6 Steps to Take When Hiring Employees In The US
Steps to Take to Be Ready to Hire Your First US Employee in the US
As the business landscape becomes increasingly global, entering the US market offers significant growth and establishment opportunities for European tech companies. But how can these firms navigate the complexities of US expansion effectively?
Understanding the US employment laws, drafting precise job descriptions, setting up competitive compensation packages, and navigating the hiring process are critical. Moreover, utilising an Employer of Record (EOR) can simplify the regulatory maze significantly.
We tapped the expertise of Clarke Bowles, Commercial Director of PGC Group, and David Rose, CEO of US Expansion Partners, who shared their strategies for tackling these challenges head-on. Their experience in facilitating successful US entries for businesses provides a roadmap for others looking to expand.
Dive into the full webinar above to discover practical strategies and expert guidance on successfully scaling your business in the US.
Preparing to Hire Your First Employee in the US
"We want to make sure that you, as a brand, you as a company, when you come to the US, you're in a position to compete for talent in the US"
You want to hire your first employee in the US, but are you ready? David Rose, CEO of US Expansion Partners,outlines essentialreadiness checksoyee in the US, focus your business must take to be talent ready, which we’ve part transcribed below/ i
He underscores the importance of understanding cultural and operational differences per state and provides a framework to assess HR practices for US expansion.
1) Understand the US Labour Market
An essential step to be ready to hire your first employee in the US is understanding the US labor market. ClarkeBowles, PGC’s Commercial Director, discussed that you must understand: how you must customise your recruitment processes per local employment laws in the area you plan to hire in and offer competitive employer sponsored benefit plans.
2) What do US Employees Typically Expect From an Employer?
Salary transparency in job postings is increasingly important, especially in states like California, Colorado, and New York, where laws now require it. These regulations aim to promote pay equity and reduce wage disparities, ensuring candidates have upfront information about compensation. This approach not only attracts more qualified applicants but also saves time for both recruiters and job seekers.
"There are US salary transparency laws which do vary state by state. Some states allow you to ask for salary histories, while others do not."
By including salary information in job postings, employers comply with legal requirements and build trust with potential employees, showcasing a commitment to fairness and transparency.
3) How To Stand Out as an Employer of Choice
To successfully attract your first US hire, it's important to clearly outline career advancement opportunities within your company. This approach not only shows your commitment to employee development but also helps your firm stand out in a competitive market.
"It's super competitive in the US. And so most companies need help filling the roles.,"
Additionally, offering a comprehensive employer-sponsored benefits plan is crucial. Such benefits are key to attracting and retaining skilled workers, emphasising your dedication to their well-being.
Clarke also highlights other vital talent acquisition strategies for adapting to the US market, including understanding local employment laws, customising recruitment processes, and ensuring competitive benefits. These elements are fundamental in attracting and retaining top talent and ensuring a smooth transition into the US market.
These strategies are crucial for UK recruitment agencies entering the US market, offering practical solutions to meet specific challenges. Further details on implementing these tactics will be explored in the upcoming sections!
David highlights the importance of strategic talent acquisition, noting that pivotal roles often require significant incentives like equity and relocation packages to attract the best candidates. This approach not only fills positions but also supports business growth and stability in the US.
4) Stand Out to Candidates via Employment Branding
Adapt a marketing-like approach to your recruitment
David, spoke on the necessity of employment branding when you are preparing to hire your first employee in the US, advocating for a marketing-like approach to recruitment.
Selling the company and the role becomes as crucial as the qualifications required when hiring in the US to stand out to top talent
"When you are ready to hire your first employee in the US, you're in the marketing business. You're trying to get attention and get people to come to you as a brand like any other kind of marketing,"
Be prepared to answer questions on the job role and your company
David also warns about the necessity of being prepared for detailed inquiries during interviews. The readiness to answer complex questions reflects well on the company and enhances candidate engagement.
"What you don't want to do is get into an interview session with a potential US employee and not have answers. The second or third time you say, 'I don't know' or 'let me find out,' they've checked out."
