Employer of Record & PEO in the United States
Hire & manage teams remotely in the United States without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.
How NNRoad Employment & PEO Services Work?
NNRoad provides professional employment organization (PEO) & employer of record (EOR) services for companies looking to hire and manage teams in the United States. Registering a legal entity in the United States as a means for employment is an outdated practice that takes both time (months) and money (thousands of USD). NNRoad’s employer of record and PEO services enables companies to hire and manage employees in the United States in full accordance with local labor laws in under a week.
Employer of Record in the United States
Employer of Record (EOR) services are for companies who do not have a legal entity in the United States, but who want to hire in the United States. Employment and full liability are outsourced to NNRoad.
➊ You interviews & select the candidates you want to hire in the USA.
➋ NNRoad arranges a local labor contract with your new employee.
➌ NNRoad arranges a service contract between your organization & NNRoad.
➍ NNRoad organizes, manages & processes payroll in the USA in full compliance with local employment laws.
➎ You maintain a normal working relationship and manage your team in the USA while NNRoad manages payroll & HR liabilities.
- Recruiting process outsourcing
- Hiring of employees/Local labor contracts
- On-boarding and off-boarding employees
- Complete payroll solution and benefit administration
- Employee management – Time keeping, bonus and allowance management, expense and claims
- Mandatory insurance compliance
- Payment management (Invoicing customers/clients and vendor payments)
- Working VISA application assistance
- US federal and state individual income tax reporting (US and non US employees)
Payroll & PEO in the United States
Professional Employment Organization (PEO) services are for companies who have a legal entity in the United States, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.
➊ You interviews & select the candidates you want to hire in the United States.
➋ NNRoad organizes, manages and processes payroll for your local employees in full compliance with local employment laws.
➌ You maintain a normal working relationship and manage your team in the United States while NNRoad manages payroll & HR compliance.
- Set up and maintenance of all employee records
- New hire information gathering for government agencies (worker eligibility)
- Payroll calculation and processing/disbursement
- Payroll tax calculation, withholding of tax (Social Security, Medicare, Unemployment, Disability Insurance, etc.) & benefit contribution
- Federal and State payroll tax reporting
- W-2 and 1099 year end processing
- Obtainment of required workers’ compensation insurance
- Providing health insurance coverage, if required
Advantages of NNRoad's United States Employment Services
- With EOR/PEO solutions you can manage client meetings, sales, quality control, marketing, R&D and customer support without a local company in the United States.
- Pay as you go
- Dedicated account manager – One point of contact for multiple locations
- Employment & termination processing
- Complete payroll solution and statutory benefit according to local laws
- With EOR/PEO solutions you can hire staff while waiting for the registration of your company in the United States.
- NNRoad only works with professional locally licensed partners
- GDPR compliant
- NNRoad manages employee record timekeeping, bonus and allowance, expenses claims and personal leaves according to local law.
- NNRoad provides foreigner VISA application services, if needed
Employment Compliance in the United States
Taxes & Payroll in the USA
Employee Income Taxes:
Individual income tax rates in the USA are based on progressive tax brackets which varies on whether the individual is single, chooses to file jointly with a married partner, or is the head of a household.
In addition to federal taxes, employees may also be required to pay state and local taxes, depending on where you live. State taxes are typically a percentage of the employee’s income. This is a separate tax imposed by the state the employee resides in. Each state sets its own state tax rate. 8 out of the 50 states do not have a state tax:
States without state taxes:
- South Dakota.
