Employer of Record in United States of America

An Employer of Record (EOR) is a company that legally hires employees on your behalf. This lets you build a team in the United States without setting up your own local entity. The EOR handles all the administrative and legal tasks of employment. Think payroll, taxes, benefits, and compliance with U.S. labor laws. You still manage your team's day-to-day work, but the EOR takes on the legal responsibilities of being an employer. For companies looking to hire in the U.S., an EOR like Rivermate simplifies the process.

How an Employer of Record (EOR) Works in United States of America

Using an EOR to hire in the U.S. is a straightforward process. The EOR becomes the legal employer, while you maintain control over your employee's work.

Here is how it typically works:

1. You find the talent. You recruit and select the person you want to hire in the U.S.
2. The EOR drafts a compliant contract. The EOR creates an employment agreement that follows all relevant U.S. federal, state, and local laws.
3. The EOR onboards your new hire. They handle all the necessary paperwork, including tax forms and employment eligibility verification (Form I-9), which is a requirement from the U.S. Citizenship and Immigration Services (https://www.uscis.gov/i-9).
4. They manage payroll and benefits. The EOR processes payroll, withholds the correct taxes, and administers employee benefits. This includes contributions for Social Security and Medicare as required by the Internal Revenue Service (https://www.irs.gov/businesses/small-businesses-self-employed/understanding-employment-taxes).
5. You manage the employee's daily work. You are responsible for your employee's tasks, performance, and integration into your company culture. The EOR handles the HR and legal aspects of employment.

Why use an Employer of Record in United States of America

Using an EOR in the United States offers a simple and efficient way to build a team. It removes the major hurdles of expanding into a new country, allowing you to focus on your business goals.

Here are some key benefits:

• Avoid setting up a legal entity. You can hire U.S. employees without the time and expense of establishing a legal entity in the country.
• Stay compliant with labor laws. U.S. employment law is complex, with rules at the federal, state, and even city level. An EOR understands these regulations and ensures you stay compliant.
• Simplify payroll and taxes. The EOR manages all aspects of payroll, including tax withholding and filing, which can be complicated in the U.S.
• Offer competitive benefits. EORs can often provide access to better and more affordable benefits packages than a small company could get on its own.
• Reduce risk. The EOR assumes the legal risks of employment, protecting you from potential fines and penalties for non-compliance.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in United States of America 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 United States of America.

Hiring in the United States of America can seem complex. You have federal, state, and sometimes even local laws to consider. The U.S. is a massive, diverse market with a large talent pool. Unlike many other countries, the U.S. largely operates on the principle of "at-will" employment. This means either you or the employee can end the working relationship at any time, for any reason, as long as it's not an illegal one. This gives you flexibility but also means you need to be clear on your hiring practices from the start.

Employment contracts & must-have clauses

In the U.S., you are not always required to have a written employment contract. Many working relationships are based on a simple offer letter. However, for key roles, a formal contract is a good idea. It provides clarity for both you and your employee.

Most employment contracts in the U.S. are open-ended. Fixed-term contracts are less common and typically used for specific projects.

Here are some common clauses to include:

• Job description: Clearly outline the employee's role and responsibilities.
• Compensation: Detail the salary, bonuses, and any other pay.
• Benefits: Mention health insurance, retirement plans, and other perks.
• Confidentiality: Include a non-disclosure agreement to protect your company's information.
• Termination: Explain the conditions under which either party can end the employment.

Probation periods

Probation periods are common in the U.S. but not legally required in most states. They serve as a trial period for both you and the new hire to see if the fit is right. A typical probation period is 90 days, but it can be shorter or longer depending on the role.

Because of the "at-will" employment system, a probation period doesn't drastically change the terms of termination. You can still let an employee go after the probation period. However, it sets a clear expectation for performance evaluation during the initial months of employment.

Working hours & overtime

The Fair Labor Standards Act (FLSA) is the federal law that governs working hours and overtime in the U.S.

• A standard workweek is 40 hours.
• Any hours worked beyond 40 in a week must be paid as overtime.
• The overtime pay rate is at least 1.5 times the employee's regular rate of pay.

Some employees are "exempt" from overtime pay. This usually applies to salaried employees in executive, administrative, or professional roles who meet specific criteria. Be aware that some states have their own overtime laws that may be more generous than federal law.

Public & regional holidays

The U.S. has a number of federal holidays. However, private employers are not required to give employees paid time off for these holidays. Most companies do observe the major holidays.

