Multiple enterprises worldwide have long preferred the United States for business expansion. This country offers many advantages, from its robust economy to its stable political climate.
Take technology, for example. The USA boasts a strong reputation for innovation and technological advancements.
Its thriving startup ecosystem and robust research facilities foster an environment of growth and success for businesses.
Not only that, but the country is also suitable for hiring talented employees. For that, you must be aware of employment laws, which include the following:
- The standard working hours for all employees in the USA are 40 hours per week.
- Employers must pay employees at least $7.25 per hour, which is not exempt from minimum wage regulations.
- One of the most widely spoken languages in this country is English.
- The official currency of the USA is the Dollar (USD).
In addition, you will need to build a powerful human resource management team to help you navigate the challenges of hiring employees in the US.
Challenges of Hiring in the USA
Hiring employees in the USA is not as easy as it may seem. There are a lot of factors that, when not considered, can turn out to be potential hurdles for companies. A few examples of the same include,
- Complex USA Labor Laws
One of the primary challenges of hiring employees in the USA is that no single employment law applies to every company. Since it is a 50-state nation with various municipal governments, federal, state, and local statutes are in place.
Nonetheless, some of the most common provisions include,
- In the USA, ‘employment at will’ allows employers and employees to terminate the employment relationship without prior notice. However, it is a common practice to provide at least two weeks' notice before leaving their job.
- Although not mandatory, employers in the USA are known to provide paid or unpaid vacation leave to employees, depending on company policies and agreements.
- There is no mandatory rule for probation period in the USA.
Navigating these rules and regulations influencing the structure of employment relationships in the USA can be extremely confusing for companies, especially when they lack the resources to seek legal advice. This can ultimately result in workers’ misclassification or other potential legal consequences.
- Payroll Processing in Foreign Country
Moving on, similar to employment laws, the payroll system in the USA comprises various rules and regulations. For example,
- The income tax rates usually range from 10% to 37%, depending on the income level.
- Employers typically incur additional costs of about 17% of the employee’s annual salary. However, the exact amount might differ depending on the salary and other local factors.
Most organizations find it tedious to understand the different types of payroll policies while maintaining compliance. One potential solution is to incorporate a powerful payroll mechanism. However, it usually requires a huge investment of money and energy.
- Competitive Talent Landscape
- A tech talent shortage is a common problem affecting thousands of businesses worldwide, and the USA is no exception.
- While the USA is at the forefront of tech innovation and growth, the country's educational institutions are still failing to equip the new generations with the skills necessary to carry out high-tech roles.
- In fact, according to the latest study, the tech industry of the USA experiences the highest turnover rate, amounting to as much as 13.2%.
A strong global acquisition strategy can help you deal with these challenges. From minimizing turnover rates to fostering a strong work culture, enterprises seeking international expansion benefit.
How to Hire in the USA
You can hire in the USA effectively in three main ways. They include the following,
- Setting up a local entity
- Hiring employees via EOR
- Hiring contractors via AOR
Setting up a local entity
- Establishing a formal business presence is usually one of the most traditional methods of hiring employees in any new market.
- Depending on your company's needs, you can set up a subsidiary, branch office, or representative office.
- However, it typically entails a complicated incorporation process and demands substantial upfront investment and capital investments.
Hiring employees via EOR
- An employer of record, such as Skuad, assumes entire legal liability on your behalf and enables you to hire employees in the USA without setting up a local entity.
- From local benefit administration to payroll and taxes, an EOR is one of the most cost-effective ways to expand your business in any new market.
- It allows for greater flexibility and faster onboarding and provides ongoing compliance support.
Hiring contractors via AOR
- Partnering with an Agent-of-Record is wise if you want to hire independent contractors in the USA.
- They help you mitigate the risk of worker classification and conduct all back-office activities required to ensure a business's smooth running.
Cost of Hiring in the USA
All three of the above-mentioned ways of hiring employees in the USA come with their associated costs.
| Parameters |
Setting up a local entity |
Partnering with Skuad (AOR/EOR) |
| Initial costs |
The cost is typically high since you must handle all legal expenses, set-up fees, business registration costs, and more. |
Minimal since Skuad already has an established formal presence in the United States. |
| Administrative costs |
You must build separate teams to handle all administrative and HR tasks. |
Low, since Skuad assumes all administrative burden on your behalf. |
| Compliance Costs |
High, you will need to have legal experts to help you navigate through the complicated labor laws of the USA. |
Low, Skuad guarantees 100% compliance with all employment laws in the USA. |
| Parameters |
Partnering with Skuad (AOR/EOR) |
Setting up a local entity |
| Initial costs |
Minimal since Skuad already has an established formal presence in the United States. |
The cost is typically high since you must handle all legal expenses, set-up fees, business registration costs, and more. |
| Administrative costs |
Low, since Skuad assumes all administrative burden on your behalf. |
You must build separate teams to handle all administrative and HR tasks. |
| Compliance Costs |
Low, Skuad guarantees 100% compliance with all employment laws in the USA. |
High, you will need to have legal experts to help you navigate through the complicated labor laws of the USA. |
Additionally, a few other costs are involved in hiring employees in the USA. They can broadly be categorized into two main types,
- Direct costs include salary, wages, employee benefits, onboarding, and training.
- Indirect costs: Administrative expenses, workplace safety, and legal and compliance.
Navigating these different types of costs while maintaining accuracy can be difficult for companies.
Therefore, Skuad offers its country cost calculator, a powerful tool for understanding the total cost of employment in different countries worldwide, including the USA.
A Brief about Employment Laws in the USA
Employment laws in the USA cover many regulations and standards that govern the working relationship between an employer and an employee. Some of the most prominent ones include,
- The Fair Labor Standards Act outlines the guidelines for standard wages and overtime pay in the public and private sectors.
- Employee Retirement Income Security Act regulates employers who provide pensions or welfare benefits plans to their employees.
- Family and Medical Leave Act regulates leave policies for eligible employees under certain circumstances, such as the birth or adoption of a child.
Hire in the USA with Skuad
Want a seamless global expansion experience? Look no further than Skuad.
With expertise in over 160+ countries, Skuad has helped multiple enterprises worldwide.
It features robust capabilities such as automated onboarding, cross-border payroll, and 100% compliance with local laws, among many others.
Additionally, we have an in-house legal guidance team to provide legal expertise in country-specific laws.
From understanding labor regulations to minimizing global employment risks, Skuad has got you covered.
Get started today and experience the wonders of seamless global growth.
FAQs
Q1: How do you hire employees in the USA?
Ans: Two of the most effective ways to hire employees in the United States are to either set up your subsidiary in this foreign land or partner with an employer-of-record, such as Skuad.
Q2: How much does it cost to hire an employee in Skuad?
Ans: The cost to hire in the United States usually differs based on the method you are applying for this purpose. For example, setting up a local entity in the USA is usually very expensive compared to seeking the services of an EOR.
Q3: How many US labor laws are there?
Ans: More than 180 federal laws currently cover the day-to-day operations of a business organization in the USA.
Q4: How does payroll work in the USA?
Ans: Employers in the USA are mandated to pay their employees in the country’s official currency, the Dollar (USD). Additionally, they must comply with the minimum wage requirements, which might differ from state to state.
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