2) Write a Good Job Description Tailored to the US Market
As we explore how to hire your first US employee in the US, David emphasised the necessity of crafting compelling US job descriptions and benefits to attract skilled professionals in this fiercely competitive market
401k plans are a Necessity to Retain Top Talent
He discusses how strategic benefit packages, including health insurance and 401(k) plans, play a crucial role in not just attracting but also retaining US talent in such a competitive landscape.
"Offering a comprehensive benefits package is no longer just an option; it’s a necessity to stand out in the US market."
When preparing to hire your first employee in the US, it's crucial to consider the following examples to include in your packages.
David highlights the need to tailor employment benefits to US employment laws and to stand out from the competition. These are key examples to include in your packages when preparing to hire your first employee in the US
Comprehensive health insurance plans
Generous 401(k) contributions
Additional perks like remote work options and flexible hours
Understanding and implementing employer benefits are crucial for businesses to establish a strong foothold in the US, aligning with both regulatory requirements and employee expectations
Tailoring Language and Localisation in US Job Descriptions
"US job descriptions.. really is a marketing and branding opportunity to stand out when hiring your first employee in the US."
David highlighted the importance of adapting to US norms when preparing your job descriptions to hire your first employee in the US. This includes using American spelling and terminology to ensure the job listing appears professional and familiar to local candidates.
This includes using American spelling and terminology to ensure the job listing appears professional and familiar to local candidates. For example, ensuring words like 'globalisation' are spelled the American way ('globalization') can avoid misunderstandings and reflect attention to detail, valued by US job seekers.
Transparency in Work Arrangements
" So if you are providing remote or hybrid, spell that out.’
When you are ready to hire your first employee in the US, it is essential to be clear about whether roles are remote, hybrid, or onsite. In the full webinar, David pointed out the need for clarity to meet the expectations of the modern workforce.
Effective communication on how many days your employee must be on site or remote, builds trust and portrays your company as an honest and transparent employer.
Provide Benefit Details in Your US Job Description
Including detailed benefits in job descriptions is crucial when you go out to market to hire your first employee in the US. Benefits often influence a candidate's decision on whether to accept a job offer as much as salary. In our webinar, Clarke notes
"One of the major ways that employers compete for talent in the US are the benefits that they offer employees."
For UK companies, understanding the complexities of state-specific benefits regulations is crucial.
3. Compensation Models to be Ready to Hite Your First US Employee
In the US, offer letters are commonly used by employers instead of comprehensive contracts, offering flexibility regarding job details like salary and start date. Central to US employment law is 'At-Will Employment,' allowing either party to terminate employment at any time, without cause or notice.
This means employees can leave with little notice, and employers can terminate without long-term commitments. Offer letters typically cover essential terms like compensation and job title but lack the detail of formal contracts.
David explains, " In the US employers don't provide employment contracts...US businesses really just give an offer letter."
At will employment flexibility in the US is appealing for both employers and employees, but requires clear communication to set correct expectations about job security and tenure.
By acknowledging these differences and tailoring your job descriptions accordingly, your company can more effectively attract and retain the necessary talent for successful US expansion.
US Compensation and Benefits
As you prepare to hire your first employee in the US, understanding the nuances of compensation is crucial. Salary and benefits are primary considerations for job seekers, making it essential to include these details in your recruitment process.
Key Compensation Components to Consider:
Incentive Bonuses (Understand the frequency and calculation methods)
Annual Bonuses (Explore how these are calculated and awarded)
Sales Commissions (Determine the structure and payout rates)
Annual Raises (Plan for regular salary increments to retain talent)
Importance of Regional and Role-Specific Salary Research
Given the recent legal changes in 21 US states, where it's illegal to ask about a candidate's past salary, conducting thorough salary research becomes even more significant. Consider the job title, experience level, and the specific location when setting compensation. This approach not only complies with new laws but also ensures fairness and competitiveness in your offers.