Here is a list of the federal holidays in the United States:

Some states and cities have their own official holidays in addition to the federal ones.

Hiring contractors in United States of America

Hiring independent contractors can be a flexible way to bring in specialized skills for specific projects. Contractors are responsible for their own taxes and do not receive the same benefits as employees.

It's crucial to classify workers correctly. Misclassifying an employee as an independent contractor can lead to serious penalties, including back taxes and fines. The Internal Revenue Service (IRS) has strict guidelines for determining a worker's status.

An Employer of Record (EOR) can help you mitigate the risk of misclassification. An EOR legally employs workers on your behalf, taking on the responsibility for payroll, taxes, benefits, and compliance with labor laws. This allows you to work with talent in the U.S. without the legal and administrative burdens of direct employment.

Navigating compensation and payroll in the United States can seem complex. Each of the 50 states has its own rules, and you need to follow both federal and state laws. It's about understanding all the parts of an employee's salary, including what you add and what you take out. Getting this right is key to running a compliant and successful business.

Payroll cycles & wage structure

In the U.S., you can pay your employees on different schedules. The most common are weekly, bi-weekly, semi-monthly, or monthly.

• Weekly: You pay employees every week, resulting in 52 paychecks a year. This is common in industries like construction and food service.
• Bi-weekly: You pay employees every two weeks, for a total of 26 paychecks a year. Many companies in healthcare and tech use this schedule.
• Semi-monthly: You pay employees twice a month, usually on the 15th and the last day of the month. This means 24 paychecks a year and is often used for salaried employees.
• Monthly: You pay employees once a month, for 12 paychecks a year.

Your wage structure will depend on whether your employees are salaried or hourly. A salary is a fixed amount paid each pay period. A wage is based on an hourly rate, so the total pay depends on the number of hours worked.

Overtime & minimums

The Fair Labor Standards Act (FLSA) is the federal law that sets the rules for overtime and minimum wage.

The federal minimum wage is currently $7.25 per hour. However, many states and cities have their own higher minimum wage rates. When the state or local rate is higher, you must pay the higher wage.

For overtime, the FLSA requires you to pay non-exempt employees 1.5 times their regular hourly rate for any hours they work over 40 in a workweek. A workweek is a fixed period of seven consecutive days. It's important to know that there is no legal limit on the number of hours an employee can work in a week, as long as they are properly paid for overtime.

Some employees, often those in executive, administrative, or professional roles, are considered "exempt" from overtime rules. This usually depends on their job duties and how much they are paid.

Employer taxes and contributions

As an employer in the U.S., you are responsible for paying several payroll taxes. These are your contributions and are not deducted from employee wages. The main federal taxes are for Social Security, Medicare, and unemployment.

Employee taxes and deductions

You must also withhold certain taxes from your employees' paychecks and send them to the government. These deductions include federal, state, and sometimes local taxes.

In the United States, employee benefits and leave are a mix of government-required programs and company-specific perks. This means your benefits package can vary a lot from one employer to another. While some benefits are mandated by law, many companies offer additional benefits to attract and keep the best employees.

Statutory leave

The U.S. does not have a federal law that requires paid time off for employees. However, the Family and Medical Leave Act (FMLA) provides some employees with up to 12 weeks of unpaid, job-protected leave per year for specific family and medical reasons. To be eligible, you must have worked for your employer for at least 12 months, for at least 1,250 hours over the past 12 months, and at a location where the company employs 50 or more employees within 75 miles.

Some states and cities have their own laws that require paid sick leave or family leave.

Public holidays & regional holidays

The U.S. government recognizes several federal holidays, but private employers are not required to give you paid time off for them. However, most employers do offer paid holidays.

Here are the federal holidays for 2025:

Some states and cities have their own official holidays as well.

Typical supplemental benefits

To attract and retain employees, many companies offer benefits beyond what is legally required.

How an EOR can help with setting up benefits

Setting up a competitive benefits package in the U.S. can be complex. An Employer of Record (EOR) can help you navigate the different federal, state, and local laws.

An EOR can:

• Ensure you comply with all legal requirements.
• Help you design a benefits package that is attractive to employees.
• Manage the administration of your benefits program.
• Save you time and resources.

By partnering with an EOR, you can offer your employees a great benefits package without the headache of managing it yourself.

