Employment Laws and Regulations
Contracts and Work RulesWork Week and LeaveWagesIncome TaxSocial Security Administration (SSA)Hiring ExpatsTermination
Minimum Working Conditions
For employees covered by the Fair Labor Standards Act (“FLSA”), it establishes standards for wages, working conditions, and overtime compensation. The FLSA does not apply to employees who are “executive, administrative, or professional employees,” and these are designated as “exempt” from the provisions of the FLSA. Other types of employment are also considered “exempt” under the FLSA These include, but are not limited to, employees who work as caregivers for the elderly or infirm, outside sales representatives, certain qualified computer experts, employees of certain seasonal amusement and recreation businesses, and occasional babysitters. Only other employee groups are exempt from the FLSA’s overtime pay requirements.
Fixed-term/Open-ended Contracts
No legal provision governs fixed or unlimited term contracts. In the absence of an employment contract, employment relationships are presumed to be “at-will,” terminable by either party at any time, with or without cause.
Trial Period
No legal provision governs a formal “trial period.” However, some employers prefer from a business perspective, to have an internal policy on trial periods of 90 days.
Employer’s Obligation to Provide a Healthy and Safe Workplace
The Occupational Safety and Health Act (OSHA) requires employers to provide employees with a safe and healthy place of employment, which is free from recognised hazards (death or serious physical harm). The OSHA regulations govern a wide variety of workplace conditions, and require employers:
- a) to remedy known workplace hazards;
- b) to limit the amount of hazardous chemicals workers can be exposed to;
- c) to use certain safe practices and equipment; and
- d) to monitor hazards and keep records of workplace injuries and illnesses.
Anti-Discrimination Laws
It is illegal under U.S. federal law to discriminate against an employee, either intentionally or through a disparate impact, on account of his or her race, color, religion, sex (including pregnancy, sexual orientation and gender identity), national origin, age (40 or older), disability or genetic information. It is also illegal to harass an employee on account of these protected characteristics or to retaliate against an employee because he or she complained about discrimination, filed a charge of discrimination, or participated in an investigation or lawsuit concerning employment discrimination. Most employers with at least 15 employees are covered by this body of federal law, as are most labour unions and employment agencies.
Healthcare and Insurances
Under the Patient Protection and Affordable Care Act, certain large employers who do not offer affordable health insurance that provides minimum value to their full-time employees may be subject to significant penalties.
Holidays and Annual Leave
Although the United States government recognises several “national holidays,” no federal law requires employers to provide employees with time off for a holiday. However, it is customary for employers to provide employees with paid time-off to observe nationally and locally recognised holidays. Similarly, no federal law requires employers to provide employees with paid vacation time. In practice, all employers provide employees with paid vacation time.
Maternity and Parental Leave
The Family and Medical Leave Act (”FMLA”) requires employers with fifty (50) or more employees within a seventy-five (75) mile radius to provide covered employees with twelve (12) weeks’ unpaid leave in a 12-month period for the birth or placement of a child.
Some state laws provide for maternity leave for employees who are not covered under the FMLA. In addition, several states provide workers with partial pay during parental leave and in general.
Sickness Leave
Employees may be entitled to unpaid sick leave under the FMLA, which allows eligible employees to take up to twelve (12) weeks’ unpaid medical leave in a 12-month period for a serious health condition that prevents the employee from performing the functions of his or her job. Though there is no national law guaranteeing paid sick leave, a number of states, counties, and cities require employers doing business within their boundaries to offer paid sick leave. Employers must offer paid sick leave to employees working on certain federal contracts.
Disability Leave
A disabled employee may be entitled to unpaid leave under the FMLA as discussed above. In addition, workers’ compensation insurance administered at the state level may provide for paid leave. Finally, while the Americans with Disabilities Act (“ADA”) does not expressly provide for disability leave, employers are required to make reasonable accommodations for qualified employees with disabilities, which could include leave, so long as doing so does not pose an undue burden on the employer.
Salary
The Fair Labor Standards Act (FLSA) sets forth a (national) minimum wage for all non-exempt employees of $7.25 per hour. States are free to legislate a higher minimum wage. Kindly refer attachment below for the latest minimum wage of each state.
Maximum Working Week
American workplace law does not impose maximum working hours. However, different states have practice different rest periods.
