Diverse Talent, Complex Compliance

The United States remains one of the most attractive markets for global business expansion, offering access to a diverse and skilled workforce. However, its complex regulatory environment shaped by federal, state, and local laws makes compliance a critical aspect of the hiring process. This guide provides employers with a clear overview of key employment regulations, mandatory benefits, and hiring practices to support compliant and effective workforce management in the U.S.

Contract and Work Rules

Most employees in the U.S. are hired on an “at-will” basis. This means the employment relationship can be terminated by either party at any time, with or without cause or notice, as long as it is not for an illegal reason. Exceptions include termination based on discrimination (e.g., race, sex, religion) or retaliation (e.g., whistleblower protection under various federal and state laws).

Severance Pay

There is no legal requirement for severance pay unless stipulated in an employment contract or collective bargaining agreement. However, many employers voluntarily offer severance in exchange for a signed release of potential legal claims.

Notice Period

U.S. law does not mandate a notice period for terminating individual employees. Unless covered by a contract or union agreement, employers can end employment immediately. Some employers request notice from employees who resign and may offer compensation for unused vacation if notice is given.

Anti-Discrimination and Equal Opportunity Laws

Under U.S. federal law, it is illegal to discriminate against an employee, either intentionally or through a disparate impact, based on race, color, religion, sex (including pregnancy, sexual orientation, and gender identity), national origin, age (40 or older), disability, or genetic information. Harassment or retaliation against employees for reporting discrimination, filing a complaint, or participating in an investigation or lawsuit is also prohibited. These laws typically apply to employers with 15 or more employees, as well as most labor unions and employment agencies.

Work Week and Leave

The standard U.S. workweek is 40 hours. There is no federal requirement for paid vacation or leave, but most employers offer paid time off (PTO) as a benefit. States may have additional regulations on breaks and rest periods.

Healthcare and Insurances

Under the Affordable Care Act (ACA), employers with 50 or more full-time employees must offer affordable health insurance or face penalties. Employer-provided health insurance is common and often includes medical, dental, and vision coverage.

Holidays and Annual Leave

The U.S. has no federal requirement for paid holidays or vacation. However, most employers observe national holidays such as Independence Day, Thanksgiving, and Christmas. Paid vacation is a common benefit, typically ranging from 10 to 20 days annually.

Maternity and Parental Leave

The Family and Medical Leave Act (FMLA) entitles eligible employees to 12 weeks of unpaid leave for childbirth, adoption, or serious health conditions. Some states (e.g., California, New York) offer paid family leave programs that provide partial income replacement.

Sick Leave and Medical Leave

Under the Family and Medical Leave Act (FMLA), eligible employees are entitled to up to 12 weeks of unpaid leave within a 12-month period for qualifying medical and family reasons. This includes a serious health condition that prevents the employee from performing their job, or to care for a spouse, child, or parent with a serious health issue. To qualify, employees must have worked for a covered employer (typically with 50 or more employees), for at least 12 months, and logged at least 1,250 hours during the past year.

While there is no federal law mandating paid sick leave for all employees, a growing number of states, cities, and counties require employers operating within their jurisdiction to provide paid sick leave. Examples include California, New York, and Massachusetts, among others. Employers must also comply with Executive Order 13706, which requires federal contractors to offer up to 7 days of paid sick leave annually to employees working on or in connection with certain federal contracts.

Disability Leave

Employees may qualify for unpaid leave under the FMLA for disability-related reasons. Additionally, state workers’ compensation laws may offer paid leave for job-related injuries. The Americans with Disabilities Act (ADA) requires employers to provide reasonable accommodations, which can include leave, unless it causes undue hardship.

Note: Employment laws can vary by state and may change. Always consult the latest regulations or legal counsel for specific compliance requirements.

Wages and Minimum Pay

The federal minimum wage is governed by the Fair Labor Standards Act (FLSA) and is currently $7.25 per hour, a rate unchanged since July 24, 2009. However, many states and municipalities have enacted higher minimum wage rates. In cases where federal and state laws differ, employers are required to comply with the law that provides the greater benefit to the employee.

While the FLSA sets standards for minimum wage and overtime, it does not regulate payment of wages above these levels, such as promised bonuses, commissions, or fringe benefits. These are typically governed by state laws, some of which provide mechanisms for employees to file claims for unpaid or promised compensation.

