Employer of Record in United States of America

How an Employer of Record works in the United States.

An Employer of Record (EOR) is a third-party company in the United States that acts as an employer on behalf of another business.

EORs are typically utilized by businesses wanting to employ overseas workers without the hassle and expense of setting up a registered legal entity in that country.

They handle all legal and administrative aspects of employment such as onboarding, payroll, taxes, and employee benefits, while you continue to manage the employees’ work.

Rivermate’s EOR services are built on three pillars:

• Local HR experts who understand the market and employment laws.
• A network of partners that allows us to provide competitive benefits.
• The Rivermate platform that simplifies every aspect of the employment relationship.

Using an EOR provider in the United States lets you focus on the fundamentals of your business, knowing your overseas employees are cared for by an entity that understands all local laws and practices.

View Our Employer of Record Services

United States labor market: At a glance

The hiring market
Greatest hiring activity:	California
Hiring timelines:	3-4 business days is typically sufficient
In-demand sectors:	Sales, administrative and accounting roles
Sectors with skills shortages:	Healthcare, retail and sales

The salary market
Employer tax contributions:	Social Security: 6.2% on wages up to $184,500 per employee Medicare: 1.45% Federal unemployment: 6% on the first $7,000 of each employee's wages State unemployment: varies by state
Minimum wage:	Federal minimum wage is $7.25 per hour, although many states and cities have higher minimum wage rates
Average gross annual salary:	$62,608
Income tax brackets:	Federal income tax is progressive, with brackets between 10% and 37% Some states charge an additional state income tax

What will it cost to hire in the United States?

The United States is full of talented and ambitious employees, but they are relatively expensive to hire compared to other nations.

U.S. business owners should choose their location carefully, as regulations regarding salary, taxes and employee benefits can vary dramatically from state to state.

Salary requirements

The U.S. federal minimum wage is $7.25 per hour. For a full-time employee working 40 hours a week, that’s a salary of $15,080.

However, many U.S. states and municipalities impose a higher minimum wage. The highest state minimum wage is currently $17.13 per hour in Washington, although this is adjusted annually to track inflation.

Under federal law, employees who work over 40 hours a week must be paid an overtime rate of at least 1.5x their regular wages, although exemptions apply. Some states mandate even more generous overtime rules.

Employer contributions

In the United States, employers are responsible for paying the following payroll taxes:

• Social Security: 6.2% on wages up to $184,500 per employee.
• Medicare: 1.45% on all employee wages with no limit.
• Federal Unemployment (FUCA): 6% on the first $7,000 of each employee's wages.

State Unemployment (SUCA) contributions may also be due depending on where the business is based. The rates and wage limits vary depending on the state.

There are no federal laws regarding employer pension contributions, although many employers choose to offer a 401(k) to attract and keep the best employees.

Statutory benefits

Under the Affordable Care Act (ACA), U.S. employers who had 50 or more full-time employees in the previous calendar year (including full-time equivalent employees) are obliged to offer affordable health insurance. Often, they will subsidise these insurance plans to meet the ACA’s definition of affordable, although this isn’t mandatory.

Employers are not required to offer any paid time off to their staff. Federal law also doesn't mandate paid maternity or sick leave by default, although some states make it compulsory for everyone.

Under the Family and Medical Leave Act (FMLA), employees are given up to 12 weeks of unpaid leave per year for specific family and medical reasons, but only after a year of working at their company. This rule only applies to companies with at least 50 employees in the region.

Employment cost calculator

Use our Employment cost calculator for a more accurate estimate of what it will cost to hire your employee in the United States.

What hiring in the United States really looks like

Market condition	What an employer needs to know
Talent availability	The talent pool is large, but skilled workers are often located in larger cities, where more generous salaries are offered. The largest hubs of many high-paying industries are located in Northeastern states such as New York, Massachusetts, New Jersey and Connecticut.
Top-paying sectors	Healthcare, utilities and tech.
Skills shortages	There is a huge demand for registered nurses across every U.S. state, while vacancies for retail sales associates, physicians and truck drivers are also among the most frequently advertised.
Key employer challenge	Business owners operating in more than one U.S. state need to understand and respect multiple sets of federal and state employment laws.