Salary Transparency's Impact on Recruitment
A recent LinkedIn survey highlighted the importance of salary transparency, showing that 91% of US respondents would be more likely to apply if salary ranges were included in job postings. This trend spans various industries and experience levels, indicating that clear salary information can significantly enhance your ability to attract and hire the best talent.
4. Guide to Employer Health Insurance in the US
Provide Comprehensive Healthcare Coverage to Stand Out to Employees
"Health insurance is a significant factor in attracting top talent to your organisation."
David emphasised the importance of offering comprehensive health insurance coverage as a critical component of the benefits package you offer when hiring in the US.
In the US there is no national health insurance program, therefore, employers historically play a crucial role in providing health insurance for their employees.
Federal law requires employers in the US to offer an employer sponsored healthcare plans to any employees working more than 30 hours in one week. Hence why offering healthcare coverage when hiring in the US is an extremely important factor to individuals when they are looking at new roles.
Preparing to Discuss Benefits Plans During the Interview Process
"Understanding the intricacies of health insurance offerings is crucial in attracting and retaining talent."
When you are preparing to hire your first employee in the US, you must be able to explain the key aspects components of the healthcare plan you will be offering. This includes:
Carrier Selection: This refers to choosing the insurance company that will provide the healthcare coverage for your employees. It's important to select a reputable carrier that offers a wide network of healthcare providers, ensuring that your employees have access to quality medical services when needed.
Premium Contribution: Premiums are the monthly payments made to the insurance company to maintain coverage. Employers often share the cost of premiums with their employees, and determining the percentage of the premium that the employer will cover is crucial. Competitive premium contributions can make your benefits package more attractive to potential hires.
Coverage Tiers: Healthcare plans typically offer different levels of coverage, or tiers, to accommodate employees with varying needs. These tiers may include individual coverage, coverage for an employee and their spouse, coverage for an employee and their children, and family coverage. Offering a variety of coverage options allows employees to choose the plan that best fits their individual or family situation.
Comprehensive Coverage: This entails ensuring that the healthcare plan covers essential medical services, including preventive care (such as annual check-ups and vaccinations), hospitalisation (for surgeries or serious medical conditions), prescription drugs, and specialist visits. Comprehensive coverage ensures that employees have access to the medical care they need without facing significant out-of-pocket expenses.
Additional Perks: In addition to basic healthcare coverage, offering extra benefits can enhance the attractiveness of your benefits package. These perks may include telemedicine services (which allow employees to consult with doctors remotely), wellness programs (such as gym memberships or smoking cessation programs), and health savings accounts (HSAs) that allow employees to save pre-tax dollars for medical expenses. Providing these additional benefits can improve employee satisfaction and overall well-being.
Understanding and addressing the health insurance coverage you will be offering is crucial for employers to stand out in the US job market.
"Crafting a competitive health insurance strategy can significantly enhance your ability to attract and retain talent."
Employers should be prepared to address specific questions about health insurance during the recruitment process, such as coverage details, deductibles, out-of-pocket expenses, and network options. Having a well-defined strategy in place demonstrates the employer's commitment to employee well-being and enhances their competitiveness in the job market.
US Employer Sponsored Health Insurance Regulations and Compliance
"Understanding health insurance regulations, particularly under the Affordable Care Act (ACA), is essential for employers in the US."
In our webinar, Clarke highlighted the legal requirements imposed by the ACA, which mandate employers to offer affordable health insurance schemes to eligible employees working 30 hours or more.
While US law sets minimum requirements, employers have the flexibility to design bespoke packages to attract and retain talent.
"Employers have the opportunity to tailor health insurance packages to meet the diverse needs of their workforce."
By offering customisable health insurance options, including dental, vision, and prescription drug coverage, employers can cater to the specific preferences of their employees. This flexibility enables employers to differentiate themselves in the competitive US talent market and demonstrate their commitment to employee satisfaction and well-being.
5. What is a 401k for UK employers?
401K plans are a staple of retirement benefits in the US, akin to private pension schemes in the UK but with distinctive features tailored to the American workforce.