Let's talk about letting an employee go in the United States. The process, often called termination or offboarding, is more than just saying goodbye. It involves a series of steps to ensure you handle the separation professionally and legally. A smooth offboarding process helps protect your company and treats the departing employee with respect. This is true whether the person resigns or you decide to terminate their employment. In the U.S., most employment is "at-will," which means either you or the employee can end the relationship at any time, for any reason, as long as it's not an illegal one. Still, having a clear and consistent offboarding process is a smart move.

Notice periods

In the United States, there is generally no legal requirement for you to give an employee notice before termination. This is because of the at-will employment doctrine that applies in all states except Montana.

However, there are some exceptions:

• Employment Contracts: If you have an employment contract with an employee, it may specify a required notice period.
• Company Policy: Your own company policies might state that you will provide a certain amount of notice.
• Union Agreements: Collective bargaining agreements often have rules about notice periods.

While not legally required, providing two weeks' notice is a common courtesy. It can help maintain a positive relationship and give the employee time to prepare for their transition.

Severance pay

Similar to notice periods, you are generally not required to offer severance pay. The Fair Labor Standards Act (FLSA) does not mandate it.

Here are a few situations where severance pay might be required:

• Company Policy: If your employee handbook or company policy promises severance pay, you must provide it.
• Employment Agreement: A contract with an employee may include a severance package.
• Layoffs: Some states have laws that require severance pay in cases of mass layoffs or plant closings.

Even when not required, many companies choose to offer severance pay. A typical offer is one to two weeks of pay for every year the employee worked for the company. Offering a severance package can be a gesture of goodwill. It can also be used in exchange for the departing employee signing a release of claims against your company.

How Rivermate handles compliant exits

At Rivermate, we make sure every employee exit is handled correctly and compassionately. We understand that navigating the complexities of offboarding can be challenging. Our platform simplifies the process for you.

Here’s how we help:

• Compliant Documentation: We provide you with the necessary termination letters and other documents to ensure you meet all legal requirements.
• Final Paycheck Calculation: We help you accurately calculate the final paycheck, including any accrued vacation time, to comply with state laws.
• Benefits Administration: We guide you through the process of handling benefits, such as health insurance continuation under COBRA.
• Step-by-Step Guidance: Our platform walks you through each step of the offboarding process, from the initial decision to the final exit interview.

We believe in treating every employee with dignity, even during their departure. Our goal is to make the process as smooth as possible for both you and your departing team member.

Navigating the world of U.S. visas and work permits can feel complex. Essentially, a visa allows a foreign national to travel to a U.S. port of entry and request permission to enter the country. A work permit, on the other hand, is an authorization to work legally in the United States. There are many types of visas, each with its own set of rules and requirements.

Employment visas & sponsorship realities

Sponsoring a work visa in the U.S. is a significant commitment for any employer. An Employer of Record (EOR) can simplify this process, but there are some practical realities to consider.

What an EOR can typically sponsor:

• Streamlined Visa Acquisition: An EOR can make the visa process more transparent and straightforward, especially for companies that don't have a legal entity in the U.S.
• Green Cards: For companies looking to hire or relocate employees to the U.S. permanently, an EOR can sponsor green cards, which grant permanent resident status.

What an EOR generally can't sponsor:

• Self-sponsorship: This is rare and usually reserved for individuals with extraordinary abilities, entrepreneurs, or investors. Most work visas require an employer sponsor.
• Visas without a clear employer-employee relationship: The EOR acts as the legal employer, so the role and responsibilities of the employee must be clearly defined.

Practical Routes to Sponsorship:

The most common route to employment in the U.S. is through direct sponsorship by the company where the individual will be working. However, an EOR can be a valuable partner in this process, handling the administrative and legal complexities. This is especially helpful for companies that are new to sponsoring foreign workers or don't have a large HR team.

Business travel compliance (short-term visits)

For short-term business trips to the U.S., the B-1 visa is the most common option. It's important to understand the rules of this visa to ensure compliance.

What you can do on a B-1 visa:

• Consult with business associates.
• Attend a scientific, educational, professional, or business convention or conference.
• Negotiate a contract.
• Participate in short-term training.

What you can't do on a B-1 visa:

• Engage in employment.
• Receive a salary from a U.S. source.
• Remain in the U.S. indefinitely.

Key Compliance Points:

To be eligible for a B-1 visa, you must demonstrate the following:

The initial period of stay is typically one to six months, with a maximum of one year, including extensions.