The United States of America has the largest economy in the world. Known for its business friendly laws, the US is home to major tech companies like Apple, Google, and Meta, as well as Fortune 500 companies, major banks, Hollywood, and some of the world’s best universities. The country is a leader in a number of industries, including media, sports, tech, and finance.
Because the United States is considered at-will when it comes to employment, employers are not required to offer many benefits to their employees. As an employer, however, it is strongly recommended to build comprehensive benefits and compensation packages for your employees, both to reward them for their hard work and to attract top talent.
Here is some information about all the mandatory compensation and benefits in the United States, as well as some typical benefits that employers provide for their employees.
Despite having at-will employment laws, the United States government does provide some tax-funded benefits to its citizens.
Social security and medicare are a flat rate in the United States. They are a withholding at the federal level. Employees and employers both pay into the country’s social security and medicare system: 6.2% of an employee’s salary into social security and 1.45% for medicare. This is a total contribution of 7.65% for both employer and employee.
The United States has 7 different tax brackets for income withholding. These withholdings will vary based on the employee’s salary.
The withholding tax brackets in the United States are:
10% for $0-$10,275
12% for $10,275-$41,775
22% for $41,775-$89,075
24% for $89,075-$170,050
32% for $170,050-$215,950
35% for $215,950-$539,900
37% for $539,900 and above
In the United States, there are no statutory federal requirements for employees to be compensated for vacations or holidays. Most employers, however, choose to give their employees paid time off for vacation in the employment contract.
The Federal Fair Labor Standards Act does not require employers to compensate their employees for the 10 standard public holidays in the United States.
This benefit is normally agreed upon by employee and employer in the contract. The 10 federal holidays in the United States are:
New Year’s Day
Martin Luther King Day
Columbus Day/Indigenous Peoples' Day
Although sick days are not statutorily mandated by the government, there is a key labor law that does help provide employees with some benefits.
The Family Medical Leave Act provides certain employees with up to 12 weeks of unpaid leave per year. Employers are required to maintain the employee’s benefits and hold their job during this leave.
Employees are eligible for this leave if they have worked for the employer for at least 1,250 hours over 12 months. The employees should be based at a location where the company employs more than 50 employees within 75 miles. Some states and local laws differ, depending on what is required of employers to provide their employees with in terms of sick leave.
Some states offer additional family, medical, maternity and paternity leave that works with the FMLA. Many employers opt to give their employees sick leave.
Maternity leave is not a federally mandated benefit in the US. Most employers choose to provide their employees with maternity leave based on the employment contract.
Paternity leave is not a mandated benefit in the US. However, many employers choose to provide their employees with maternity leave in the employment contract. Some employers also give employees shared parental leave for things like family planning, adoption, and placing a child into foster care.
The standard working week in the United States is Monday-Friday. Full-time employees typically work a 40-hour work week. Part-time employees are classified as working less than 30 hours in 1 week. Part-time employees are not entitled to medical benefits in the United States.
Anything over 40 hours in 1 week is required by law to be paid at an overtime rate. Overtime in the US is regulated as time-and-a-half of the regular employee’s base salary or wage.
Employers are not required to pay employees overtime wages for working on Saturday, Sunday, or holidays, unless they are working more than their standard 40 hours in 1 week.
The FLSA allows for executive, administrative, professional and outside sales employees to not be paid overtime as long as their minimum salary qualifies as exempt.
Some state laws require employees to have a rest day or compensation at a premium rate for work performed on the 7th day of consecutive work.
One of the main reasons that employees are not guaranteed benefits in the US is due to the rise of the gig-economy. With the rapid increase of technology in the past few decades, the gig-economy has emerged as a major part of American work culture. Gig-economy jobs include: Uber, Lyft, Instacart, DoorDash, as well as freelance workers and independent contractors.
Although the gig-economy model has some advantages, such as being able to be your own boss and build flexibility into your work schedule, there are many drawbacks that directly affect how compensation and benefits are viewed in the United States. Gig-economy workers are classified as independent contractors. They are not entitled to healthcare benefits, equal compensation, or unemployment insurance.
Distinguishing between independent contractors and full-time employees is crucial for employers. As a business, you should strongly consider whether your employees are being fairly compensated.
Most employers in the United States give their employees health insurance and health benefits through their company. As the federal government does not have a national social security fund that covers health insurance, employers will opt to either give their employees insurance or help cover some of the cost of healthcare.
On top of giving employees health insurance, many employers choose to give their employees either full or partial dental and vision benefits, usually through discounted plans. This is another great way to reward employees for their hard-work as well as stand out as an employer.
As there are no federally mandated paid time off requirements in the United States, giving your employees vacation days is a great reward. Most employers choose to give their employees accrued paid time off that depends on how long they have been employed and how much they have worked. Most employers also offer employee benefits like paid maternity leave, paternity leave, marriage leave, and bereavement leave.
Most companies also choose to help employees set up 401k plans that both the employer and the employee pay into each pay period to boost their retirement benefits. Although social security benefit deductions are mandatory in the United States, giving additional retirement and pension options allows employees to have more flexibility in how they choose to save for retirement.
Companies of all sizes want to hire employees in the US, but don’t know how to navigate the country’s at will employment model. Via makes hiring American talent and building your global team seamless. We have the knowledge to help you create comprehensive and fair employee benefit packages. With our easy-to-use platform, Via helps you manage local HR processes for direct employment such as work visas & permits, benefits, payroll, background checks, and more. Our team of local labor lawyers and on-the-ground experts ensure that your company remains compliant while expanding abroad. As your employer-of-record/entity in the United States, Via assumes responsibility for all legal compliance, so that you can focus on what matters: recruiting and managing your team.
With Via’s transparent pricing, you can pay full-time employees or contractors in the US with no hidden set-up fees, no foreign exchange or transaction fees, and no minimums–start with 1 employee and scale up at your own pace.