consider the benefit of engaging an HR partner to support their hiring in the country.
Population 337M (164M Labor Force) | Capital City Washington D.C. | Languages Spoken English |
Currency United States Dollar (USD) | GDP per capita $69,531 | Ease of Doing Business 6th in the world |
Minimum Wage $7.25/hour (federal, some states set a higher minimum) | Average Wage $4,297 per month | Paid Leave None (21 days standard) |
The United States is renowned for its energetic business environment. In the World Bank’s Ease of Doing Business report, the United States of America ranked 6th out of 190 countries. The primary driver of the US’s dynamic business environment is the highly-educated and entrepreneurial population.
Highly competitive, the US business environment rewards innovation and is therefore technologically sophisticated. Businesses benefit from growth-focused economic policies and a stable legal system, at both the federal and state-level, that delivers predictable results.
Undoubtedly, the US business environment is incredibly attractive but it’s important to note that strong regulations, in relation to business conduct and consumer protections, are enforced. For example, health and safety laws apply at both the federal and state level and other regulatory aspects to consider include advertising practices, product warranties and service contracts.
As well as federal requirements there’s also a need to comply with the state and city requirements, where your business is incorporated and/or operating. For example, businesses operating in certain industries must obtain licenses, permits and certificates at the federal, state, city, and county level – see the US SBA website for further details.
After falling into recession in 2020 the US economy rebounded strongly in 2021 with an annual GDP growth rate of 5.67%, a 2.3% increase on the pre-pandemic rate. Through 2022 the growth rate has slowed, with the OECD forecasting an annual GDP growth of 2.5%, and a fall to 1.3% in 2023.
Business operating costs continue to increase. Tightness in the US labor market has led to wages increasing across the country. Lingering issues with global supply chains and the conflict in Ukraine are sighted as factors contributing to rises in the cost of commodities. As such, at 7.7% in Q4 of 2022, inflation remains above the Federal Reserve’s 2% target.
In the United States, labor laws are imposed at the federal, state and local level. The US differs from other advanced economies in that its labor laws do not provide for many of the minimum rights of employment and benefits that are seen in European countries or Canada. For example, US employers are not required by law to pay employees for time not worked (paid vacation) and the concept of at-will employment means employers can dismiss employees without having to establish ‘just cause’ (read more at Which Laws Apply to Terminating Employees Overseas).
At the Federal level, the US Department of Labor enforces a number of key pieces of employment legislation, including;
State law tends to mirror federal law, with some states mandating more employee protections and employment benefits than others. For example, California has extensive employment laws, including additional legislation relating to pay equity and transparency. One example is section 432.3 of the California Labor Code which prohibits employers from seeking or relying on salary history information when assessing candidates’ suitability for a job.
At Horizons, we have the capacity to combine our USA PEO & Employer of Record service with the handling of payroll and additional recruitment services. By taking on the complex administration and legal compliance work, we allow you to focus your efforts on a rapid and successful expansion into the US market.
American business culture is highly individualistic and entrepreneurial. American employees tend to be highly motivated to succeed and pursue ambitious career goals. Employers who are able to successfully harness these qualities, by setting the right incentives and creating suitable work environments, are likely to succeed.
A professional attitude in terms of punctuality and service level are important characteristics but work ethic is considered the most valuable attribute. American employees work long hours with 50-hour weeks common across many industries. The USA has an extremely egalitarian business culture, with an individual’s accomplishments and talents respected more than their age or background.
Recruitment is handled online in the USA with job portals and online interviews used to identify and assess candidates. With high competition for most jobs, the screening process is an important aspect of the hiring process. Recruiting software is often used to deal with large numbers of candidates, with pre-employment aptitude testing used widely. The types of tests used vary between industries and roles but cognitive and situational-judgment assessments are popular.
The strength of the resume (CV) and cover letter is also an important consideration. Whereas European cultures exercise modesty and look for potential in candidates, the US values self-confidence and candidates are expected to go into detail on their past successes and emphasize what it is they can bring from day one. Of course, a self-confident resume and cover letter must be backed-up by a strong performance in any interviews whether online or in-person.
When interviewing potential employees in the USA, employers must comply with various federal and state laws. For example, employers need to be aware of laws relating to discrimination such as Title VII of the Civil Rights Act and the Age Discrimination in Employment Act. Keep in mind that states go further than others in protecting the rights of job seekers in terms of discrimination categories and privacy. The need for care and expertise during the recruitment process is another reason to consider our USA Employer Record and PEO services.
The specific format of job interviews varies across the USA. Some companies choose to conduct all of their interviews online whilst others opt for a combination of online and in-person interviews. As with job interviews in Europe or Canada, punctuality and presentation are important aspects of job interviews in the USA.
Questions about salary history are regulated by state law. Among states and local governments, the trend is moving in the direction of prohibiting employers from requesting information or asking candidates about their salary history.
See Industry Dive’s running list of states and local governments (city administrations) that have prohibited employers from requesting salary information from potential employees.
When changing jobs, the typical salary increase in the USA is around 5%. This figure is an average that represents differences between industries and age brackets that employees fall under. The rate of annual salary growth tends to be higher for younger employees, for example, in 2021 workers aged 25-34 received a 9.8% salary increase when changing jobs whereas workers over the age of 55 received an average increase of 4.1%.
