The United States of America
Know everything about hiring and compliance in the USA.
The current Federal Minimum Wage for exempt/salaried workers is $35,568. In five states (California, Colorado, Maine, New York, and Washington), the minimum salary wage exceeds the Federal minimum wage.
In the USA, mandatory benefits include Social Security, Medicare, Federal and State unemployment insurance, workers' compensation insurance, and Private healthcare.
Under The Fair Labor Standards Act (FLSA), certain types of work and specific states require overtime pay. However, some roles consider overtime as part of the salary and are therefore exempted. Typically, standard working hours are around 40 hours per week, from Monday to Friday.
While there is no legal obligation for employers to provide bonuses to employees in the USA, many companies include annual or performance-based bonuses as part of their compensation package, which is subject to taxation as salary.
In the USA, employers typically process payroll twice a month, with most companies following this schedule:
1st payroll cycle (1st to 15th):
- Payroll cut-off date: 4th of each month
- Payment date: 15th day of each month
2nd payroll cycle (15th to last day):
- Payroll cut-off date: 20th of each month
- Payment date: last day of each month
The individual tax system in the USA is intricate. Federal individual tax rates are progressive and vary as shown below:
- Income up to $9,950: 10% tax
- Income above $9,950 and up to $40,525: 12% tax
- Income above $40,525 and up to $86,375: 22% tax
- Income above $86,375 and up to $164,925: 24% tax
- Income above $164,925 and up to $209,425: 32% tax
- Income above $209,425 and up to $523,600: 35% tax
- Income above $523,600: 37% tax
These rates apply to single employees with no partner or dependents. Additional factors such as household status and the number of children also play a role in determining individual tax rates, making the system more complex.
In the USA, an employee agreement should encompass various essential details, including the employee's name, address, job role, job description, start date, compensation, vacation entitlement, manager's information, place of work, benefits, and a termination clause. The contract must be drafted in English, and it can also be bilingual.
Employment at will is a prevailing concept, allowing both the employer and the employee to terminate the contract at any time. However, it is customary in the USA to provide a 2 weeks' notice before termination.
Severance pay is not mandated by statutory provisions in the USA.
Probation periods are not legally required due to the nature of at-will employment in the USA.
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Frequently asked questions
What is the maternity leave policy in USA?
"Under the Family and Medical Leave Act (FMLA), pregnant employees are entitled to 12 weeks of unpaid leave. This leave must be contiguous unless otherwise granted by the employer. Employees are eligible for FMLA leave if: - they have worked in the company for a minimum of 12 months - have worked for at least 1250 hours in the last 12 months - work at a location where the employer employs 50 or more employees within 75 miles"
Do male employees have the right to paternity leave in USA?
There is no law on mandatory paternity leaves in the USA.
How many sick leave days are employees entitled to in USA?
USA employees are entitled to 15 days of Paid Time-off for both vacation and sick days. Extended, serious illnesses of 5 days or more are covered under the Family Medical Leave Act. The FMLA provides up to 12 weeks of unpaid leave. Employees are eligible for FMLA if: - they have worked in the same organisation for 12 months - they have worked for at least 1250 hours over the past 12 months - they work at a location where the employer employs 50 or more employees within 75 miles
What are the public holidays observed in USA?
Following are the Federal Holidays in the USA: - New Year’s Day: January 1 - Martin Luther King’s Birthday: 3rd Monday in January - Washington’s Birthday- 3rd Monday in February - Memorial Day: last Monday in May - Juneteenth National Independence Day: June 19 - Independence Day: July 4 - Labor Day: 1st Monday in September - Columbus Day: 2nd Monday in October - Veterans’ Day: November 11 - Thanksgiving Day: 4th Thursday in November - Christmas: December 25
What are the legal requirements for terminating an employee in USA?
Every Federal, State and City ordinance must be followed by employers while dismissing a worker. The termination clause might include the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), which allows employees to continue with their health insurance when unemployed.
What documents are typically required during the employee onboarding process in USA?
" Compliance documents required at the time of onboarding: - I-9 form - W-4 form - Passport / ID - State Tax Form - Voided Check"
What are the components included in the employer cost breakdown in USA?
" The monthly employer cost breakdown in the USA typically includes: - Social security: 6.2% - Medicare: 1.45% - Federal unemployment: 0.60% - State unemployment: 2.7% - Workers' compensation: 0.25% This is an estimated 11.2% of the employee's gross salary which should be accounted for in the employer's cost of employment calculation."
Are employers required to provide a bonus to employees in USA?
There is no legal requirement for employers to provide a bonus to employees in USA. However, many companies offer annual or performance-based bonuses as part of their compensation package, which is taxed as salary.
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