Hiring Employees in the United States

1. Key Points in Employment Contracts

Labor Contracts for Full – time Employees
Contracts must be written in English or bilingual. They must be in written form and signed by both parties.
The contract must include:
- Name
- Start date
- Contract term
- Professional role
- Job description
- Work location
- Manager
- Employment type
- Vacation/leave
- Salary
- Payment terms
- Termination
IC Contracts for Part – time Employees and Interns
You can refer to Hong Kong IC contracts. Part – time employees and interns do not need insurance, while full – time employees do.

2. Overview of Local Statutory Welfare Systems

Salary Payment
Monthly Pay: The last working day of each month
Semi – Pay: The 15th of each month (if the 15th is a weekend, the payment date will be advanced to Friday)
Monthly Minimum Wage
SmartDeer currently only accepts tax – exempt or salaried workers. Currently, the federal minimum wage for tax – exempt/salaried workers is $35,568. There are 5 states with a minimum wage higher than the federal minimum wage. These states are California, Colorado, Maine, New York, and Washington. Employees living in these 5 states must have an annual salary at least equal to the state minimum wage. Employees living in other states must have an annual salary at least equal to the federal minimum wage.
Probation Period
Most states in the United States practice “employment – at – will,” which means that both employers and employees can terminate the employment relationship at any time. The legal significance of the probation period is mainly for internal management and assessment standards, and there are no special legal protections or restrictions. Note: Probation cannot be terminated based on discriminatory factors such as race, gender, age, and religion. Termination during the probation period must still comply with anti – discrimination and labor laws.
Common probation periods are 30 – 45 days.
Employer Costs
Employer costs are usually estimated to be 9.50% – 12.50% of the employee’s salary (depending on the state).
- Social Security – 6.2%, with an annual maximum limit of $9,932.40
- Medicare – 1.45%
- Federal Unemployment Insurance – 0.60%, with an annual maximum limit of $42
- State Unemployment Insurance – 1% – 4%, with an annual limit depending on the state
- Workers’ Compensation – 0.25% – 0.30%
- Payroll Tax (varies by state) – 0.38% (California)
  Statutory benefits
- Workers’ compensation insurance (premiums depend on the employee’s state and occupation)
- 401K (required by California companies)
- Employee health insurance (not statutory, but most companies offer it as part of the compensation package)

3. Salary Payment and Statutory Holiday Responsibilities

Personal Income Tax
The national (federal) minimum wage is $7.25 per hour or $1,160 per month. Each state has its own minimum wage laws.
Overtime Pay and Maximum Working Hours
The standard working hours are 8 hours a day and 40 hours a week. The standard working week is from Monday to Friday.
According to the Fair Labor Standards Act (FLSA), at the federal level and in some states, certain types of work and positions must pay overtime. However, certain positions and work types may be exempt from mandatory overtime requirements. For these exempt positions, overtime pay is considered to be included in the salary.
Statutory Holidays
Although the federal government does not require employers to pay employees for vacations and holidays, SmartDeer employees in the United States are entitled to at least 12 days of paid time off (PTO). This right applies to both vacations and sick leave.
Treatment or Conversion Logic for Unused Annual Leave at the End of the Year
Annual leave can be accumulated. If the annual leave is not fully used at the end of the year, the unused valid annual leave will be carried over to the next year according to the company’s policy.
Statutory Holidays
There are 6 recognized holidays in the United States. In addition, there are 5 holidays recognized by the Federal Reserve, and employers can choose whether to provide these holidays based on the best interests of employees and business needs.
These holidays are recognized, and most businesses, except those in the retail and hospitality industries, are closed:
- New Year’s Day: January 1st
- Memorial Day: The last Monday in May
- Independence Day: July 4th
- Labor Day: The first Monday in September
- Thanksgiving Day: The fourth Thursday in November
- Christmas Day: December 25th
  The Federal Reserve recognizes the following holidays. The Federal Reserve and most banks are closed, and federal government employees have a day off:
- Martin Luther King Jr. Day: The third Monday in January
- Presidents’ Day: The third Monday in February
- Juneteenth: June 19th
- Columbus Day: The second Monday in October
- Veterans Day: November 11th
Other Holidays
- Maternity Leave
  In the United States, according to the federal Family and Medical Leave Act (FMLA), pregnancy is a specific eligibility criterion for protected unpaid leave. Under the FMLA, pregnant employees are entitled to 12 weeks of unpaid leave. Unless otherwise approved by the employer, this leave must be continuous.
  Employees will be eligible for FMLA leave if they meet the following conditions:
  - They have worked for the employer for at least 12 months
  - They have worked at least 1,250 hours for the employer in the past 12 months
  - They work within 75 miles of a location where the employer employs 50 or more employees
- Paternity Leave
  In the United States, there is no specific federal paternity leave law other than the parental leave granted by the Family and Medical Leave Act (FMLA).
- Parental Leave
  In the United States, federal law allows for parental leave under the Family and Medical Leave Act (FMLA). One or both parents can take parental leave within the first year after the child’s adoption or birth. Employees are entitled to 12 weeks of unpaid leave. Unless otherwise approved by the employer, this leave must be continuous.
  Employees will be eligible for FMLA leave if they meet the following conditions:
  - They have worked for the employer for at least 12 months
  - They have worked at least 1,250 hours for the employer in the past 12 months
  - They work within 75 miles of a location where the employer employs 50 or more employees
- Sick Leave
  In the United States, sick leave falls under the category of the Family and Medical Leave Act (FMLA) and only applies to serious illnesses. The FMLA provides employees with up to 12 weeks of unpaid leave.

