If you’re looking to hire in the United States, there are many rules and regulations you’ll need to comply with. America is home to a world-leading economy and a massive labor force of highly skilled workers. By hiring abroad as a French company, you can expand your talent pool and assimilate into a growth-driven business environment.
The United States can also provide other benefits for your company. These include insights into a vast range of industries, access to other major North American markets, and the chance to grow your business in an innovative environment.
If the rules and regulations regarding hiring skilled workers in the US seem too complicated, here’s everything you need to know as a French company looking to hire in the US.
Reasons to Hire in the United States
World-Leading Economy
French companies looking to grow their business can benefit from the US’s robust and diverse economy. The United States is a major global superpower, ranking 1st in the world by a solid margin in terms of gross domestic product in 2022.
Breaking into the North American market can provide your company with additional investment possibilities and wide-ranging opportunities in several desirable industries.
Hiring in the United States also gives your company access to major market hubs. For example, Silicon Valley (a world-renowned hub for technology), Wall Street (a major presence in the global financial sector), and Hollywood (which is incomparable in the entertainment industry).
Highly Skilled Workforce
French companies can also benefit from the United States’ large skilled workforce. In addition to being an economic powerhouse, the US also has a robust and well-funded education system, which also topped the global rankings in 2021. This allows your company to select from a diverse talent pool.
The country is also home to many internationally-recognized schools, such as Harvard, MIT, Stanford, and Princeton universities.
Business-Friendly Environment
The United States has a business culture that encourages growth, and was ranked the 6th easiest country in the world to do business in. Public policy and tax incentives for companies are incredibly business-friendly, and regulatory barriers are also low, making it fairly easy to set up a business in the US.
Labor Laws in the United States
Hiring in the United States gives French employers access to a major global economy and a highly skilled workforce. However, there are some considerations and major local laws that you’ll need to know to remain compliant. It’s also important to remember that some labor laws can vary between states.
Employees vs. Contractors
Employees are defined as workers who perform a service for you on an indefinite basis. Employees are part of a company’s payroll and may be entitled to certain benefits, such as worker’s compensation, unemployment insurance, and vacation. These workers also have taxes withheld by the company.
An independent contractor is a self-employed individual who performs work for a specific project or time period. Independent contractors are not part of a company’s payroll and must handle their own tax deductions and social security contributions. They are also not covered by employment and labor laws. These kinds of arrangements tend to provide more flexibility for the contractor.
There are many pros to hiring independent contractors in America, but it’s important to make sure you’re not misclassifying contractors as employees. Misclassifying your employees can result in a number of penalties for your business. These can include significant back-taxes to the contractor and fines.
Employment Contracts
United States federal employment laws don’t have any minimum requirements for employment contracts, and many states don’t require a written agreement. However, companies should provide a written offer of employment that outlines the basic terms of the job and other important conditions. This can also vary between states.
For skilled American workers, it’s standard practice to have a clearly defined written contract of employment, which should include:
- Position and description of the job’s responsibilities
- Salary
- Termination clauses
- Severance pay
The rules, regulations and legal requirements regarding employment contracts in the US are drastically different than most European Union countries. There are a few kinds of contracts you can consider when hiring in the United States.
Fixed-Term Contracts
These types of contracts allow your company to recruit skilled Americans to work for a specified period of time. This can be used for temporary and seasonal workers, or those covering for employees on leave. In the United States, there are no local labor laws that govern these types of contracts, meaning there is no limit on the duration of a fixed-term contract. However, most typically last for around one to three years.
Recruitment Agency Contracts
This type of contract is used when a company uses a recruitment agency to find a skilled American worker that’s a good fit for the employer’s open role. However, these contracts can be somewhat complicated. The agreement helps define terms and conditions regarding the employee, such as the protocol if the worker leaves or doesn’t perform well. It also defines the recruitment agency’s compensation in the event of a successful process.
Freelance Contracts
Freelance contracts are used by companies to hire workers for particular projects or tasks. It establishes the working terms between both parties, such as payment and the project’s requirements.
Costs of Hiring US Skilled Workers
In addition to your employee’s wages, there are several other obligatory costs that your company will be responsible for. Here’s an idea of how much it might cost you to hire US skilled workers. Partnering with an employer of record like Borderless can help streamline the hiring process and keep you compliant with local labor laws.
Salary and Wages
In the United States, the federally-mandated minimum wage is $7.25 per hour, although the actual minimum wage requirements can vary between jurisdictions. For example, states like California, New York, and Connecticut have minimum wages around $15.
However, a skilled American worker’s salary should be based on their qualifications and level of experience. As of 2023, the average salary for a full-time employee in America is around $59,000 per year, or roughly $28.30 per hour.
On occasion, the employee might be subject to both state and federal minimum wage laws. In this case, the employee is entitled to the higher of the two wages.
Overtime Pay
The United States follows a standard eight-hour workday and a 40-hour workweek. Under the Fair Labor Standards Act, employees who are not exempt and work more than 40 hours in a week are entitled to overtime pay. Additionally, there is no limit on the number of hours employees can work in a given week.
If an American worker qualifies for overtime, they must receive at least 150% of their regular hourly wage. It’s also important to know that certain employees are exempt from being eligible for overtime. These employees are generally paid a yearly salary and tend to work in more senior or professional positions.
Overtime premiums in the United States are not required for work on weekends or holidays unless your employee has worked more than 40 hours that week.
Payroll and Taxation
As a French company hiring in the United States, you’ll need to set up a proper payroll system. It is the responsibility of employers to manage all payroll expenses, tax withholdings, and contributions to social programs for their employees. Payroll cycles are flexible, and you can pay your employees biweekly or monthly.
