USA

Laws and common practice vary according to the state in the US. This information is based on federal regulations and /or common practice.

Contract Types

In the United States, employment contracts are typically classified into the following categories:

Permanent (At-Will Employment): Most employees work under “at-will” employment, meaning that either the employer or employee can terminate the employment at any time without cause, except in cases of discrimination or other illegal reasons.

Fixed-Term Contracts: These are less common but are used for specific projects or time-limited roles.

Freelance/Independent Contractor: Freelancers and independent contractors are self-employed individuals who provide services under a contract for a specific period or project.

Part-Time and Temporary Work: These roles are more limited in hours and may be seasonal or short-term.

Probation

In the U.S. there is no maximum mandated probationary period. 90 days is common, though some contracts will have probation periods of up to 12 months.

Working Hours

The standard full-time workweek in the U.S. is generally 40 hours, typically spread over five days. Federal law limits the workweek to 40 hours before overtime pay is required.

Overtime

Overtime must be paid at 1.5 times the employee’s regular rate for any hours worked over 40 in a week. Certain jobs are exempt from overtime under the Fair Labor Standards Act (FLSA), including some salaried positions in managerial or professional roles.

Other

There is no 13th month salary in the US. Payroll is usually monthly but may be bi-weekly or weekly.

Tax rates valid for: 2024

Corporation Tax: 21% Plus state tax of 0 to 12%

Consumption Tax: NA State taxes vary between 4% and 7%

Employers’ Social Security: 16.26 to 24%

Employees’ Contributions: 6.2% Plus 1.45% Medicare and 0.5% disability insurance

Income Tax Rates

To 11,000 – 10%

11,000 to 44,725 – 12%

44,725 to 95,375 – 22%

95,375 to 182,100 – 24%

182,100 to 231,250 – 32%

231,250 to 578,125 – 35%

Over 578,125 – 37%

Note that additional state taxes will also be due

Notice
In the U.S., employment is generally “at-will,” so employers and employees do not need to provide notice before ending the employment relationship, unless a contract specifies otherwise. Some employers may choose to provide notice, but it is not legally required.

Dismissal
No reason is needed to terminate an at-will employee, but the dismissal must not be based on discrimination, retaliation, or other illegal grounds. Employees are entitled to final pay, including any earned but unused vacation.

Severance
Severance pay is not required under federal law unless specified by a contract, but many companies offer severance packages depending on the duration of employment or other conditions.

The states have different regulations as regards leave. This information refers to federal law or common practice.

Federal Holidays:

11 or 12 (for Washington employees on Inauguration Day). Note there is no legal requirement for private companies to give any paid time off, however most will do so. There are additional holidays in the different states.

2024 dates

New Year’s Day – 1st January

No Day Given in Lieu

Martin Luther King Jr Day – 15th January

Day Given in Lieu – NA

President’s Day – 19th February          

Day Given in Lieu – NA

Memorial Day – 27th May

Day Given in Lieu – NA

Juneteenth – 19th June

No Day Given in Lieu

Independence Day – 4th July

No Day Given in Lieu

Labour Day – 2nd September

Day Given in Lieu – NA

Columbus Day – 14th October

Day Given in Lieu – NA

Veterans’ Day – 11th November

No Day Given in Lieu

Thanksgiving – 28th November

Day Given in Lieu – NA

Christmas Day – 25th December

No Day Given in Lieu

Employees have no legal entitlement to any paid holiday but in practice most employees will get 10 days, sometimes 15 days. Typically, this is taken after the first year of accrual. Often the amount of leave permitted will include allowed sick days.

Carry over permitted

There is no requirement to allow employees to carry over leave.

Payment in lieu allowed          

Leave can only be paid out on termination. Generally, residual leave must be compensated in cash after termination of employment if it cannot be taken in kind. However, it is possible to have a contract clause stating that unused leave will  not be paid out on termination.

Sick Leave

The U.S. has no federal mandate for paid sick leave, though certain states and municipalities require it. Employers typically offer sick leave as part of a broader PTO policy.

Maternity Leave

Under the Family and Medical Leave Act (FMLA), eligible employees are entitled to up to 12 weeks of unpaid leave for the birth or adoption of a child. This applies to companies with 50 or more employees.

Paternity Leave

Paternity leave is not mandated by federal law. However, fathers may be eligible for unpaid leave under FMLA, similar to maternity leave.

Parental Leave

Parents can take up to 12 weeks of unpaid leave under FMLA for the birth or adoption of a child, if eligible. Some states have their own paid parental leave programmes.

Bereavement Leave

Typically, 1-5 days, but policies vary by employer.

Military Leave

Employers must provide unpaid leave for employees serving in the military under the Uniformed Services Employment and Reemployment Rights Act (USERRA).

Medical

In the U.S., healthcare is largely employer provided, with employers offering health insurance as a key benefit. Large employers are required to offer affordable health insurance under the Affordable Care Act (ACA). The quality and extent of coverage varies widely.

Other Common Benefits

Retirement Benefits (401(k)) may be offered whereby employers may match employee contributions to retirement plans. Life Insurance, dental and vision coverage, additional annual leave (PTO) tuition reimbursement and wellness programmes including gym memberships, mental health resources, and fitness stipends may also be offered.