To do business in the USA, it is vital to have a good understanding of its business or work culture. Making the right impression with the right people is the key to success in the USA, and it is important to back this up with the right research on the market and potential business associates.
As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about the American work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in the US to start your expansion well-informed.
Work Culture in the US
The US is the most powerful economy in the world and spans six time zones, with Atlantic and Pacific coastlines and land borders with Canada to the north and southwards to Mexico and Central America and the nations of South America.
The US’s free enterprise system encourages invention and innovation. American workplace culture blends teamwork and individual responsibility and it is not uncommon for professionals to identify strongly with their work. Higher level management typically draw on their university and college contacts for business.
US office environments can be intensely competitive, with workers striving to be the ‘employer of the year’ or in line for other recognition. Hierarchical office structures can nevertheless be quite open in the relationship between employees and managers.
It is time to ‘get down to business’ so here are a few tips on taking the right steps, and avoiding the pitfalls! Here are some tips and information on the work culture in the US:
- Punctuality: It is important to be on time or even a little early, as it displays you are eager to make a start on the negotiations.
- Business Meetings: These follow defined agendas and, because of the ‘time is money’ philosophy, negotiations can quickly conclude. Communication should be direct, straightforward and to the point. Conflicts tend to be dealt with directly and openly. Switch off the mobile and do not send emails from your phone or laptop.
- Hierarchy: structure is clear from the number of acronyms attached to positions in a company. From vice-presidents downwards there are SVPs, EVPs, AVPs and EDs before you reach the more usual MDs. It is as well to get them in the right order.
- Introductions and Greetings: Firm handshake with a friendly smile. First names are often used even at initial meeting, with a little small talk.
- Business Cards: These can be swapped but in the digital age, not everyone uses them – it is no longer standard practice but may still be performed.
- Dress Code: Varies with location and sector. Business attire tends to be formal for men and women, but whereas Wall Street banks expect suits, California’s Silicon Valley techies will not be out of place in shorts and t-shirts. If unsure, err on the side of caution. Casual smart is growing increasingly in office dress code.
- Gift-giving: This is rare, and any gifts should be modest and symbolic.
- Sealing the Deal: Handshakes are largely symbolic; signing the contract is the closer.
- Business Meals: Business is often conducted over breakfast, lunch, or dinner – the golf course is another popular venue.
US Minimum Wage
The national minimum wage of US$7.25 per hour varies across the 50 states and Washington DC. For example, in California the minimum hourly rate is US$14 for companies with more than 26 employees and US$13 per hour for companies with fewer.
In 2021, Idaho applied the national minimum, but Hawaii had a rate of US$10.10, Illinois US$11 and Washington DC US$15.20 per hour. Where employees are subject to both state and federal regulations the higher rate applies.
For example, Georgia has a minimum of US$5.15 per hour, but companies who are covered by the Fair Labor Standards Act must pay the federal minimum of US$7.25. These are employers who have yearly sales totaling US$500,000 or more or those who engage in inter-state trade, which encompasses most companies.
Probation Periods in US
Probation, trial, or introductory periods are not covered by federal law, but employers may use them to evaluate new staff before permanent employment. A typical period of 90 days depends on mutual agreement or whether a collective bargaining or union agreement is in force.
United States employment is generally ‘at will’, meaning the employer or employee can terminate without reason or cause, as long as it does not violate an individual’s rights on such as race, gender, age, pregnancy, or religion and is not retaliatory.
Companies implementing a probationary period must ensure policies and procedures are carefully worded and new hires understand that during and after this trial period the employment remains ‘at will’.
All states have the same ‘at will’ policy, except for Montana – where employees, following a probationary period, can only have their employment terminated for good cause. If no time period has been agreed between the parties, then the default probationary period is six months from the date of hiring.
Working Hours in US
Normal working hours or standard shift is a 40-hour week comprising five eight-hour days with at least eight hours rest in between, although employees often work longer hours. Under the Fair Labor Standards Act (FLSA), hours exceeding 40 in a 168-hour period are considered overtime. Flexibility in the standard nine to five working hours or ‘flexi-time’ depends on individual contracts.
Break times for lunch or dinner are not mandatory under federal law but state laws may provide for minimum meal periods.
In states which does not mandate breaks or meal periods, benefits are agreed between employer and employee.
Employer / employee agreements for coffee breaks usually do not exceed 20 minutes and are paid as working time. If agreed, breaks are considered part of working hours when calculating any overtime. Unauthorized breaks are not counted.
Overtime in US
US employees generally work more hours annually compared to the rest of the world, working longer shifts and taking fewer vacations. Except for a few occupations (such as transportation) there is no federal restriction on hours worked.
Overtime is paid at one-and-a-half times above the usual hourly rate if the employee works more than 40 hours a week averaged over a 168-hour period as covered by the Fair Labor Standards Act.
Work on Saturdays, Sundays, holidays, or regular days of rest is not automatically overtime unless overtime is worked on such days.
Notice Periods in US
Most US workers, unless they have an employment contract or collective bargaining agreement, are employed ‘at will’. Employers do not need to give notice and an employee can resign without notice. The only time employers cannot terminate a contract is if it violates the employees’ rights – for instance, due to an employee’s race, gender, age, pregnancy, or religion.