The U.S. job market is widely regarded as being somewhat slow in 2026, due to uncertainty surrounding the economy. For business owners looking to hire, that means there should be no shortage of talented candidates. Historically, the job market tends to pick up after a new president takes office, then slowly cool off.

The employee onboarding process is relatively smooth. Provided there are no complicated contract alterations and necessary documents are submitted with no delay, they should typically be cleared to start within three business days.

Compliance risks employers must know about

Employment law in the United States is relatively flexible in terms of employee contracts. There’s plenty of freedom to add custom terms, although regulations around non-compete agreements are subject to significant state-level variation.

Federal law is arguably quite generous to business owners, at least compared to most of Europe, where workers tend to receive more rights and benefits.

Nevertheless, there are some important HR regulations that employers must follow to avoid financial penalties.

Employers must follow federal, state and municipal regulations

U.S. employment law is often split into federal and state regulations.

In some cases, business owners have to follow both laws simultaneously, such as paying both federal and state taxes.

However, there are instances where state regulations override federal law. An obvious example would be the minimum wage. In January 2026, there were 30 U.S. states with a minimum wage higher than the federal wage of $7.25 per hour.

Several states have their own labor laws regarding how employees can be treated in the workplace. There are also states with public holidays that aren’t observed elsewhere in the U.S.

If that wasn’t complicated enough, many cities and counties have unique laws that override both state and federal regulations.

According to the Economic Policy Institute, there are currently 69 municipalities with their own minimum wage regulations.

It can be particularly tricky for those with businesses in various U.S. states to keep up with the different rules.

Employers must keep accurate employee records

Under the Fair Labor Standards Act (FLSA), employers are obliged to maintain accurate employee records. These should include wages, hours worked and deductions for covered employees.

Records can prove to be essential if an employee claims they have been exploited.

A famous case illustrating the severity of this law occurred when Tyson Foods was sued by its employees in 2016.

The employees claimed they weren’t being adequately paid for time donning and doffing protective uniforms, and Tyson Foods had no records proving otherwise. They were awarded $2.9 million.

Notice periods aren’t offered by default in the United States

While employees and employers are legally required to give notice before parting ways in many countries, that’s rarely the case in the United States.

The U.S. default is “at-will employment”, which allows employers to immediately dismiss staff without having to establish just cause.

On the flip side, this also permits staff to quit their job, storm out of the office and never come back.

Some U.S. states do have labor laws that give employees more protection, while unionized workers tend to be better protected as well.

Notice periods may be written into a contract at more senior levels of employment, but that’s not always the case.

Benefits of hiring employees through an EOR in the United States

Although the United States doesn’t offer as many blanket employee rights as other countries, it’s important to follow those that do exist with extreme care. Failing to respect U.S. employment law, whether on a federal, state or municipal level, can lead to huge financial penalties.

Yet, as a busy entrepreneur, you likely have no desire to wrap your head around all the different regulations, especially if you’re planning to hire in multiple states.

In order to save themselves time and avoid crippling fines, many business owners choose to hire U.S. employees using an Employer of Record.

At Rivermate, we help employers by:

• establishing a local entity in the United States.
• handling payroll, taxes, benefits, terminations, and various other aspects of the employment relationship.
• ensuring full compliance with all U.S. employment regulations.

This leaves you free to focus on what you do best: managing your employees and growing your business.

Ready to hire in the United States?

Hiring in the United States involves more than finding a suitable candidate. From managing payroll, taxes and benefits and ensuring full compliance with United States labor regulations. Rivermate handles all the difficult local nuances so you can hire with confidence.

Talk to a United States Hiring Expert

Sources:

1 www.dol.gov/agencies/whd/minimum-wage/state#wa
2 www.bls.gov/ooh/highest-paying.htm
3 lightcast.io/resources/blog/america8217s-highest-paying-industries
4 www.lightcast.io/resources/blog/most-posted-for-jobs-in-each-us-state
5 www.epi.org/minimum-wage-tracker/
6 supreme.justia.com/cases/federal/us/577/442/
7 www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions
8 www.bls.gov/news.release/jltst.t13.htm
9 www.bls.gov/cps/cpsaat39.htm
10 www.irs.gov/filing/federal-income-tax-rates-and-brackets
11 www.bls.gov/ces/publications/length-pay-period.htm
12 www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-rule-banning-noncompetes
13 https://www.dol.gov/general/topic/benefits-leave/fmla