Employer of Record in American Samoa

Expanding your team into American Samoa requires a clear understanding of the local employment framework. Businesses looking to hire employees in the territory must navigate specific regulations, from legal entity establishment to payroll and tax compliance. Without a strategic approach, these complexities can slow down expansion and increase operational risks.

Fortunately, there are several pathways to engaging talent in American Samoa, each with distinct advantages depending on your business goals and long-term presence plans.

To hire employees in American Samoa, companies typically have a few options:

• Establishing a Local Entity: This involves setting up a registered business in American Samoa, which can be a time-consuming and costly process, requiring legal registration, setting up local bank accounts, and understanding ongoing compliance requirements.
• Utilizing an Employer of Record (EOR): Partnering with an EOR like Rivermate allows you to legally hire employees in American Samoa without establishing your own entity. The EOR acts as the legal employer, handling all compliance and HR functions, while your company directs the employee's day-to-day work.
• Hiring as an Independent Contractor: While this offers flexibility, it's crucial to ensure the worker genuinely qualifies as an independent contractor under American Samoan law to avoid misclassification risks and potential penalties.

How an Employer of Record (EOR) Works in American Samoa

An EOR in American Samoa manages all the legal and administrative aspects of employment, enabling your company to operate compliantly without a physical presence. The EOR handles:

• Legal Compliance: Ensuring adherence to all local labor laws, employment contracts, and regulatory requirements specific to American Samoa.
• Payroll Processing: Managing employee salaries, local income tax withholding, social security contributions, and other mandated deductions.
• Benefits Administration: Providing and administering locally compliant benefits packages, which may include health insurance and retirement plans as per local standards.
• HR Support: Offering ongoing human resources assistance, including onboarding, offboarding, and resolving employment-related queries.
• Tax Withholding and Reporting: Handling all employer-related tax filings and remittances to the appropriate authorities in American Samoa.

Benefits of Using an EOR in American Samoa

Leveraging an EOR service for hiring in American Samoa offers significant advantages for companies seeking to expand efficiently and compliantly:

• Accelerated Market Entry: Hire employees in American Samoa quickly, often within days, bypassing the lengthy process of local entity establishment.
• Guaranteed Compliance: Mitigate legal risks and ensure full adherence to complex and evolving American Samoan labor laws and tax regulations.
• Cost Efficiency: Avoid the substantial expenses and administrative burden associated with setting up and maintaining a local subsidiary.
• Operational Flexibility: Scale your team up or down with ease, allowing you to adapt to market demands without the fixed overhead of a local entity.
• Focus on Core Business: Offload non-core HR and administrative tasks to the EOR, allowing your internal teams to concentrate on strategic initiatives.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in American Samoa includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in American Samoa.

Employers in American Samoa must withhold and remit Social Security, Medicare, and FUTA taxes, similar to U.S. requirements. The key rates for 2025 are 6.2% for Social Security (up to ~$168,600 wage base), 1.45% for Medicare (no wage limit), and 0.6% effective FUTA rate on the first $7,000 per employee after credits. Employers are also responsible for withholding an Additional Medicare Tax of 0.9% for wages exceeding $200,000.

Income tax withholding relies on employee-provided Form W-4, with deadlines for quarterly filings using Form 941 (due April 30, July 31, October 31, and January 31). Employers must issue W-2 forms by January 31 annually and file W-3 with the SSA. Employee deductions include standard amounts based on filing status, with 2025 projected standards ranging from $14,600 (single) to $29,200 (married filing jointly). Itemized deductions and tax credits can further reduce taxable income.

Foreign workers and companies face additional considerations, including residency status, tax treaties, and compliance with transfer pricing rules. Foreign employees may need Form W-8BEN to claim treaty benefits. Employers should be aware of special rules for foreign entities, including the distinction between branches and subsidiaries, which impact tax obligations.

Salaries in American Samoa vary by industry and role, with key benchmarks including:

The territory adheres to U.S. federal minimum wage laws, with the 2025 minimum wage set at $7.25/hour, subject to future updates. Employers must ensure compliance to avoid penalties.

Additional compensation often includes bonuses and allowances such as performance, sign-on, housing, transportation, and COLA, varying by industry and role. Payroll cycles are typically bi-weekly or semi-monthly, using direct deposit, checks, or cash, with mandatory tax withholdings.

Salary trends indicate increasing demand for skilled workers, gradual wage growth driven by inflation and legal updates, and a growing emphasis on benefits to attract talent. Regular market review and local expertise are recommended for maintaining competitive, compliant compensation packages.

In American Samoa, vacation leave is not mandated by law but is often provided by employers through their policies, including accrual based on hours worked or service length, with carryover and payout terms specified in employment agreements. Public holidays are observed annually, such as New Year's Day, Independence Day, and Christmas, but paid time off for these is not legally required, though common practice.

