USA Employment Contracts

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USA Employment Contracts

A successful business largely depends on its employees. By creating working contracts that include the right terms and benefits there will be no misconception and the perfect work-life balance can be created. At Bradford Jacobs, this is our aim, and we support companies in over 100 countries with creating compliant and balanced labor contracts.

Our team keeps track of the Italian laws and regulations on a daily basis to be duly aware of updates that can be implemented in working contracts. By using our PEO and EOR services, we can provide compliant labor contracts for employees in Italy, including local benefits.

To support your plans, we made this guide including the basics of employment contracts in the US. After reading this guide you will know everything about social security, notice periods, and the average working hours.

How do you hire US Employees?

International companies hiring employees for their expansion into the United States of America must deal with wide-ranging federal and state laws as well as local regulations. Another unique feature surrounds contracts - fixed-term, full-time or part-time, temporary, and seasonal contracts are familiar concepts worldwide. But, the ‘at-will’ contracts that prevail in the US mean either employer or employee can terminate with or without notice or cause, as long as termination is not discriminatory or retaliatory.

Federal and state laws cover payroll, tax, social insurance, and benefits including minimum wages, working hours, overtime, and maternity leave. The US, however, is less federally regulated than other countries in such areas as termination and severance, notice periods, sick leave, and holiday pay. These areas can be dealt with contractually, or by agreement, as part of the employment relationship but depending on state and municipality regulations.

These issues must be considered before companies move into the ‘recruitment phase’. This involves:

  • Ensuring Form I-9 is in place allowing employees to work in the US.
  • Completing Form W-4 so the employer knows how much withholding tax to remit for federal and state taxes.
  • Registering the employee with the relevant state’s Labor Agency.
  • Putting worker’s compensation insurance in place.
  • Deciding on payroll method to pay employees, pay withholding tax to the Internal Revenue Service (IRS) and the state’s tax agency if applicable and file tax returns. This process will operate more efficiently by employing payroll specialists such as Bradford Jacobs.
  • Employers must have an Employer Identification Number (EIN) before remitting forms and withheld taxes to the Internal Revenue Service (IRS). Employers can apply for an EIN online using the IRS website. Employers must also register to pay federal taxes electronically through the Electronic Federal Tax Payment System.

Outsourcing the recruitment and hiring process through Bradford Jacobs’ Professional Employer Organization (PEO) network will give you the security that our in-depth know-how can deal with all these potential problems. Trusting our Employer of Record (EOR) services to handle every aspect of payroll compliance will guarantee a trouble-free move into your new territory.

Employment Contracts in the US

US laws set no minimum requirements for contracts and most employment relationships are ‘at will’ and can be terminated by either party, without notice or cause. However, termination must not be discriminatory or retaliatory and cannot contravene any rules dictated by individual states or municipalities.

Fixed Term or Open-ended Contracts: No laws govern these.

Probation/Trial Periods: These usually depend on company policy and typically provide for an evaluation after 90 days.

Recruitment Agency Contracts: These contract types have the potential to be problematic in their execution.

Attention must be paid to the classification of worker being supplied to a company as this has tax implications for the IRS. In placing staff, the agency must also ensure contracts with the employer observe all relevant laws pertaining to overtime, working hours, discrimination etc.

In drawing up employment contracts, if applicable, or in the written agreements that go with an ‘at will’ employment relationship, general considerations include:

  • Contracts are not a legal requirement in the US, nor need any terms be explicitly covered.
  • Unlike the employment laws of most countries, the US has no restriction on the length of a fixed-term contract.
  • There is no law governing probation periods although many employers have an internal policy regarding ‘introductory periods’. These typically provide for an evaluation after 90 days, but in the case of ‘at-will’ employment they have little point legally as either party can terminate when they like without cause.
  • Senior managers and executives do tend to have formal written contracts, particularly dealing with compensation and severance terms.
  • US law does not provide for notice periods, except where a contract provides for one or in the case of mass dismissals governed by the Worker Adjustment and Retraining Notification Act (WARN Act).

What Employment Laws exist in the US?

Employment laws, administered by the Department of Labor (DoL), vary at federal, state and sector levels, including:

  • Civil Rights Laws protect employees against discrimination based on race, color, religion, gender, nationality, pregnancy, age, and disability and are enforced at federal level.
  • Family and medical leave laws allow employees up to 12 weeks’ unpaid leave over 12 months with conditions depending on length of service.
  • Workers’ compensation laws cover work-related injury or illness.
  • Workplace safety laws protect employees from hazards and repetitive injuries and infectious diseases, among many other conditions.

In addition to these protections, federal and state laws also apply in a variety of areas, including:

  • The federal minimum wage is US$7.25 per hour, but this varies at state level. California applies minimum hourly rates of US$14 per hour for companies employing more than 26 employees and US$13 per hour for companies with fewer, for example. Georgia has a minimum rate of US$5.15 per hour, but employers operating under the Fair Labor Standards Act employers must pay the federal minimum of US$7.25.
  • Normal working hours comprise 40 a week over five days. Lunch breaks or shorter periods of rest are not mandatory.
  • Overtime is paid at one-and-a-half times the usual hourly rate when employees work more than 40 hours per week averaged over 168 hours.

How do you Onboard US Employees internationally?

The most efficient and cost-effective method of onboarding employees into the United States of America is through a global recruitment company such as Bradford Jacobs.

Transferring staff from abroad demands compliance with strict and time-consuming procedures to obtain visas and permits. Making mistakes risks sanctions, wasting time and money, with the likelihood the employee will not be allowed to start work, or may even be refused entry on arrival at the border. The US is particularly strict in applying restrictions on immigration.

The alternative is to locate and recruit staff within the US by partnering with Bradford Jacobs. This requires a thorough knowledge of the employment market. We have that knowledge and will clear the way for your expansion.

Our Professional Employer Organization (PEO) and Employer of Record (EOR) solutions manage every stage of the process from finding the employee to seeing their first check is paid on time. The result? Your new employees are quickly operational as part of a team making their mark in your new territory.

Translating US Employment Contracts

As there is no legal requirement for contracts in the US, language requirements tend to apply in a wider context. For example, workplace documents or notices should be provided in the main language of a designated percentage of the employees, if this is not English. An ‘English-only’ policy could be regarded as discriminatory.

Tick all the boxes

Bradford Jacobs’ recruitment specialists will guide you and your employees through every step of onboarding into the US. From talent acquisition to the complexities of employment legislation, payroll and tax, Bradford Jacobs ticks all the compliance boxes, and we ensure every aspect is contractually watertight.

The global reach of our Professional Employer Organization (PEO) recruitment platforms, combined with the in-country knowledge of our Employer of Record (EOR) specialist teams, guarantees a successful and smooth transition of your employees into your new territory.

To learn more about our PEO and EOR packages, contact one of our consultants today.