Tax Brackets for single individual tax payers
10%: 0 – 10,275 USD
12%: 10,276 – 41,775 USD
22%: 41,776 – 89,075 USD
24%: 89,076 – 170,050 USD
32%: 170,051 – 215,950 USD
35%: 215,951 – 539,900 USD
37%: >539,900 USD
Tax Brackets for Married tax payers filing jointly
10%: 0 – 20,550 USD
12%: 20,551 – 83,550 USD
22%: 83,551 – 178,150 USD
24%: 178,151 – 340,100 USD
32%: 340,101 – 431,900 USD
35%: 431,901 – 647,850 USD
37%: >647,851 USD
Tax Brackets for head of household tax payers
10%: 0 – 14,650 USD
12%: 14,651 – 55,900 USD
22%: 55,901 – 89,050 USD
24%: 89,051 – 170,050 USD
32%: 170,051 – 215,950 USD
35%: 215,951 – 539,900 USD
37%: >539,900 USD
Single taxpayer yearly income = 70,000 USD
22% * 28,224 = 6209
12% * 31,499 = 3780
10% * 10,275 = 1028
6209+3780+1028 = 11,017
Yearly income tax = 11,017 USD
Employer Costs in the USA
In the United States, taxes are withheld from an employee’s paycheck by their employer. The employer is then responsible for remitting those taxes to the appropriate government agencies. Employers are also required to make contributions to social security and Medicare on behalf of their employees. These contributions are typically a percentage of the employee’s income.’
Employers in the USA must contribute to the worker’s compensation program. This compensation is a medical insurance that varies from state to state and worker class codes. Contact us for more details regarding your specific enquiry.
Social security tax is charged on all income up to a defined limit. Together with Medicare taxes, these are also known as FICA Taxes (Federal Insurance Contributions Act).
The rate (for 2020 and 2021) is 12.4% of income, with a maximum limit of $137,700 for 2020 (rising to $142,800 in 2021). This is split between employee and employer, with 6.2% taken out of employee pay and 6.2% contributed by the employer.
Working Hours in the USA
Working Hours per Week
The work week in the United States is 40 hours per week, typically from 9am to 5pm Monday to Friday. According to the Fair Labor Standards Act (FLSA), nonexempt employees 16 years old or older must receive overtime pay for hours worked over 40 per week.
In the United States, overtime is typically paid at a rate of 1.5 times the employee’s regular rate of pay. However, there are laws in place that dictate when overtime must be paid, and how much.
Benefits & Insurance in the USA
The Federal Insurance Contributions Act (FICA) requires U.S. employers to withhold social security and Medicare contributions from employee paychecks. As of 2020, the employer contribution rate for social security is 6.2% of an employee’s taxable wages, while the Medicare rate is 1.45%.
Employers with 50 or more employees are required to offer affordable healthcare coverage insurance plans. These businesses must act in accordance with the Affordable Care Act (ACA) or be compelled to a shared responsibility payment by the Internal Revenue Service (IRS).
Benefits in the USA are a common appeal for companies who wish to attract high quality talent. These benefits include but are not limited to:
- Medical insurance
- Stock options
- Dental insurance
- Pension fund (called the 401k in the USA)
Most Attractive Benefits to Employees
In the United States, benefits and perks are often seen as key factors in determining whether or not to accept a job. In fact, a recent study found that 40.2% of employees considered flexible hours to be a must-have benefit, while 33.6% said that paid insurance premiums were key.
Other popular benefits included paid family leave (29.2%), regular remote work (26.4%), and financial assistance with professional certifications (26.3%).
While these benefits are certainly important to many workers, it’s important to remember that they come at a cost to employers. As such, businesses need to carefully consider which benefits they can afford to offer in order to attract and retain the best talent.
One way that employers can offset the cost of benefits is by offering contributions to employees’ retirement accounts. This not only helps to attract and retain workers, but it also provides a valuable financial benefit to employees.
In the United States, employer contributions to retirement accounts are typically made through a 401(k) plan. Under this type of plan, employers can choose to match a certain percentage of employee contributions, up to a certain amount. For example, an employer might choose to match 50% of employee contributions up to $5,000 per year.
Termination Laws in the USA
Employees in the United states may be terminated at any time, without notice & for any reason as long as it is not for discriminatory reasons such as race, gender, or sexual orientation. Discrimination based on race, gender, or sexual orientation is against the law in the USA. Employees in the USA can quit at any time with or without giving a notice.
Unless otherwise stated in the employee’s labor contract, there are no laws in the United States that entitle terminated employees to severance packages. However terminated employees must be paid in full for the hours they have worked since their last paycheck.