There is no legal requirement for paid sick leave; employers set their own policies regarding accrual, usage, and documentation. Under the FMLA, eligible employees can take up to 12 weeks of unpaid, job-protected leave for family and medical reasons, including childbirth and adoption, provided they meet tenure and hours worked criteria. Other leave types like bereavement, study, sabbatical, military, and jury duty are offered at employer discretion.

Employee benefits in American Samoa combine U.S. federal requirements with local customs. Employers must provide mandatory benefits such as Social Security, Medicare, workers' compensation, unemployment insurance, and adhere to U.S. minimum wage laws. While federal Family and Medical Leave Act (FMLA) applies, local variations may exist. Employers observe 11 federal holidays, typically without mandatory paid leave.

In addition to legal requirements, many employers offer voluntary benefits to enhance competitiveness, including health insurance, retirement plans (like 401(k)s), paid time off, life and disability insurance, and professional development. Health insurance is widely valued, with plans varying in coverage and cost-sharing, and must comply with federal privacy laws like HIPAA. Retirement plans are often structured as 401(k)s, sometimes with employer matching, and are regulated under ERISA.

Employers range from small businesses with limited benefits to large firms and government entities offering comprehensive packages. Industry-specific benefits are also common, especially in healthcare and tourism sectors. Offering competitive, compliant benefits is key to attracting and retaining talent in American Samoa.

Employment agreements in American Samoa are vital for clarifying employment terms and ensuring legal compliance. The territory primarily uses fixed-term and indefinite-term contracts, each suited to different employment durations and needs.

Key clauses required in employment agreements include terms on wages, work hours, probationary periods, confidentiality, non-compete restrictions, and termination procedures. These provisions protect both parties and help prevent disputes. Employers should ensure contracts are comprehensive and compliant with local laws to maintain positive employment relationships.

American Samoa is increasingly adopting remote work, with benefits such as higher employee satisfaction, access to broader talent pools, and cost savings. Employers must navigate existing labor laws that apply equally to remote and on-site workers, covering minimum wage, working hours, employee rights, and taxation, despite the absence of specific remote work legislation. Ensuring a safe, healthy, and non-discriminatory remote environment remains a key employer responsibility.

Flexible work options are gaining popularity, including telecommuting, flextime, compressed workweeks, job sharing, and hybrid models. Employers should establish clear policies on eligibility, application processes, and performance expectations. Data security, privacy, and equipment reimbursement are critical; employers need robust protocols, employee training, and transparent expense policies. Reliable technology infrastructure, such as high-speed internet, VPNs, collaboration tools, and technical support, is essential, though connectivity challenges in some areas may require additional solutions like hotspots.

In American Samoa, employment termination laws require employers to follow specific procedures to ensure legality and compliance. While explicit notice periods are not mandated, providing at least one to two weeks' notice for at-will employees is recommended, with longer periods (up to three months) for employees with extended tenure. Contractual terms take precedence if specified, and notice should be in writing, clearly stating the effective date and reasons for termination.

Severance pay is not legally required unless stipulated in an employment contract, company policy, or negotiated agreement. When applicable, it is typically calculated at one to two weeks of pay per year of service. Terminations must be based on legitimate grounds, categorized as "with cause" (e.g., misconduct, poor performance) or "without cause" (e.g., layoffs, restructuring). Employers must maintain documentation, provide final wages, conduct exit interviews, and return company property to ensure lawful termination.

American Samoa's economy increasingly relies on independent professionals for specialized skills, project-based work, and flexible staffing. Employers must understand legal distinctions between employees and independent contractors, as misclassification can lead to penalties. Key factors in classification include behavioral control, financial control, and the nature of the relationship. Properly drafted contracts are essential, detailing scope of work, payment terms, confidentiality, and intellectual property rights. Contracts should explicitly state that the contractor is not an employee and include clauses for IP ownership to ensure businesses retain rights to work products.

Independent contractors in American Samoa handle their own tax obligations, including income tax, estimated taxes, and potentially U.S. Social Security and Medicare taxes. They may also need a business license depending on their work. Contractors are responsible for obtaining their own insurance, such as professional liability insurance. Employers should verify contractors have appropriate coverage. Common industries utilizing independent contractors include tourism, professional services, construction, healthcare, education, creative services, and the non-profit sector, offering businesses flexibility and access to specialized expertise.

Foreign nationals seeking employment in American Samoa must obtain specific work permits under local regulations, which differ from mainland U.S. rules. The primary permits include Entry Permits (short-term), Work Permits (employer-sponsored), and Long-Term Residency Permits (for extended residence). Employers must secure labor clearance before applying, submitting documents such as passports, educational credentials, medical and police records, employment contracts, and proof of financial stability. Application fees and processing times vary, typically taking several weeks to months.

Long-term residents may apply for permanent residency after meeting criteria like continuous residence (typically 5-10 years), good conduct, and financial stability. Dependents of permit holders can also apply for permits, requiring proof of relationship and financial support. Both employers and employees must comply with ongoing obligations such as maintaining valid documentation, reporting changes, and adhering to labor laws to avoid penalties like fines or deportation.