Overtime
Non-exempt employees must receive 1.5 of their regular rate of pay for working hours more than 40 hours per week. Generally, non-working time, such as leaves and holiday times, is not counted toward the 40-hour-a-week overtime threshold.
| Married Taxpayers Filling Separately | Married Taxpayers Filling Jointly | Head of Household Taxpayer | Tax Rate (%) |
| 0 – 11,000 | 0 – 22,000 | 0 – 15,700 | 10 |
| 11,000 – 44,725 | 22,000 – 89,450 | 15,700 – 59,850 | 12 |
| 44,725 – 95,375 | 89,450 – 190,750 | 59,850 – 95,350 | 22 |
| 95,375 – 182,100 | 190,750 – 364,200 | 95,350 – 182,100 | 24 |
| 182,100 – 231,250 | 364,200 – 462,500 | 182,100 – 231,250 | 32 |
| 231,250 – 578,125 | 462,500 – 693,750 | 231,250 – 578,100 | 35 |
| 578,125+ | 693,750+ | 578,100+ | 37 |
U.S. law provides retirement benefits and subsidised health insurance under federal Social Security and Medicare programs. Employers are required to contribute 6.2% of each employee’s salary (on the first $160,200 of an employee’s gross wages) to Social Security, as well as 1.45% of each employee’s salary (without any limit on the wage base) to Medicare. Kindly refer below for the latest update on Social Security Changes 2023.
Foreign nationals without permanent resident status or a work visa are not permitted to work in the United States. An employer seeking to hire a foreign national may file a petition with the United States Department of Homeland Security/ United States Citizenship and Immigration Services (“USCIS”) for an employment visa on behalf of the prospective employee.
If the petition is approved, the prospective employee must obtain a “visa stamp” from a United States embassy or consulate (Canadian citizens are exempt from this requirement). To get a temporary U.S. work visa, an employer must file a petition with U.S. Citizenship and Immigration Services (USCIS). An approved petition must be part of the visa request; the types of visas include:
- H-1B – for applicants with a college degree hired to do specialised work. The visa is valid for three years and can be extended for an additional three years. The visa is connected to the employer that filed the petition. If there is a change of employer, the new employer must repeat the process. USCIS will evaluate the application number yearly. There are 85,000 H-1B visas available for year 2022.
- H-1B1 – for applicants with a college degree from Chile and Singapore. The US government grants up to 1,400 visas to Chilean citizens and 5,400 from Singapore each year.
- H-2A – for temporary or seasonal agriculture work. It is limited to citizens of qualified countries. Usually valid for up to 1 year and can be extended to a maximum of 3 years.
- H-2B – for temporary non-agricultural work. These visas are limited to citizens of qualified countries. Usually valid for up to 1 year and can be extended to a maximum of 3 years.
- L – for intercompany transfers (people transferred from a foreign company to a US branch of the company.) The applicant must have been employed at the company for a year before the transfer and work in a managerial level position or higher with specialised knowledge.
- 0 – for people with extraordinary ability in science, arts, education, business, or athletics.
The standard procedure is to obtain a short-term work visa and then apply for an immigrant visa after the employee has started working in the United States.
For those seeking employment-based immigrant visas:
- E-1 – Highest priority employment for those with extraordinary ability in science, arts, education, business, and athletics.
- E-2 – for those with advanced degrees or exceptional ability.
- E-3 – for skilled workers and professionals, as well as unskilled workers.
- E-4 – Members of certain immigrant groups.
- E-5 – Immigrant investors in US companies (substantial investment)
Alternatively, an employer may sponsor a potential employee’s application for permanent resident status, referred to as a “green card,” if the employee can establish that the potential employee is a multinational executive/manager transferee, has unique skills, or has been offered a job in the United States. The employer must have been unable to recruit a U.S. worker who meets the position’s minimum requirements.
All employers are obligated to verify that all individuals they employ are authorised to work in the United States.
Generally, employees employed on an “at-will” basis may be terminated, with or without cause or grounds, provided it is not for an illegal reason, notably discrimination on grounds of a category protected by law or protected “whistleblowing” activity (reporting certain employer activity where the employee reasonably believes that the information he or she provided relates to potential violations of specific laws).
Severance Pay
Except as otherwise provided in an employment contract, employers need not make severance payments to terminated employees. However, employers often offer severance payments to bind an agreement made between the employer and employee at the time of termination to waive any potential claims arising out of the employment relationship.
Notice Period
Except in certain mass dismissals or as provided for in an employment contract or a collective bargaining agreement, U.S. law does not impose a formal “notice period” to terminate an individual employment relationship. Most employees are employed “at-will” and either party can terminate the employment relationship without notice. In some states, where payout of unused vacation time is not required by law, employers frequently will pay an employee for unused vacation days, provided the employee gave some advanced notice of resignation.
USA’s Statutory Holidays
| Public Holidays | Date (2024) |
|---|---|
| New Year’s Day | 1 Jan |
| Martin Luther King’s Birthday | 15 Jan |
| President’s Day | 19 Feb |
| Memorial Day | 27 May |
| Juneteenth | 19 Jun |
| Independence Day | 4 Jul |
| Labor Day | 2 Sep |
| Columbus Day | 14 Oct |
| Veterans Day | 11 Nov |
| Thanksgiving Day | 28 Nov |
| Christmas Day | 25 Dec |