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Hire Employees in United States
  • By Travis Kliever
  • Updated March 1, 2024
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Travis Kliever
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Travis is a global business development advisor. He has spent the last 14 years supporting business establishment and development in North America, Southeast Asia, and throughout the world. With multiple degrees from the University of Oregon, Travis currently splits his time between the US, and Bali, Indonesia. At RemotePad, Travis writes about remote work, hiring internationally and PEO/EOR business models.
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Hire Employees in United States

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When hiring in the US, consider compliance with labor laws, cultural diversity, and language barriers. For expats, manage visa issues and understand tax implications. Prioritize clear employment contracts detailing compensation, benefits, and termination policies. Learn more in this guide.

Key Takeaways

  • Understand labor laws: Familiarize yourself with federal and state labor laws.
  • Advertise the job: Advertise the job on U.S. job websites, newspapers, or through local recruitment agencies.
  • Interview and select: Conduct interviews and select the best candidate.
  • Prepare an employment contract: Prepare a contract that complies with U.S. labor laws, and onboard the employee.

What are the key Things to Know Before Hiring employees in United States

Hiring employees in the United States involves adhering to a number of laws and regulations. There are also practical considerations to take into account. Here are some key things to know:

  1. Labor Laws: U.S. labor laws protect employees in various ways. You must comply with laws related to wages (including overtime), safety and health, non-discrimination, and workers’ compensation, among others. Some key federal laws include the Fair Labor Standards Act (FLSA), the Occupational Safety and Health Act (OSHA), and the Americans with Disabilities Act (ADA).
  2. Employment Discrimination: U.S. law prohibits discrimination based on race, color, religion, sex, pregnancy, national origin, age, disability, or genetic information. These protections are overseen by the Equal Employment Opportunity Commission (EEOC).
  3. Immigration Laws: If you’re hiring non-U.S. citizens, you must comply with immigration laws, including verifying eligibility to work in the U.S. using Form I-9. Hiring unauthorized workers can lead to severe penalties.
  4. Taxes: Employers must withhold federal and often state and local taxes from employees’ wages. This includes income tax, Social Security, and Medicare taxes. Employers typically need to pay unemployment tax as well.
  5. Employee Classification: Employees must be correctly classified as either exempt or non-exempt from overtime under the FLSA. Misclassifying employees can lead to fines and penalties. Also, be careful about the distinction between employees and independent contractors, as they are treated differently for tax purposes and benefits.
  6. Benefits: While not all benefits are required by law, some such as time off for voting, jury duty, family leave, and military leave are. Health insurance is also required for companies of a certain size under the Affordable Care Act.
  7. Job Descriptions and Advertisements: These should be written to attract a diverse group of qualified candidates, and should not discourage any particular group from applying. They should focus on the skills and qualifications required for the job.
  8. Background Checks: If you plan on conducting background checks, understand the laws surrounding this, including the Fair Credit Reporting Act (FCRA). In certain cases, you may need the applicant’s permission.
  9. Confidentiality and Non-Disclosure Agreements: Depending on the nature of your business, you may require employees to sign these to protect your business’s proprietary information.
  10. Employment Contracts: While not required, having a detailed employment contract can help clarify expectations and protect both parties.
  11. Local and State Laws: In addition to federal laws, you’ll also need to comply with any laws in your specific state or locality, which can cover areas such as minimum wage, sick leave, and more.

Before hiring, you may want to consult with a human resources professional or employment attorney to ensure you’re compliant with all relevant laws and best practices.

How much does it cost to hire employees in United States?

The cost of hiring an employee in the United States goes beyond just their salary or hourly wage. Here are some costs associated with hiring an employee:

  1. Salary or Wages: This is the base compensation you will provide to the employee for their work. The amount can vary widely depending on the industry, role, employee’s experience, and geographical location.
  2. Employer Payroll Taxes: Employers are responsible for paying Social Security and Medicare taxes (collectively known as FICA), which as of my knowledge cutoff in September 2021, is 7.65% of an employee’s gross pay. You’ll also need to pay federal and state unemployment taxes.
  3. Benefits: This can include health insurance, retirement contributions, tuition reimbursement, paid leave, and other perks. The cost can vary significantly, but on average, benefits may add 30-40% to the base compensation cost.
  4. Recruitment Costs: These can include advertising job openings, using a recruitment agency, or spending internal resources on reviewing applications, conducting interviews, and onboarding new employees.
  5. Training and Development: Training a new employee to get them up to speed can take significant time and resources. You may also choose to invest in ongoing training and professional development.
  6. Workspace and Equipment: Depending on the job, you may need to provide a workspace, computer, software, mobile phone, protective equipment, or other tools necessary for the job.
  7. Legal and Regulatory Compliance: There may be costs associated with ensuring compliance with labor laws, occupational safety and health regulations, etc.
  8. Workers’ Compensation Insurance: This cost varies by state and the type of work performed, but it’s typically a mandatory expense.
  9. Turnover Costs: If an employee leaves, you’ll need to spend resources on finding a replacement, and there may be lost productivity in the meantime.

These costs can add up to a significant amount, and it’s important to budget for them when considering hiring employees. The actual cost can vary significantly depending on the specifics of the job and your business, so it’s a good idea to consult with a financial advisor or accountant.

What are the legal requirements for hiring employees in United States?

