Employer of Record USA
Infotree Global Solutions assists you to streamline your business expansion in the USA with the professional employer of record services. Our services help you have your employees on board while saving you time in establishing a new entity. It means that you can kick-start your business operations in the USA without delay. By becoming your U.S. employer of record, we let you take advantage of our global network and resources to compliantly hire and manage international workers. Our experts handle payroll, hiring & legal formalities on your behalf. With Infotree Global, you can reduce the risk, cost, time, and efforts required for a new setup and stay focused on global business expansion.
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Hiring in the United States
Employment laws in the U.S. can vary from state, federal, and local sources making it difficult to figure out the suitable ones for employers looking for expansion. For example, federal law recommends a higher minimum wage rate as compared with state law. On the contrary, state law may ask employers to maintain a record for a longer time period, unlike federal law. Due to varying standards of liabilities on the employers, it is recommended to consider the assistance of an employer of record US. Often, there are a few areas that are not explicitly outlined in either state or federal law. In such a scenario, the terms will entirely depend upon the employment contract. An employer of record is highly recommended in such a scenario filled with complications. It comes to the rescue here by setting out the terms clearly to refrain from implied agreements and thus saves you from legal hassles.
United States law does not obligate any minimum requirements for an employee job contract. It does not emphasize written terms because it considers employment relationships as ‘at will’. Hence, the services are terminable at any time without prior notice. However, it is prohibited for an employer to fire an individual based on race, age, sex, religion or sexual orientation, or handicaps as stated in the US Equal Employment Opportunity laws. Though it is not mandated yet both parties can set the employment terms without violating the country’s regulations. While negotiating employment terms with an employee the employer should be aware of :
Working hours – The normal working hours in the U.S. are Monday to Friday 9:00 am to 5:00 pm representing 8 hours shifts and 40 hours weekly. Organizations these days are getting more flexible and allow their employees to set their own work schedules. Part-time employees work less than 40 hours a week.
Compensation – In the United States, minimum wages are regulated by the Fair Labor Standards Act (FLSA), and many aspects of compensation are determined at the state level. Under the FLSA employers must adhere to the following guidelines while drafting an employment contract:
- The federal minimum wage for covered nonexempt employees is $7.25 an hour.
- In some states, minimum wages may be higher than federal minimum wages.
- Employees covered under FLSA are entitled to receive one-half times their regular rates of pay for hours worked in excess of 40 in a workweek.
- Extra pay for work on weekends, holidays, or regular days of rest depends upon the sole discretion of the employer.
Probation Period – In the United States, there is no legal provision for trial periods. Depending on the business perspective some employers prefer to have an internal policy on trial periods, which are known as probationary periods. It usually offers a formal way of evaluating an employee’s job performance after 90 days.
Bonuses – There are no legal requirements to pay bonuses to employees in the USA; however, many employers distribute bonuses in the form of performance incentives.
Termination and Severance – US employment law does not obligate any formal notice period for terminating the services of an employee except as stated in a job contract or collective barraging contract. Most workers are recruited on an ‘at will’ basis and can be terminated by any party. However, employers are required to give 60 days advance notice to the employees as per the Worker Adjustment Retraining Notification Act, known as WARN act.
Several aspects need to be familiarized with to adhere to the employment laws in the USA. It is vital for organizations planning to start an office and HR department. In general, written contracts of employment are not required. However, state and local employment laws may require particular information to be in writing. The employer of record USA makes sure that employment contracts are drafted in accordance with local laws and employee benefits.
Maternity leaves – In the USA, employers are not legally needed to provide paid maternity leave to employees. However, the majority of companies tend to provide it as a benefit to attract the best talent into their workforce.
The Family and Medical Leave Act, however, made it mandatory for employers to provide eligible employees with 12 weeks of unpaid leave for specific medical treatment or family reasons. FMLA applies to employers who have at least 50 employees or more. An employee can avail of FMLA benefits in case of childbirth, adoption, taking care of family members in case of serious health conditions, self-illness, etc.
