Like many countries, the USA has been heavily impacted by recent world events, including the Covid-19 pandemic and the Russian invasion of Ukraine. The US economy saw the strongest rebound of all the G7 in Quarter 1, 2022 (Figure Two). With labor markets and business trade looking strong in the immediate years to come, the US remains in high-demand for partner PEO or Employer of Record (EOR USA).
The USA’s economy is unparalleled in its size and scope. The country makes up for almost a quarter of the global economic output (Figure One) and is by far the largest economy in the G7 group of nations. In terms of GDP, only China comes close; whereas it trails the US in terms of Nominal GDP (US$20.95 trillion vs. US$14.72) and GDP per Capita (US$63,206 vs. US$10,434), by Purchasing Power Parity, China comes in at US$24.28 trillion compared to the USA’s US$20.95 trillion. Thus, the US remains in high-demand for partner PEO or Employer of Record.
Doing business in the USA requires a strong grasp of the country’s labor laws, which in some respects are very different from any other parts of the word.Â Here are some of the key points to look out for.
A good place to start with understanding USA employment law is being aware of ‘At Will’ contracts, which the majority of USA-based workers are employed on. At Will contracts stipulate that workers can leave their jobs at any time, and allow employers to terminate as and when they want as well (though they need to remain compliant with equal opportunity and non-discrimination laws). Some contracts via Partner PEO USA will stipulate only being terminated for cause, and other legally enforceable clauses, many of which are outlined below.
The USA boasts a competitive labor market and negotiating offers can be tricky and fierce. Applicants will come to these discussions with labor market data (such as comparative salaries and benefit levels) and will be looking for specific terms added to the contracts, such as separation clauses, vacation days, and enhanced benefits including healthcare.
Some employers have a trial period for new employees, while others do not. For most employers who require a trial period – also known as a probationary period or an introductory period of employment (also by the partner PEO USA) – the employee typically will receive a review after a specified period of time.
The standard working week in the USA is forty hours, although part-time contracts are common. Flexible schedules and even days off can be negotiated as part of a job offer.
There is no set minimum for vacation days in the USA – this number is usually negotiated as part of a contract. There are ten national holidays, (New Year’s Day, the Birthday of Martin Luther King, Jr., George Washington’s Birthday, Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans Day, Thanksgiving, and Christmas Day) but private employers are not required to offer these days as paid time off (although it is common practice to do so).
Employers are not required to offer paid sick leave; however they are obligated under the Family and Medical Leave Act (FMLA) to offer up to twelve weeks of unpaid leave per employee per year (applicable to businesses with more than fifty employees). Similarly, paid parental leave (including maternity leave) is not a federal requirement, although a few states do mandate it. Parental leave is covered for up to 12 weeks as per the FMLA provisions, above.
Overtime is a statutory right for ‘non-exempt employees’, and is paid at 1.5 times for any hours worked over the employee’s contracted weekly hours. Taxes include Social Security (6.2%) and employer and employee contributions to Medicare (1.45%). Employers must contribute to the Federal unemployment Tax for each employee. The current minimum wage in the USA is $7.25 per hour.
Private health insurance isn’t required to be provided, but the Affordable Care Act penalizes employers and partner PEO USA who don’t offer this benefit. Supplementary benefits (including healthcare) are often negotiated by employees when they are offered a role. These can include pensions, including defined contribution plans such as the 401(k) and 403(b), scheduling, leave, and life insurance.
Final thoughts on EOR USA and partner PEO USA
With many idiosyncrasies and a leaning towards flexibility, ambiguity, and hard negotiation, the USA’s labor market requires some serious navigating. Employer of Record (EOR) in the United States can help businesses manage labor needs and regulations. Acvian is a global employment organization that supports companies and entrepreneurs with these services (and we also offer free tools, like the payroll cost calculator). Being your professional employment provider Acvian will take care of your workforce overseas and all HR related questions:
- Employee onboardings
- Local agreement drafting and approval
- Payroll setup and calculation
- Wages payment and payslips providing
- Benefits compensation and expenses reimbursement
- Tax filing
- Legal consultancy
Contact the Acvian team today and learn what it will take to hire your talents. With our reach in 118 countries and a strong network system, we can make your global expansion happen much sooner and at a lower overall cost.