The legal requirements for hiring employees in the United States can be quite complex due to the range of federal, state, and local laws involved. Here’s a broad overview of some of the most important legal requirements:

  1. Eligibility to Work: Under the Immigration Reform and Control Act, employers must verify an employee’s eligibility to work in the U.S. This is typically done using Form I-9, which requires the employer to examine the employee’s identification and employment authorization documents.
  2. Non-Discrimination: The Civil Rights Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, and other laws prohibit employment discrimination based on factors such as race, color, religion, sex, national origin, disability, or age. This applies to all stages of employment, including hiring.
  3. Fair Labor Standards Act (FLSA): The FLSA sets requirements for minimum wage, overtime pay, recordkeeping, and child labor. Employers need to classify employees correctly as exempt or non-exempt from overtime and pay them accordingly.
  4. Tax Withholding: Employers must withhold federal income tax and FICA (Social Security and Medicare) tax from employees’ paychecks. Most states also have income tax that must be withheld. Employers need to have employees complete Form W-4 to determine the correct amount of tax to withhold.
  5. Employer Identification Number (EIN): Employers need to obtain an EIN from the IRS for tax reporting purposes.
  6. State-Specific Requirements: States have their own laws related to topics such as minimum wage, paid sick leave, and more. Some states also require employers to pay for disability insurance.
  7. Occupational Safety and Health Act (OSHA): Employers have a responsibility to provide a safe workplace and may need to comply with specific safety and health standards.
  8. Workers’ Compensation: Employers are generally required to carry workers’ compensation insurance to cover employees in case of work-related injury or illness.
  9. Employee Privacy: Employers must respect employees’ privacy, including in areas such as background checks, medical information (under the Health Insurance Portability and Accountability Act or HIPAA), and drug testing.
  10. Posting Requirements: Employers are required to display certain federal and state labor law posters where employees can easily see them.

This is a broad overview and not a comprehensive list. Depending on the specifics of your business, there may be other legal requirements. For example, employers of a certain size have additional requirements under laws such as the Family and Medical Leave Act (FMLA) and the Affordable Care Act (ACA). It’s a good idea to consult with a human resources professional or an employment attorney to ensure you’re in compliance with all relevant laws.

What are the key ways to hire employees in United States, such as PEO and EOR solutions?

When hiring employees in the United States, there are various methods and solutions you can consider. Two common approaches are using a Professional Employer Organization (PEO) or an Employer of Record (EOR). Here’s an overview of these solutions and other key ways to hire employees:

  1. Professional Employer Organization (PEO): A PEO is a company that enters into a co-employment relationship with your business. They become the employer of record for tax and insurance purposes, while you retain control over day-to-day operations and management. The PEO handles payroll, benefits administration, compliance, and other HR functions. This can be a suitable option for businesses that want to outsource HR responsibilities.
  2. Employer of Record (EOR): An EOR is similar to a PEO but typically focuses on handling the administrative and legal aspects of employment. The EOR becomes the official employer of record and takes care of payroll, benefits, tax withholding, and compliance on your behalf. This can be a good option if you want to hire employees quickly in a new market or location without setting up a legal entity.
  3. In-house Hiring: You can choose to establish your own HR department or use existing HR resources within your company to handle the hiring process. This involves recruiting, interviewing, onboarding, payroll processing, benefits administration, and ensuring compliance with labor laws. This method provides direct control but requires significant time and resources.
  4. Staffing Agencies: Staffing agencies help match job seekers with employers. They handle the recruitment and screening process, allowing you to select candidates from a pool of pre-qualified individuals. Staffing agencies can be particularly useful for temporary or seasonal hiring needs.
  5. Job Boards and Online Platforms: Posting job openings on online platforms and job boards allows you to reach a wider audience of potential candidates. Websites like LinkedIn, Indeed, and Glassdoor are popular platforms for advertising job openings and sourcing talent.
  6. Networking and Referrals: Leverage your professional network and encourage employee referrals to find qualified candidates. Referrals can often lead to high-quality hires, as they come with recommendations from trusted sources.
  7. Internships and Apprenticeships: Offering internships or apprenticeships can be an effective way to identify and train talent, particularly for entry-level positions. This allows you to assess potential employees’ skills and fit within the organization before making a permanent hiring decision.

It’s important to consider your specific business needs, budget, and hiring goals when choosing the right method for hiring employees in the United States. Consulting with HR professionals or employment attorneys can provide further guidance on the best approach for your organization.

FAQs

 While there is no federal requirement for employers to provide specific benefits, some benefits may be mandated by state or local laws. For example, the Affordable Care Act (ACA) requires certain employers to offer health insurance coverage to their employees. Additionally, some states have their own laws regarding benefits like paid sick leave or family leave. It's essential for employers to familiarize themselves with the specific laws in their jurisdiction and determine the benefits they are obligated to provide.
  1. Employers are generally allowed to ask about an applicant's criminal history, but there are certain restrictions. The Equal Employment Opportunity Commission (EEOC) advises employers to consider the nature and relevance of an applicant's criminal record in relation to the job. Some states and cities have enacted "ban the box" laws that limit when and how employers can inquire about an applicant's criminal history. It's crucial for employers to understand the applicable laws in their jurisdiction to ensure compliance with fair hiring practices.

In the United States, employment contracts are not required for most employees unless specifically mandated by state law or when entering into certain agreements, such as non-compete agreements. However, having written employment contracts can be beneficial as they help establish the terms and conditions of employment, including compensation, job responsibilities, termination procedures, and any restrictive covenants. Employment contracts provide clarity and can help protect both the employer and employee in case of disputes or misunderstandings. It's advisable to consult with an employment attorney to determine whether an employment contract is necessary or beneficial for your specific circumstances.

Please note that employment laws can vary, and it's important to consult with legal professionals or relevant government agencies to ensure compliance with the specific laws and regulations that apply to your business and location.

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