Individuals should meet the below requirements in order to be eligible for FMLA
- The employee should be working for FMLA covered employer with 50 or more employees and within 75 miles of range.
- Has worked with the same employer for at least 1250 hours over the last 12 months.
- Has worked for at least 12 months for the employer.
Sick Leave – There are no strict rules on providing sick leaves to employees; however, many companies provide it. Under FMLA if an employee does not take time off due to illness, they are entitled to unpaid leaves for up to 12 weeks per year.
Vacation – It does not mandate under US law for an employer to grant any paid holidays or vacations to the employees; however, many companies offer it to remain competitive. It depends upon the employer how they prefer to offer it to the employees. In the U.S. two to four weeks is customary, nowadays employers are switching from sick leave and paid vacation to Paid Time Off. According to the paid time off, employees can take a certain number of days off for any reason.
Pension – There are prominently two kinds of occupational pension schemes – Defined Benefit Plan and Defined Contribution Plan. Between these two plans, DC (Defined Contribution) pension plans are widespread. Roughly 60% of the workforce in private industry has access to these schemes. Out of this, 43% opt for DC schemes and the other 20% favor DB (Defined Benefit) schemes.
The most extensive type of DC plan is the 401(k) plan. 401(k) plans to provide employees and employers to make pre-tax dollars contributions from their salaries to the plan. Most 401(k) plans provide retiring employees with multiple distribution options for receiving plan account balances. Lump-sum payments, installment payments for a fixed number of months, and annuities are available distribution methods. It is also possible to postpone any payment until a certain age.
Health Benefits – In the USA, there are employer-sponsored health insurances in which insurance is paid by employers on behalf of their employees. The employer has a significant contribution towards the premium of the insurance. Usually, employers pay 85% of the insurance premium for the employee and 75% of the premium for their employee’s dependents. Employers are provided tax benefits for this contribution.
The Employer mandate is a provision under the Affordable Care Act (ACA) that makes it mandatory for employers with 50 or more FTE (Full-time equivalent) employees to provide health coverage that is affordable and of minimum value. Health insurance should cover 95% of employees and their dependent children until they reach age 26 excluding stepchildren and foster children. Not doing so will result in penalties for the business. However, employers are not required to cover health insurance for spouses. Employees who work 30 or more hours per week are considered full-time.
Payroll in the United States
First, the company looking for expansion should determine the state it wants to conduct business operations in the USA. Since the rules vary between different states, it is good to learn the employment and payroll concerns else you may find yourself trapped in non-compliance penalties. Besides state tax, you will need to consider federal tax no matter in which part of the country you are in. The U.S. presents seven federal income tax categories depending on income. The lowest rate of tax is 10%, while the highest one goes to 37%. Being an employer, you can decide to withhold the federal income tax from your workers’ salaries and forward the amount to the government.
The Fair Labor Standards Act or FLSA enforces employers to follow the guidelines while setting up the payroll. There are many states which choose to establish more robust laws for their own benefit and employers must follow them. The FLSA also demands employers have the information related to their staff’s working hours and compensation on record which may be asked for later. Considering Infotree Global as your employer of record USA helps you in streamlining the process.
Payroll and Tax in the United States
Depending on business operations, there are specific rules for payroll and taxation in the USA. The federal and state payroll tax includes Medicare costs, social security, sales tax, and corporate tax. For many companies using an employer of record, it is easy to remain compliant with local laws. As a U.S. company, it is vital to register for the payroll tax and acquire an Employer Identification Number (EIN) to adhere to the federal tax rules. Payroll tax is a state-based tax which is crucial. With a local payroll provider or an EOR, you can simplify the process and ensure compliance with local laws.
All U.S. taxpayers are permitted to have health insurance or pay a penalty. As a part of U.S. customs, the employer should provide varied medical insurance plans to cover a part of the cost. The employee’s share of the premiums is included in payroll deductions. No other insurance is recommended by law but companies can offer short-term and long-term disability insurance and life insurance.
