Hire Employees in the United States

A Delaware C-corp or an LLC can be formed in days, but that is the easy part. The work is registering for withholding and unemployment insurance in every state where an employee physically sits, plus workers’ compensation cover in each.

A remote team across eight states means eight sets of registrations, filings and rules. An EOR carries all of it.

EOR to enter one or two states quickly, or to hire before a US entity exists. Entity once headcount concentrates and the registrations become worth owning.

Contractors are the exposure. The IRS applies a common-law control test, but several states — California, Massachusetts, New Jersey — use the stricter ABC test, under which most professional contractors fail prong B. Penalties stack federal and state.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a small US entity somewhere between 15 and 20 employees. Model both before committing — see EOR vs Entity for the full comparison, and plan any later migration so employees keep seniority.

Already paying someone in the United States as a contractor? Run the risk check before the arrangement is tested by an audit.

Not sure which model fits? A GX specialist will cost EOR vs entity for your exact headcount — free, within two business days. Get a model recommendation

The 2026 Social Security wage base is $184,500, up from $176,100, so the maximum employer contribution is $11,439. Medicare has no cap. The additional 0.9% Medicare surtax above $200,000 is withheld from the employee and not matched by the employer.

FUTA is smaller than it looks: the 6% gross rate falls to 0.6% with the state credit, on only the first $7,000 of wages — a maximum of $42 per employee per year.

SUTA is where the variation lives. Both the rate and the wage base differ enormously by state: the base is $7,000 in California and Florida but $46,600 in North Dakota. The rate also depends on the employer’s own claims history.

None of this is the main number. Health insurance is not a statutory percentage, is not on any rate card, and for most employers is the largest single cost above salary.

US employer cost falls sharply as salary rises, because almost everything is capped. Social Security stops at a wage base of USD 184,500 for 2026 — up 4.8% from USD 176,100 — FUTA stops at USD 7,000, and state unemployment stops at wage bases ranging from USD 7,000 in California to USD 46,600 in North Dakota. Only Medicare runs uncapped. The effective employer rate is therefore around 9% to 10% at USD 60,000 but closer to 5% at USD 300,000. One asymmetry catches people out: the additional 0.9% Medicare tax on wages above USD 200,000 is employee-only, with no employer match. And two state-level points matter more than the federal rates: California and the US Virgin Islands are credit reduction states for 2026, so employers there pay an effective FUTA rate around three times the standard 0.6%; and state unemployment rates are experience-rated, running from under 1% to over 6% depending on claims history — a genuine cost consequence of turnover.

Four representative profiles with an illustrative 3% state unemployment rate and 1% workers’ compensation. Salaries are illustrative market midpoints, not GX operating data. These figures exclude health insurance, which for most US employers is the largest cost above salary and commonly runs $8,000 to $20,000 per employee a year. Comparing the US percentage with Europe’s without adding it is misleading. For real market data on your roles, ask for a costing.

Four representative profiles costed on 2026 statutory rates. Salaries are illustrative market midpoints, to be replaced with GX operating data.

Deposit schedules for federal withholding are monthly or semi-weekly depending on prior-year liability, with a next-day rule above $100,000. Quarterly Form 941 and annual W-2s follow.

Every state where an employee physically works generally requires its own withholding and unemployment registration — remote hiring across state lines multiplies the filings rather than the cost.

Federal income tax runs 10% to 37% across seven bands, withheld against the employee’s Form W-4.

State income tax is separate and ranges from nothing at all — Texas, Florida, Washington, Nevada — to over 13% in California. Several cities add their own. Where an employee works remotely from a different state than the employer, withholding generally follows the state where the work is performed.

Written contracts are unusual for at-will employees; an offer letter is the norm. Where a contract does specify a term or a cause requirement, it displaces at-will status, so drafting matters more than its brevity suggests.

Non-competes face a shifting landscape: several states ban them outright for most employees and others cap them by salary. Confidentiality and non-solicit provisions are more reliably enforceable.

The Fair Labor Standards Act requires overtime at 1.5 times the regular rate beyond 40 hours a week for non-exempt employees. There is no daily overtime federally, though California and a few states impose one.

Exempt status requires both a salary threshold and a duties test. Misclassifying a non-exempt employee as exempt is one of the most common and most expensive US payroll errors, and back-pay claims reach two or three years.

There is no federal entitlement to paid vacation. None. Employers offer it as a benefit, commonly ten to fifteen days rising with service, and in some states accrued vacation is treated as earned wages that must be paid out on termination.

Paid sick leave is mandated by a growing number of states and cities but not federally. The FMLA provides twelve weeks of unpaid, job-protected leave at employers with 50 or more staff.

There are eleven federal holidays, but they are not statutory paid days off for private-sector employees. Federal law does not require employers to close or to pay for them.

In practice most employers observe six to ten, and the number offered is a competitive matter rather than a compliance one.

United States observes 11 paid public holidays in 2026. Dates that fall at a weekend and any substitution rules are set out below; entitlement is separate from annual leave.

The FMLA gives twelve weeks of unpaid, job-protected leave for the birth or adoption of a child or a serious health condition, at employers with 50 or more employees within 75 miles.

Paid family and medical leave is a state matter. California, New York, New Jersey, Washington, Massachusetts, Colorado and others run contributory schemes, some employee-funded and some shared. Most of the country has none.

Employment is at-will in every state but Montana. Either party may end the relationship at any time, for any reason that is not unlawful, with no notice and no severance.

That makes the US the cheapest market in this guide to exit an employee — and the exposure sits elsewhere. Discrimination, retaliation and whistleblower claims carry uncapped damages in many jurisdictions, and a dismissal that looks arbitrary invites them.

The WARN Act requires 60 days’ notice for mass layoffs and plant closings at larger employers, and several states have their own stricter versions. Final-pay timing is state law and sometimes immediate.

There is no general work visa. H-1B is capped and allocated by lottery each March for October starts. L-1 covers intra-company transfers after a year abroad. TN covers listed professions for Canadians and Mexicans and can be same-day at the border. O-1 covers extraordinary ability with no cap.

Timelines run from days for TN to more than a year for a missed H-1B lottery. Plan the route before the offer, not after.

The recurring exposures are contractor misclassification under state ABC tests, exempt-versus-non-exempt overtime errors, missing state registrations for remote staff, and state paid-leave mandates that vary by jurisdiction.

At-will employment does not mean dismissal is risk-free. Discrimination, retaliation and whistleblower claims carry uncapped damages in many states, and an arbitrary-looking termination invites them.

Form I-9 must be completed within three business days of the start date — a hard federal deadline with per-form penalties. Form W-4 and the state equivalent follow.

Confirm before the offer: which state the employee will work from, whether you are registered there for withholding and unemployment, whether workers’ compensation is in place, and whether the role is exempt or non-exempt for overtime.