Most severance packages will include a severance check and continuation of health insurance coverage. Some employers may also offer outplacement services to help the employee find a new job.
Public Holidays in the USA
Public Holidays in the United States
There are 10 public holidays in the USA, however employers are not obligated to give time off, paid leave or overtime pay for these holidays.
- New Years Day – Jan 1
- Birthday of Martin Luther King, Jr. – Jan 15
- George Washington’s Birthday – Feb 22
- Memorial Day – Last Monday of May
- Independence Day – Jul 4
- Labor Day – First Monday of Sep
- Columbus Day – Oct 10
- Veterans Day – Nov 11
- Thanksgiving Day – 4th Thursday of Nov
- Christmas Day – Dec 25
Paid Leave in the United States
Employees in the USA are not entitled to paid leave by law, however 14 days annual paid leaves per year is standard.
While many employers do give their employees paid leave for public holidays, this is not required by law. Employers may choose to give paid leave, time off or overtime pay for these holidays, but they are not obligated to do so.
Employment Contract in the USA
There is no legal requirement in most states for a formal employment contract. Most employment in the US is carried out on an ‘At-Will’ basis, meaning that it can be terminated at any time. More formal contracts, with notice periods, are generally only used for some senior positions.
An Employment Contract is a legally binding agreement between an employer and employee. It sets forth the rights and duties of each party, and outlines the terms and conditions of employment. Employment Contracts are governed by state and federal law, as well as common law principles.
Most Employment Contracts in the United States will include the following information:
– The type of employment the contract is for (full time, part time, or seasonal and permanent or temporary)
– The start date and location of employment
– The employer’s information
– The employee’s information
– The employee’s job title and average work schedule (e.g. 37.5 hours a week)
– The probation period
– How the employee will be paid (hourly, salary, etc.), how much they will receive, and how often they will receive payment (weekly, biweekly, etc.)
– Additional details like vacation time, notice required for termination, confidentiality and non compete.
Employment Contracts may also include other terms and conditions that are specific
The majority of employment in the US takes place on an ‘At-Will’ basis. This means employees can be terminated at any time, for any reason, by either employee or employer.
Types of Leaves in the USA
There is no federal (countrywide) law that mandates sick pay or leaves. But several states specify sick leave requirements.
There is no requirement in the US to provide paid maternity leave. The Family and Medical Leave Act states that employers with 0 employees or more must provide up to 12 weeks of leave and protect the job of the new mother or adoptive mother. Additionally, several states have adopted laws extending this requirements to smaller companies, but the majority of small companies in the USA do not need to offer paid or unpaid maternal leave.
FMLA leave is a federally mandated type of unpaid leave that allows employees to take up to 12 weeks off for family or medical reasons. The employee’s job is protected during that time, and they still have access to group health benefits. FMLA leave is required from private employers with 50 or more employees in the United States.
Specific situations that qualify for FMLA leave include:
– Birth or adoption of a child or placement of a foster child
– Serious health condition of the employee, spouse, child or parent
– Certain needs based on the military status of a spouse, parent or child.
Jury Duty Leave
If you have an employee who is summoned for jury duty in the United States, you are required to give them unpaid leave. However, some states and localities may require you to pay your employees for their time on jury duty.
If you have any employees who are uniformed service members, you need to follow military leave laws set forth in the Uniformed Services Employment and Reemployment Rights Act. These laws require employers to provide unpaid leave for employees who are called to military duty, as well as reinstate them in their civilian positions when they return. Employees on military leave are also entitled to continue their employer-provided health insurance for up to 24 months. This law applies to businesses of all sizes and includes all employees, even part-time staff members.
Immigration Laws in the USA
Foreign workers can be granted a work visa in the United States by:
- Having a job offer in the USA
- Having the hiring employer approve a petition by the U.S Citizenship and Immigration Services (USCIS)
- Getting Labor certification approval by the Department of Labor (DOL)
- Complete the Online Nonimmigrant Visa Application (Form DS-160)
- Schedule your interview at your nearest US consulate