However, plant closures and mass layoffs (over 50 employees) under the federal Worker Adjustment and Retraining Notification Act (WARN) and state law equivalents allow for 60 calendar days’ notice to employees, as administered by the Department of Labor.
Redundancy, Termination / Severance in US
Except when terms of notice, termination and entitlements or a period of ‘garden leave’ are set out in the employment contract, employees working ‘at-will’ are not as a rule entitled to a notice period.
Eligible employees have the right to continued healthcare coverage for a period and to receive government unemployment benefit. They may be entitled to severance pay according to state laws if it can be proved they were led to believe that severance would be forthcoming.
‘At-will’ employment can be terminated by either party without notice, but can be unlawful if:
- There was an inferred contract
- It violates public policy, federal, state, or local laws
- It is based on discrimination or reprisal
Employers that come under the Worker Adjustment and Retraining Notification Act (WARN) face termination regulations in the case of closure and laying off more than 50 workers at a single site. In this case workers must be given 60 days’ notice.
Pension Plans in US
Employers may offer their employees a pension provision through a number of different contribution mechanisms or benefit schemes.
The most common forms of pension plan schemes in the US are private pension funds which are defined benefit (DB), defined contribution (DC), or hybrid. They also have many state and local government employee retirement funds, which are largely a defined benefit, and are sponsored by states and municipalities.
Public Holidays in US
There are no national holidays as the United States Congress only has constitutional authority to create holidays for federal institutions, although most ‘Federal Holidays’ are also observed as state holidays.
The US Government recognizes 11 federal holidays, when all non-essential government employees are off work and most government offices close, including post offices.
For details of ‘State Holidays’ and how they impact on private and public employers, check out this link. Here are the holidays that are most commonly celebrated in the US:
- New Year’s Day - January 1
- Martin Luther King Jr.'s Birthday - Third Monday in January
- Washington’s Birthday - Third Monday in February (President’s Day)
- Memorial Day - Last Monday in May
- Juneteenth Day - June 19th
- Independence Day - July 4 (National Independence Day)
- Labor Day - First Monday in September
- Columbus Day - Second Monday in October
- Veterans’ Day - November 11
- Thanksgiving Day - Fourth Thursday in November
- Christmas Day - December 25
Every four years Inauguration Day is celebrated on January 20 and is counted as a federal holiday.
Sick Leave in US
Private sector employees who take time off due to sickness, have no entitlement under Federal Law to receive payment. These benefits depend on agreement between employer and employee. However, many states have their own laws on sick leave. For example, In New Jersey, employees are given an hour of paid sick leave for each 30 hours of work up to 40 hours per year, whereas New York workers have up to 40 hours annually, depending on size and income of the company.
Public sector employees have paid sick leave as per their employment agreement. Eligible employees working for companies covered by the Family and Medical Leave Act are entitled to 12 weeks unpaid leave in a 12-month period for illness, birth of a child, as a caregiver for a family member. Some companies may choose to pay these employees.
The US has no national health service; if someone becomes ill, treatment must be paid for. However, the government does fund two health plans: Medicare (insurance program for those who have paid into it) and Medicaid, assistance program for the low paid.
Vacations / Holidays in US
Although there is no statutory requirement for paid leave, but most US employers offer paid holidays of around 10 days annually, to employees who have worked for the company for 12 months. Allowances can increase with length of service.
A 2021 survey taken by the US Bureau of Labor Statistics showed that more than 33% of workers in private industry were entitled to 10 to 14 days paid holiday after the first 12 months with an increase for length of service – 15-19 days for 10 years, 20-24 days after 20 years.
Maternity/Paternity Leave in US
There is no statutory paid maternity leave provision in the US. However, eligible employees of companies that are covered by the Family and Medical Leave Act (FMLA) can take up to 12 weeks of job-protected unpaid leave for pregnancy and child rearing, ensuring that a worker’s job remains in place and their health insurance continues.
However, only 60% of workers are eligible. The Act also allows for unpaid job-protected leave for the serious illness of the employee, spouse, or a child.
There is no obligation for paid time off. Eligible employees must have completed a minimum 1,250 hours work in the previous year. For more information, click here.
Generally, paid maternity leave is treated as a form of benefit. Extending this benefit to workers is a decision made by each company, and therefore terms vary from employer to employer.
Eight states – California, New Jersey, Rhode Island, New York, Washington State, Massachusetts, Connecticut, and Oregon – plus the District of Columbia have passed their own paid family leave laws. Check out the following link for state-by-state information.
Bonuses in US
Any bonuses paid are at the employer’s discretion, as there are no federal or state laws stating employees are entitled to receive them. However, if bonuses are paid there are rules regarding these payments, whether discretionary or non-discretionary, under the Fair Labor Standards Act – for exempt and non-exempt companies. You can check out more information on bonuses here.
According to the Bureau of Labor Statistics, as of March 2020, 40% of the workforce in the private sector received non-productive bonuses. Any bonus would be taxed as salary.
Car Allowances in the US
The average allowance in 2021 was US$575 and up to US$800 for executives. Car allowances in the US are not a reimbursement but are treated as income and therefore are taxed.
Do not Suffer Culture Shock, Call Us!
The complexities of the US’s tax, payroll and employment laws at federal and state level are part of a business culture that poses questions for your international expansion. Bradford Jacobs removes the mysteries of all these issues – freeing your staff to concentrate on growing your business. Contact us today for more information.