Overtime Pay

Under the FLSA, non-exempt employees must receive overtime pay for hours worked over 40 in a workweek, at a rate of at least 1.5 times the regular pay rate. Some states have more stringent rules, such as daily overtime requirements.

Income Tax Withholding

Employers are required to withhold federal income tax from employees’ wages, based on information provided on the employee’s IRS Form W-4. Most states also impose their own state income tax, and withholding requirements vary by state. A few states such as Texas and Florida do not impose a state income tax on wages.

Federal Income Tax Brackets for 2024 (Annual Income in USD)

The United States operates on a progressive income tax system. Below are the 2024 federal income tax brackets based on filing status:

Social Security and Medicare (FICA)

Employers must withhold Social Security and Medicare taxes under the Federal Insurance Contributions Act (FICA). The employer must also match the employee’s contribution. As of 2025:

• Social Security tax: 6.2% (each for employer and employee) on wages up to the annual wage limit.
• Medicare tax: 1.45% (each for employer and employee), with an additional 0.9% surtax on high earners (employee-only, no employer match).

These taxes fund retirement, disability, and healthcare benefits under the U.S. Social Security system.

Foreign nationals who are not U.S. citizens or permanent residents (green card holders) must obtain valid work authorization to be employed in the United States. Employers seeking to hire foreign nationals must typically sponsor them for a work visa through the U.S. Department of Homeland Security / U.S. Citizenship and Immigration Services (USCIS).

Once USCIS approves the petition, the employee must obtain a visa stamp from a U.S. embassy or consulate (note: Canadian citizens are exempt from this step in most cases).

Common Types of U.S. Work Visas:

H-1B: For individuals in specialty occupations that require a bachelor’s degree or higher. This visa is valid for up to 3 years and can be extended for an additional 3 years. The visa is employer-specific, and a change in employer requires a new petition. The annual cap is 85,000 visas.

H-1B1: For professionals from Chile and Singapore under Free Trade Agreements. Annual caps: 1,400 (Chile) and 5,400 (Singapore).

H-2A: For seasonal or temporary agricultural work, limited to citizens of designated countries. Valid for up to 1 year, extendable to a maximum of 3 years.

H-2B: For seasonal or temporary non-agricultural work, also limited to designated countries. Valid up to 1 year, extendable to 3 years.

L-1: For intra-company transferees who have worked abroad for at least 1 year in a managerial, executive, or specialized knowledge capacity.

O-1: For individuals with extraordinary ability in science, education, arts, business, or athletics.

Immigrant (Green Card) Visa Categories:

EB-1: Priority workers with extraordinary abilities, multinational managers, or outstanding professors/researchers.

EB-2: Individuals with advanced degrees or exceptional ability.

EB-3: Skilled workers, professionals, and other workers.

EB-4: Special immigrants (e.g., religious workers, certain long-term employees).

EB-5: Immigrant investors who invest $1,050,000, or $800,000 if the investment is made in a Targeted Employment Area (TEA) typically a rural area or one with high unemployment. The investment must be made in a new commercial enterprise that creates at least 10 full-time jobs for U.S. workers.

Employers may sponsor a candidate for permanent residency if they can demonstrate that no qualified U.S. workers are available for the position and that the foreign national meets the requirements. This often involves a PERM labor certification process through the U.S. Department of Labor.

Important: All U.S. employers are required to verify the employment eligibility of every new hire by completing Form I-9 and reviewing acceptable documents as proof of identity and authorization to work in the U.S.

Notes:

• Inauguration Day is observed every four years on 20 January when a new U.S. President is sworn in. This holiday applies to federal employees in the Washington, D.C. area, as outlined in Section 6103(c) of Title 5 of the United States Code.
• Washington’s Birthday, often referred to as “Presidents’ Day” by the public, is officially recognised under federal law (Section 6103(a) of Title 5) as “Washington’s Birthday.” This is the term used for all federal purposes, even though different names may be used at the state or local level.
• When a federal holiday falls on a Saturday, it is generally observed on the preceding Friday. If it falls on a Sunday, it is observed on the following Monday. This rule applies to most federal employees under U.S. Code and Executive Order 11582.

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San Diego CA,
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Email: info@linkcompliance.com