Employees will be eligible for FMLA leave if they meet the following conditions:

They have worked for the employer for at least 12 months
They have worked at least 1,250 hours for the employer in the past 12 months
They work within 75 miles of a location where the employer employs 50 or more employees
To qualify as a serious illness, the employee or the employee’s immediate family member must have one of the following illnesses, injuries, impairments, or physical or mental conditions:
- Inpatient care in a hospital, hospice, or residential medical care facility
- Continuing treatment by a healthcare provider.
Calculation Logic for Partial – attendance Salaries (including Absence or Unpaid Leave)

Monthly salary * 12 months / 52 weeks / 40 hours * Number of days/hours to be paid
Calculate the salary based on monthly working days: Monthly salary / Number of working days in the month * Number of days to be paid

Expatriate Employees
Split Payroll
Local minimum wage required for work visas
Salaries must meet industry standards and the average regional wage level

4. Dismissal Rules and Compensation Arrangements

Withdrawal of Local Social Welfare (such as Provident Fund)
It can be withdrawn. However, if withdrawn before the age of 59.5, a fine may be required, depending on the state, and taxes will also need to be paid.
Dismissal (Legal Requirements and Best Practices)
- Notice Period
  Employment – at – will means that both parties can terminate the labor contract at any time, but the common practice in the United States is to give two weeks’ notice in advance.
- Voluntary Resignation
  Employees are allowed to resign at any time.
  - Reason: There is no legal requirement.
  - Compliance requirements:
    - Employees must submit a signed letter of resignation;
    - If employees believe that the employer’s actions have led to their resignation, they can file a lawsuit.
- Dismissal for Cause
  Employers are allowed to terminate the employment relationship at any time for any reason without notice, as long as the termination does not violate the terms of the employment agreement or any other legal protections that the employee may have.
  - Reason: There is no legal requirement.
  - Compliance requirements:
    - Do not violate the employee’s legal protections, such as anti – discrimination laws and protection against retaliation for protected actions;
    - In the United States, many factors can affect the complexity of dismissal, and the risk of litigation is also high. In cases where employees attempt to challenge the dismissal, factors such as the employee’s performance or the employer’s economic reasons for dismissal may help prove that the dismissal is legal.
  - Examples of situations that may increase the risk of litigation:
    - The employee has recently taken leave;
    - The employee has recently applied for accommodation due to disability or illness;
    - The employee has filed a complaint against the employer, including unsafe work, unpaid wages, discrimination, or the actions of managers or colleagues.
  - Statutory notice period: There is no legal requirement. However, it is recommended to give at least two weeks’ notice to maintain credibility and reduce the possibility of litigation.
  - Severance pay: There is no legal requirement. However, it is recommended to provide severance pay of ≥2 to 4 weeks’ salary in exchange for a waiver of claims*. In cases of increased risk, higher severance pay may be required.
  - Any waiver of claims obtained without paying severance pay may be considered invalid.
Conversion of Annual Leave for Departing Employees
The conversion is calculated based on working days and the daily salary of the current month.
Labor Law Website
https://www.dol.gov/
Incentive Policies
Local Employment Protection Policy
The United States strictly restricts the import of labor, especially in the construction industry.
- States often require construction companies to recruit technical and management personnel locally first. They need to place advertisements in local newspapers first. Only when no qualified local candidates are recruited after interviews can they hire technical and management personnel from abroad.
- Designers with the right to sign drawings must be professionally trained, obtain local professional licenses, and be familiar with professional technical specifications. Generally, construction companies will consider hiring local engineers with professional licenses.
- Contractors engaged in professional trades such as plumbing, fire sprinklers, HVAC, electrical, boilers, elevators, and asbestos removal must all have professional licenses. It is difficult for foreign ordinary laborers to enter the United States. U.S. labor laws require employers to give priority to local people when recruiting employees.
  The Equal Employment Opportunity Act (EEO) prohibits employment discrimination based on factors such as race, gender, age, and religion.
  The Occupational Safety and Health Act (OSHA) requires employers to provide a safe working environment and comply with relevant health and safety regulations.