The tax brackets for employees are:
- Incomes below $11,000: 10% of taxable income
- Incomes between $11,001 and $44,725: $1,100 plus 12% of the amount exceeding $11,000
- Incomes between $44,726 and $95,375: $5,147 plus 22% of the amount exceeding $44,725
- Incomes between $95,376 and $182,100: $16,290 plus 24% of the amount exceeding $95,375
- Incomes between $182,101 and $231,250: $37,104 plus 32% of the amount exceeding $182,100
- Incomes between $231,251 and $578,125: $52,832 plus 35% of the amount exceeding $231,250
- Above $578,126: $174,238.25 plus 37% of the amount over $578,125
Employer taxes in America are 7.65%. This includes:
- 6.2% for social security and unemployment insurance
- 1.45% for medicare
Additional employee costs and taxes include 6.2% for social security, 1.45% for medicare, and a 6% unemployment tax for the first $7,000 earned in a year. It’s also not mandatory for employers to provide bonuses to employees, though some do based on the company’s performance.
Keep in mind, tax rates and other payroll requirements can vary between states.
Leave Entitlement
In contrast to many other advanced global economies, the United States does not have a statutory requirement that gives employees paid time off of work. However, many employers provide Paid Time Off (PTO) as a supplementary benefit. The average skilled US worker is allowed 11 days of paid vacation leave per year.
The same applies to sick leave. There is no statutory requirement for employers to provide compensated sick leave for their employees. Under the Family and Medical Leave Act (FMLA), workers can take up to 12 weeks of unpaid sick leave for certain medical situations after working 12 months with the same employer.
New mothers can utilize the FMLA to take up to 12 weeks off, though there is no statutory paid maternal or parental leave.
Some jurisdictions may have different rules and mandates for paid sick leave, paternal leave and vacation time.
The United States has 11 public holidays:
- January 1 (New Year’s Day)
- 3rd Monday in January (Martin Luther King’s Birthday)
- 3rd Monday in February (Washington’s Birthday)
- Last Monday in May (Memorial Day)
- June 19 (Juneteenth National Independence Day)
- July 4 (Independence Day)
- 1st Monday in September (Labor Day)
- 2nd Monday in October (Columbus Day)
- November 11 (Veteran’s Day)
- 4th Thursday in November (Thanksgiving Day)
- December 25 (Christmas Day)
Termination and Severance
When hiring in the United States, you should know that the majority of states have an at-will employment policy. This means that either an employer or employee can end an employment relationship at any time with no notice or reason unless specifically stated in the contract.
There are some exceptions that you must consider before terminating an employee:
- Employees who are covered by collective bargaining agreements, or have a specific employment contract, can be protected from at-will termination.
- Employers cannot terminate an employee to avoid paying benefits such as healthcare, called good faith and fair dealing. This means that both parties will deal with each other fairly and in a way that doesn’t destroy the rights of the other party to receive the benefits of the contract.
- Certain state laws can protect employees from at-will termination. Montana is an example of this.
There is no statutory minimum notice period before termination. Additionally, the notice period must be specified in the employment contract. However, it is standard practice for both parties to provide at least two weeks’ notice. Probation periods typically last between two and three months.
Employers are also not legally required to pay severance after terminating an employee. Many employers still opt to provide pay, which is usually based on the employee’s tenure with the company.
Benefits
There are federal laws in the United States that help to ensure skilled workers receive certain mandatory benefits.
These include worker’s compensation, unemployment insurance, and FMLA protections. It’s common for employers to offer supplementary benefits, including health insurance coverage, dental, and paid time off to boost employee retention and attract top talent.
How Can You Legally Hire Employees in the United States?
Now that you have an understanding of the local laws and requirements, you might be wondering how you can actually hire top American talent and expand your team. French employers in the United States have a few different options to legally hire employees. You can either set up a local entity or engage a local employer of record to guide you through the hiring process.
Set Up a Local Entity
One option French employers have is to set up their own legal entity to hire in America. Companies who set up their own entity are responsible for all aspects of hiring, including payroll, taxation and local taxes, employee benefits administration, and onboarding. It is also your responsibility to remain compliant with local labor laws to avoid penalties.
To set up a local legal entity in the United States and hire skilled workers, you’ll need to:
- Register your company as an entity (corporation, limited liability company, etc.)
- Select a location for operation
- Register your company name
- Open an American corporate bank account
- Register with the Internal Revenue Service
- Obtain an Employer Identification Number
You’ll also need to determine what type of entity fits your organization the best. There are a two major options you can choose from:
- Limited Liability Company (LLC): an organization owned by one or more people.
- Corporations: a company primarily owned by shareholders.
Engage an EOR in the US
Alternatively, French companies can partner with an employer of record (EOR US) to help streamline the hiring process. An EOR acts as a legal employer in the country you wish to hire in.
A quality EOR handles all the logistics of hiring employees, including payroll duties, tax withholdings, benefits administration, and termination. This gives you more time and energy to focus on managing your team and growing your business.
A quality EOR in the US also has in-depth knowledge about federal and state labor laws, helping you to remain compliant with all necessary rules and regulations.
Contact Borderless: Your Trusted EOR Services Partner
Borderless provides EOR services that can help you compliantly hire top-tier global workers without worrying about the logistics, meaning you can spend more time and energy on each team member, day to day operations, and growing your business.
Borderless provides a range of useful benefits for your company and can handle all aspects of the hiring process, including payroll, benefits administration, and termination. An employer of record service in the United States can also help you stay up-to-date with changing local labor laws and compliance risks.
Contact Your Chosen Professional Employer Organization Today
Book a demo with Borderless today to learn more about our employer of record services and help manage a global team. From helping a legal employer to hire new employees, adhere to local employment laws and navigate the recruitment process, tax laws, immigration services, and everything in between, Borderless is here to help you every step of the way.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