While setting payroll in the United States one should be aware that there is a 21% corporate income tax rate on organizations that have annual taxable earnings equal to or above USD 18,333,333. The progressive tax rate is 15% applicable to firms with a taxable income of below USD 18,333,333. Social Security and Medicare tax are components of the payroll tax. Employers and employees both contribute 6.2% towards social security tax and 1.45% towards Medicare tax.
Challenges When Expanding into the U.S.
While setting up a subsidiary in the U.S., you need to consider a few aspects. These include business type, products, industry, nature of business, nationality, license, and trade agreements.
You need to consider the following steps to set up a subsidiary:
Choose a Business Type – You should know whether you want the organization to be limited liability or a corporation. Both kinds of entities have their advantages and disadvantages, so choose wisely that goes well with your own system.
Select a State – When it comes to the U.S., there are 50 states. Some of them are more suitable for operating a business than others. Every state has its own set of rules for businesses, so you should be well aware of what that means for your organization before you set it up.
Set Up a Corporate Bank Account – It is a little harder for international businesses to have a bank account in the country but it becomes easy with a U.S. subsidiary. Holding a U.S. bank account will help you manage payroll for your foreign employees.
As accounting and tax laws abound in complications here, most international businesses also seek the expert guidance of an Employer of Record during the process of establishing a subsidiary. The EOR Company should file a petition on your behalf addressing the specific details, duties, and dates of employment. The next step is to file a Labor Certification Application (LCA) specifying the benefits of employees and after its approval, the company will get a certified copy from the Department of Labor. H1B petition should be filed with the proper USCIS Service office and after processing, the company should get a receipt from the same office. Thus, it involves a crucial and tedious process for which you need to consider taking the employer of record USA services.
Benefits of Engaging an Employer of Record in the USA
To simplify your expansion process let Infotree Global assist you to deal with all the complexities. Be it hiring employees or distributing payroll or taking care of expenses, we are there to assist you at every step. Partner with us and start your global business without worries.
Market Access – Relying on the professional expertise of an Employer of Record is the best way to enter an unknown market quickly. By using Employer of Record services, an international organization can avail the expertise of U.S. employees to work for its company. Besides quick access to the U.S. market, the EOR also enables the client to ease off worries related to payroll and HR.
In-Country Laws – It is hard to ignore the importance of regulations and compliance in a foreign country. If you are operating a business in the U.S. you need to be well aware of the payroll and taxation rules. With US Employer of Record services, a company can hire a foreign individual or local employees and deal with the complexities of the country’s rules. Be it income tax, social security contribution, expanse management, withholding charges, or business tax, an EOR company takes care of it all with total compliance.
Diverse Solutions – No matter whether you already have a company in an international location or you are going to establish one, an employer of record can help you significantly. The EOR Company can hire staff on your behalf without having the need of setting up a branch in the U.S. If your company is already operating, using EOR for managing payroll tasks can be a great idea as they can present an effective solution to tax and accounting responsibilities in the country.
Why Infotree Global Solutions?
Ensuring total compliance with employment laws comes as a major concern for many companies. The complications of laws make it vital to use US Employer of Record services. Right from drafting local contracts for workers, we take care of the onboarding and fulfill all the legal formalities for the new country.
Our core objective is to ensure that you can make the most of mobility without a legal entity. Focusing on employee satisfaction, we are committed to delivering increased productivity and high efficiency. Our EOR model is designed in a way that provides you with everything you need at every step of your global expansion journey. Candidates are mobilized in-country quickly, saving you time, energy, and resources. Our dedicated personal support ensures a stress-free transition for employees around the world. Besides, you will also retain complete control over your employees and their day-to-day tasks. That too, without engaging yourself in the administrative hassles because we overcome them for you.
Using Infotree Global Solutions is the fastest way to deploy local and foreign employees in the USA. Know more about outsourced employment through Infotree Global Solutions.