5. Analysis of Local Government Incentives and Policies for Opening Companies and Hiring Local Employees

Quota Ratio for Foreign Employees’ Work Visas
In the United States, the legal environment for hiring employees is relatively flexible, and there are no specific requirements or restrictions on the number and proportion of local employees in a company. Generally, for every 3 – 5 employees, a maximum of 1 – 2 work visas can be allocated, depending on the specific situation of different states in the United States.
Funding Policies
The United States attracts many foreign enterprises to invest due to its large consumer base, business environment that encourages innovation, and legal protection. Currently, the attractive investment industries in the United States are manufacturing, especially in the fields of semiconductors and clean energy technologies.
At the federal level, there are certain restrictions on foreign investors in sectors such as air transportation, communications, energy, minerals, fisheries, and hydropower.
Employment Figures
As of August 2024, the labor force population was 1.6855 million, of which the number of employed people was 1.6143 million.
U.S. Bureau of Labor Statistics : U.S. Bureau of Labor Statistics (bls.gov)

6. Human Resources Analysis and Employment Suggestions

Unemployment Rate
The unemployment rate dropped to 4.2% in August 2024.
Average Salary Trend
As of the fourth quarter of 2023, the average annual income of employees in the United States was $59,384. Although wages have continued to grow, the growth rate has slowed down compared to 7.3% in 2021 – 2022.
Average income by state: On average, Mississippi is the state with the lowest income, with an average income of $48,048, and Massachusetts is the state with the highest income, with a per – capita income of $86,840.
According to data from the U.S. Bureau of Labor Statistics in 2022, almost all of the highest – paying occupations in the United States are in the medical industry. Athletes and sports players are the only non – medical professionals in the top five.
https://www.usatoday.com/money/blueprint/business/hr – payroll/average – salary – us/
Employment Suggestions
Employees must have a valid identity.
Although the United States promotes the principle of “employment – at – will,” which means that employers can terminate employees at any time for legal reasons or no reason, this principle does not mean that employers are not subject to any legal restrictions when terminating or changing labor relations. Unjust dismissal may expose the company to the risk of being sued.
Employers cannot make dismissal decisions based on an employee’s race, color, religion, ancestry, gender (including pregnancy, sexual orientation, and gender identity), age, nationality, mental or physical disability, medical condition, marital status, military status, or genetic factors.
Employers may not discriminate against employees who are 40 years of age or older.
Employers may not harass, punish, or treat employees who report or file complaints differently.
Language
The official language and the main ethnic language are both English.

7. Cultural Adaptation

Religious Customs
[Religion] 54.6% of the national population believes in Protestant Christianity, 23.9% believes in Catholicism, and a small number of people believe in Judaism, Eastern Orthodoxy, Buddhism, Islam, etc. The United States is a gathering place of multiple ethnic groups and diverse cultures, and customs vary among different ethnic groups.
Business Culture
Time concept: In the United States, punctuality is an important part of business etiquette. It is considered very important to arrive on time for appointments and meetings. If there is an irresistible force preventing you from arriving on time, you need to notify the other party in advance and apologize.
Dress code: Americans dress casually in their leisure time, but they dress formally for work and at banquets. For example, when attending weddings, business negotiations, and other events, you should wear formal attire. The diet is mainly American Western cuisine.
Contract and legal awareness: Americans attach great importance to the clarity of contracts and legal terms and avoid ambiguity to prevent misunderstandings. They have high requirements for contracts and a strong legal concept.
Negotiation style: American businessmen focus on practical interests and efficiency in negotiations and do not like to procrastinate. They like to reach a consensus in the first round of negotiations but may be too strict on details.
Gift – giving: When invited to a banquet or as a guest, bringing small gifts such as cosmetics and children’s toys is a popular practice. Hosts prefer to hear words of praise rather than questions about the price.
Social etiquette: In the United States, using full names for addressing is a common social etiquette. In business settings, you should use your full name instead of a nickname or abbreviation. Additionally, it is impolite to interrupt others during a conversation. If you want to interrupt someone, you should politely insert your words when the speaker pauses.