For UK employers expanding into the US, grasping the concept and expectations surrounding 401K plans is crucial for integrating successfully into the local business culture.
Is it a Federal Requirement to have a 401K Plan?
"Like health care in the US, the federal government provides only a small retirement plan, in the US it’s called a 401K."
The comparison of US healthcare provision and retirement plans David Rose explained in our webinar underscores the minimal role of the federal government in retirement planning.
Placing significant responsibility on employers to offer private retirement options when hiring US employees. Unlike in the UK, where employer contributions to pensions are mandated at certain levels, US employers have a range of options and flexibility in how they contribute to 401K plans.
401k Expectations and Contributions When Hiring Employees in the US
“As an employer, you can expect candidates to inquire during the interview process, 'Does your company offer a 401(k) plan?' It's commonly expected that the answer will be yes”
During recruitment, 401k plans are typical the first thing a candidates inquires. The expectation of such a plan is almost universal among job seekers, especially those in professional fields.
This norm extends to not just having a 401K plan available to offer employees in the US but also the specifics of how employers contribute to these plans.
US Employer Matching Contributions to 401k Plans
" Employers often entice top talent by providing matching contributions. "
In our webinar with US Expansion Partners, we discussed the key steps to take to be ready to hire your first employee in the US. As discussed, one of the key features that attract candidates to a US company is the employer’s contribution strategy to their 401k plan, particularly matching contributions.
When employers match the contributions that employees make towards their 401K plans, it significantly enhances the attractiveness of their overall benefits package. This not only incentivises employees to save more towards their retirement but also positions the company as a supportive and employee-focused employer.
6. US Sales Policies for US Employees
Importance of Policies in Sales Roles
"Especially salespeople are going to ask lots of detailed questions about the job itself and the employee benefits and work remote work policies."
In his discussion, David Rose points out the crucial role of transparency in sales roles. For employers, this means being thoroughly prepared to answer in-depth questions during interviews. This approach not only clarifies expectations but also demonstrates to potential hires that your company values openness and detailed planning.
Detailed Questions from Sales Candidates
"When you start hiring salespeople, they're going to want to know some very specific, very detailed questions... What's the ramp up period... What is the commission structure?"
David addressed the specific concerns that sales candidates typically raise. For companies, understanding and preparing for these questions is essential. This readiness to discuss the ramp-up periods, commission structures, and other compensation details shows candidates that your company is considerate of their career needs and goals, making your positions more attractive to skilled professionals.
What are the Employee Needs?
"These are really important details. You should expect a top-tier salesperson... It's all about preparation and having these answers crisp and ready to go during the interview process."
when you are ready to hire your first employee in the US Emphasise the importance of preparation, David suggests that employers need to be well-versed in their own policies. Being able to quickly and accurately explain company policies during interviews can significantly enhance a candidate’s perception of your company as organised and reliable. This is especially critical when aiming to attract experienced, high-performing sales personnel.
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1) Classify your Employee Correctly
In every country, there are different ways to engage employees and the US is no different. Most people are either employed, self-employed, or operating through a company they have formed. Getting this right at the beginning in the US is critical in order to avoid liability later down the line and to ensure your employee and company are protected under US law.
There are three different ways to engage employees in the US:
W-2 (Employed)
1099 (Self-employed)
Corp-to-Corp (Operating through their own company).
Although it may seem easier starting out in the US with a 1099 or Corp-to-Corp employee, it’s important to remember that the US employment compliance landscape is a minefield and this can cause problems for your business further down the line.
You should always engage your US employees as a W-2 unless you've had the relationship classified by a professional supplier. If a US employee is engaged as a W-2 it gives you and the worker appropriate protections and prevents the IRS from knocking on your door in the future.
2) Check Your Employee’s Legal Work Status
If you've found the employee you want to hire in the US and want to move forward, you're going to need to check their right to work in the US. The check is carried out through the completion of an I-9. This is required by the Immigration Reform Act and is used to verify the identity of an employee and their eligibility to work in the US.
