Employer of Record in The United States

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in The United States if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in The United States below, to avoid any compliance issues.

Employment Contract Requirements

In the United States, employment agreements assume various formats since there are no specific regulations mandating written documentation to be valid. However, certain states have enacted wage theft laws requiring employers to communicate basic employment terms to their employees in writing. These include:

• Identification of both parties
• Designated workplace and working hours
• Job roles and responsibilities
• Basic salary (including compensation and benefits)
• Total number of holidays
• Reasons for potential employment termination

Onboarding Process

We can help you get a new employee started in The United States quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

In the United States, employers must adhere to the Fair Labor Standards Act (FLSA) regarding working hours and overtime regulations. While there is no cap on the number of hours employees aged 16 and older can work in a given week, non-exempt employees must receive overtime pay for any hours worked over 40 in a workweek, compensated at a rate of at least time and a half their regular pay rate. Exempt employees, such as certain executive, administrative, and professional workers, are not entitled to overtime pay under the FLSA.

Employers should also be mindful of state-specific regulations, as some states impose additional restrictions on working hours and overtime. Compliance with both federal and state labor laws is essential to avoid penalties, ensure proper compensation for employees, and maintain a fair working environment.

As of 2025, the federal minimum wage in the U.S. still stands at $7.25 per hour – the same rate since 2009.

However, many states have implemented higher minimum wages to better reflect local economic realities and the cost of living. For instance, California now has a minimum wage of $16.50 per hour, while Washington state's rate is $16.66 per hour. Employers must follow both federal and state laws, especially since 34 states, territories, and districts have set wages above the federal baseline.

Wage requirements can also vary depending on factors like job type, specific industry rules, and local economic conditions.

It's important for employers to be aware of exceptions and unique wage structures – such as those for tipped workers, interns, and trainees.

Legislative efforts, such as the Raise the Wage Act of 2025, highlight ongoing conversations about increasing the federal minimum wage to $17 by 2030. As wage regulations continue to shift, businesses need to stay up to date with laws at all levels to stay compliant and avoid legal issues.

Global expansion shouldn't mean losing time to paperwork or dealing with complicated, country-specific HR systems. An Employer of Record helps you keep your focus on talent by handling the operational side of employment in The United States. That includes onboarding, contract management, payroll processing, and statutory compliance, all aligned with local laws and best practices. The EOR guarantees that employees are legally employed and properly supported from day one.

This streamlined setup allows you to prioritize recruiting the best people and integrating them into your company culture. Your team stays lean, and you avoid getting caught up in the details of local processes or shifting regulations. For founders, global hiring managers, or HR teams working across borders, an EOR multiplies your impact, reducing admin time, preventing errors, and helping ensure that new hires have a smooth experience from the get-go.

Payroll taxes in the United States encompass critical obligations such as federal income tax withholding, Social Security and Medicare contributions (FICA), and Federal Unemployment Tax Act (FUTA) payments. Employers must understand these taxes' requirements, including accurate calculations, timely remittances, and compliance with both federal and state regulations. Non-compliance can lead to penalties and strained employee relationships, highlighting the need for a robust payroll system. Employers should also stay informed about tax rates, wage base limits, and due dates to ensure compliance.

Leveraging payroll management software can simplify these processes, helping businesses consolidate payroll data, calculate taxes accurately, and meet legal obligations in the United States.

Hiring in The United States means taking on local payroll obligations, which often include unique tax rates, contribution rules, and strict documentation. If you're not familiar with the system, or don't have a local entity, it’s easy to make mistakes. That’s where an Employer of Record ccomes in. The EOR manages payroll for your team on your behalf, ensuring every process is accurate, timely, and legally compliant.

Key Ways an EOR Supports Payroll in The United States:

• Full Legal Compliance: Ensures all payments, deductions, and filings meet country-specific requirements.
• Payroll Setup & Processing: Handles salary calculations, tax withholdings, and local reporting obligations.
• Statutory Benefit Contributions: Pays into required social programs and manages country-mandated benefits.
• Employee Documentation: Generates compliant contracts and manages hiring and termination paperwork.
• Local Currency Payouts: Delivers salaries in local currency, avoiding delays or exchange rate issues for employees.

In the United States, work permits and visas are crucial for employers hiring foreign workers. The process requires filing petitions, meeting specific eligibility criteria, and adhering to regulations. Common non-immigrant visas include the H-1B for specialty occupations, the L-1 for intra-company transferees, and the O-1 for individuals with extraordinary ability. Immigrant visas such as EB-1, EB-2, and EB-3 allow permanent residence. Employers must ensure compliance with U.S. immigration laws when sponsoring and hiring international talent.

In the United States, leave policies are largely determined by individual employers, as there is no federal mandate for paid annual leave.

The Family and Medical Leave Act (FMLA) provides eligible employees with up to 12 weeks of unpaid, job-protected leave per year for specific family and medical reasons. Employers are encouraged to develop comprehensive leave policies, stay informed about state and local regulations, and communicate policies effectively to ensure compliance and maintain employee satisfaction.

In the United States, employers are required to provide key mandatory benefits such as Social Security, Medicare, unemployment insurance, workers' compensation, and protections under the Family and Medical Leave Act (FMLA), which ensure financial security, healthcare access, and job-protected leave for eligible employees.

Beyond these legal requirements, popular supplemental benefits like health insurance, retirement savings plans (e.g., 401(k)), paid time off, and wellness programs play a crucial role in attracting and retaining top talent. Employers must also navigate a complex legal landscape governed by regulations such as ERISA and the Affordable Care Act (ACA), emphasizing the importance of compliance to avoid penalties and foster a supportive, competitive workplace.

When hiring across multiple countries, maintaining consistency in how you deliver employee benefits quickly gets tricky. Each country, including The United States, has its own legal rules, cultural norms, and contribution systems. An Employer of Record helps you strike the right balance between global structure and local compliance. They take over the complexity of delivering benefits that are aligned with The United States’s legal requirements and competitive with local market expectations.

From ensuring statutory benefits are in place to managing local onboarding timelines and enrollment systems, the EOR provides a seamless experience for both employer and employee. This makes it easier to grow your team across borders without reinventing your benefits process in each new location. You stay in control of your overall benefits strategy, while the EOR takes care of executing it in a way that works legally and culturally in The United States. It’s a smarter way to scale benefits globally without losing local relevance.

In the United States, employment termination is primarily governed by the "at-will" employment doctrine, meaning employers can dismiss employees at any time without cause, except where prohibited by law. However, various federal and state regulations protect employees from wrongful termination based on discrimination, retaliation, or contractual breaches. Employers must also comply with the Worker Adjustment and Retraining Notification (WARN) Act, which mandates a 60-day notice period for mass layoffs in companies with 100 or more employees. Additionally, some states have enacted their own "mini-WARN" Acts with expanded requirements, such as Washington state's law taking effect July 27, 2025, which applies to employers with 50 or more full-time employees. While there is no federal requirement for severance pay, some companies offer severance packages based on tenure, position, or company policies.

The termination process typically includes reviewing employment agreements, documenting performance issues or policy violations, providing notice (where applicable), settling final pay, and conducting exit interviews. Employees are entitled to their final paycheck, including any accrued wages and benefits, with the payment timeline varying by state law. Understanding these legal requirements ensures employers remain compliant while upholding employee rights during termination.