Employment Law in the US

Employment relationships in the US are governed by federal laws such as the Fair Labor Standards Act, the Family and Medical Leave Act, and the Occupational Safety and Health Act. State-specific regulations also exist. Federal and state laws outline workers' rights, employer obligations, and procedures for settling labor disputes.​

Additionally, US law places specific regulations on the use of temporary and agency workers. Staffing agencies can provide workers to third-party companies only in cases of temporary, occasional, or transitory tasks. Compliance with statutory requirements such as minimum wage standards, social security contributions, and working time regulations is essential.​

Because of the complexity of the United States' labor and tax laws, compliant employment contracts are a critical business requirement. With Safeguard Global as your partner, you can hire employees in the United States with confidence, knowing that every contract meets legal standards. We also provide guidance on cultural expectations and hiring best practices while helping you stay current with regulatory changes.​

Contracts

Employers are required to provide written employment contracts detailing terms and conditions, including job responsibilities, compensation, working hours, and benefits.

In the United States, employment contracts can be fixed-term or at-will, depending on state law, the nature of the job, and the agreement between the employer and employee. Permanent employment contracts typically include benefits such as health insurance, retirement plans, paid leave, and other entitlements, though these can vary by employer and state.

Fixed-term employees may or may not receive the same benefits as permanent employees, as there is no federal requirement for equal treatment, and benefits are often determined by the employer's policies.

Termination and notice periods

In the United States, federal laws do not require a specific notice period for termination; however, employers must comply with the Worker Adjustment and Retraining Notification (WARN) Act for mass layoffs, which mandates a 60-day notice. In some cases, terminated employees are entitled to a warning and a fair hearing.

There is no federal requirement for severance pay; however, it may be provided based on employment contracts, company policies, or collective bargaining agreements. There is no statutory gratuity payment in the United States. As your Employer of Record (EOR) in the United States, we can assist you in managing employee terminations by providing legal guidance and a personalized process to ensure compliance with labor laws and minimize legal risks.

Probation periods

In the United States, probation periods are not mandatory for private-sector employees. However, there are mandatory probation periods for some roles with the federal government. The length of mandatory probation periods can vary.

Working hours and overtime

The standard working week in the United States typically consists of 40 hours, spread across five days, with no federal legal maximum on daily working hours, though some states may impose daily limits. Employees are entitled to rest periods as determined by state laws, which may vary; there is no general federal requirement for rest between working days or for weekly rest periods.​ However, in some industries, a minimum rest period between shifts may be required.

Any work beyond the standard working hours is considered overtime. Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive overtime pay for hours worked in excess of 40 in a workweek at a rate of at least one and one-half times their regular pay rate. Some states have additional overtime laws that provide greater protections.

Taxes

In the United States, withholding tax is known as federal income tax and is deducted by employers before paying salaries to employees. Employers must deduct federal income tax from employee wages and salaries based on applicable income tax rates and submit it to the Internal Revenue Service (IRS).​

State income tax is also deducted from wages and salaries, and some cities in the US also deduct income taxes.

Employer payroll contributions

The United States, employers make contributions toward social security and Medicare (health insurance for retired individuals), and they typically contribute to health insurance plans for existing health needs, as well as retirement plans. In addition, workers' compensation is usually financed by contributions from state governments, employers, and employees. ​