The onboarding process is an important step in the hiring process. In the USA, workplace interactions are predominantly informal and colleagues are generally relaxed about sharing details of their personal lives with one another in the interest of building strong working relationships. In the USA, an effective onboarding process helps new employees get up to speed with company processes whilst also ensuring they have the opportunity to get to know their new colleagues
Keep in mind that the onboarding process also involves legal obligations, such as establishing a contract of employment. At Horizons we have the relevant legal expertise to handle the onboarding of employees in the USA – contact us for a free consultation on your hiring project in the USA. Once the new employee has accepted the offer letter and signed the contract of employment the onboarding process moves onto the next phase: integrating the new employee.
Remote working and hybrid working models have been growing in popularity in the US over the past decade, and the trend accelerated in 2020 with the Covid19 pandemic. A 2022 study by McKinsey found that 58% of Americans (involved in the study) have the opportunity to work from home at least 1 day per week. The same study found that a large majority of American workers are in favor of flexible or hybrid working models – a key consideration for employers designing employee benefits packages.
A number of tools are used to manage and facilitate remote working arrangements in the USA.
While the Family and Medical Leave Act (1993) entitles employees to 12 weeks of unpaid vacation, for qualifying reasons, the law of the United States of America has no legal minimum in relation to paid vacation, otherwise known as paid time off (PTO).
Certain states have legislation on paid time off, but such legislation usually relates to paid sick leave. The states of Maine and Nevada are alone in having policies which allow for state-mandated PTO to be used for reasons other than illness.
Although there is no legal minimum for annual leave in the USA, many employers include PTO as part of employee benefits in employment contracts. A standard agreement is usually 25 days per year accrued at a rate of 2 days for each month worked.
Date | Holiday name |
---|---|
1 Jan Sunday | New Year’s Day |
2 Jan Monday | New Year’s Day (substitute) |
16 Jan Monday | Martin Luther King Jr. Day |
20 Feb Monday | Presidents’ Day |
29 May Monday | Memorial Day |
19 Jun Monday | Juneteenth |
4 Jul Tuesday | Independence Day |
4 Sep Monday | Labor Day |
9 Oct Monday | Columbus Day |
10 Nov Friday | Veterans Day (substitute) |
11 Nov Saturday | Veterans Day |
23 Nov Thursday | Thanksgiving Day |
25 Dec Monday | Christmas Day |
Only federal employees are entitled to PTO on federal holidays, as standard. In the private sector, the decision to award PTO on designated federal holidays lies with employers.
American employees typically expect an annual salary increase that matches or exceeds, the rate of inflation.
A survey by a management consultant specializing in employee compensation, Pearl Meyer, found that the annual base salary increase for all employee groups in the USA amounted to 4.8% in 2022.
Remote working is increasing in popularity across the United States; as such, the quality of the freelance talent pool is improving. However, the concept of ‘at-will employment’ gives US employers greater flexibility than European or Canadian employers. For example, there is no legal requirement for US employers to provide ‘just cause’ when laying off employees.
The benefits of hiring an employee as opposed to a freelancer, include more contractual control and ensuring compliance with tax and social security laws. Ultimately the decision will depend on the circumstances of your business – for instance, businesses seeking to fill high-level roles would benefit from a more formal employment arrangement where contractual protections covering IP rights and non-compete clauses could be useful. You may also find it useful to consider a long-term recruitment model, such as Horizons’ retained search service.
Yes, US companies can hire foreigners provided they have attained the relevant certifications from the US Department of Labor – see ‘Alien Employment Certifications’. Only after certification has been approved can the work begin on securing a US work visa from the US Citizenship and Immigration Services. Of course, our team of in-country legal experts can assist with the process, reach out for a free consultation on your hiring project in the USA.
Commonly, businesses choose to set up a local entity in the U.S. in the form of a ‘Limited Liability Company’ (or ‘LLC’), or a corporation. Note LLCs are incorporated under state law in the United States. The disadvantages of setting up your own legal entity revolve around the steep learning curve and legal costs and getting up to speed with the myriad legal and taxation requirements at the federal, state and local level. This is what makes a ‘Professional Employer Organization’ or ‘PEO’ can be particularly helpful.
By choosing to partner with Horizons as your USA PEO & Employer of Record you can benefit from our team of in-country legal and recruitment experts. As well as a rapid market entry, we also provide assistance with necessary processes, including; talent acquisition and in-country HR services, such as the drafting of strong employment contracts and payroll processing services that are compliant with local regulations.
Recruitment agencies and job portals are viable options for companies who have established LLC’s however you will also require additional legal services to ensure compliance with US law. Instead of working with multiple stakeholders, many businesses choose Horizons to handle the entirety of your USA hiring project. We are experts in US talent acquisition and, thanks to our established networks and knowledge of hiring markets in different states, we can ensure you hire the best possible workforce in the USA.
Your business can easily hire employees in the USA without opening a local entity. We handle local employment law, complex tax regulations, and international payroll in 180+ countries worldwide. All you need to do is focus on your business.
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71 Robinson Road #13-153
068895, Singapore
+65 3105 1170
Skalitzer Str. 85/86
10997, Berlin
+49 30 3119 9653
1700 S. Lamar Blvd Suite 338
Austin, Texas 78704
+1 (737) 265-6065
See more locations
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