If you miss any steps or forget to include the correct documents you open yourself to the risk of fines and quite serious legal implications. This is why it's important to verify every aspect of the I-9 before hiring employees in the US.
Once you've completed your own employment verifications you can use a registered supplier to utilize the government's e-verify system to provide additional clarification.
3) Offer an Attractive Employee Package
Remember, you're looking to employ someone from a different country so they will have different expectations. When you are speaking with the candidate you want to employ in the US, it’s important to go into these conversations with an open mind. We recommend completing some research on what the industry standards are for your employee in the state and city they operate in.
As healthcare in the US is not funded by the government, employees expect a comprehensive employer-sponsored healthcare plan to contribute towards unexpected medical bills. Therefore an attractive benefits plan is essential for attracting and retaining top talent when you are hiring employees in the US.
4) What do US Employees Typically Expect From an Employer?
Paid Time Off - This is the 'PTO' policy US employees will ask about often during the interview process and upon hiring. It consists of paid vacation time, paid sick leave, and public holidays. There are many ways to create a policy but you need to ensure you meet the federal and state requirements according to where your employee is based.
Healthcare - The US has no public healthcare system so it's likely your employee will be expecting you to provide them with a sponsored healthcare plan. Some US employees also require their families to be included in their healthcare plan. The US employee healthcare plan is usually formed through a monthly employer contribution and in some cases, the employee will be contributing too.
401(k) - Retirement is at the forefront of the average American’s mind and that means they will be asking you about what 401(k) plan you're offering. A 401(k) plan is a company-sponsored retirement account in which employees can contribute income, while employers may match contributions tax-free. It is the equivalent of a pension plan in the UK.
Salary - Do your research, you want to pay your new US employee fairly, but you might not want to part with an excessive amount of your allocated budget. Completing research before hiring employees in the US should give you an indication of the price ranges you should budget for. You should base this on industry standards, experience levels, and the state or city you will be operating from.
Remember, salary is not the main motivation for US employees when accepting job offers. Your benefits package will be one of your main selling points when hiring employees in the US as they need a comprehensive plan to ensure they have coverage for healthcare treatment.
Another key consideration when employing a worker in the US is that in some states you are legally not permitted to ask about their current or previous salary. You can only ask what salary they are expecting in their next role. Certain states also require you to display the salary range in any job advertisements for transparency.
Commissions and bonuses - Questions around compensation packages for meeting business goals are common when hiring employees in the US. This is especially true amongst salespeople who have targets to hit. Therefore, you should forecast your predicted US sales and design a compensation package accordingly.
5) Provide Clarity on the Employment Relationship
So, you've decided on the package and your employee has accepted, now it's time to get it all into writing. You want to make this as clear as possible and avoid any possible confusion, the best way to do this is through an Employment Agreement. This will outline all the specifics of the job, what you expect from them, and what they get in return, and provides protection to all parties.
If you are thinking about using an existing employment agreement, don't. You will need all of your legal agreements adjusted for the U.S. so you should speak to a professional about this. It's best to get this done ahead of time so you're ready once your candidate has accepted the offer.
6) Payroll Your US Employees
One of the most important steps when hiring employees in the US is having a compliant payroll process in place to ensure they are paid. The US is notorious for an endless number of tax codes and a system that makes even seasoned US lawyers scratch their heads. This is why it’s important to understand how to payroll a US employee compliantly without stepping on the wrong side of the law.
The US legal system consists of federal, state, and municipal legislation and the same rules apply to the tax system. When hiring US employees, you need to make sure you're paying the correct 'employer taxes' according to where in the US you are setup and registered to do business. The same rule applies to where your employee is performing their work.
As the employer, you will also need to ensure when paying a US employee you pay the correct 'employee taxes' according to US law and will need to take into consideration a number of similar items. It is highly recommended to plan ahead of time when hiring employees in the US and you should speak to professionals who know what they are doing.
Need Help Hiring Employees in the US?
At PGC we pride ourselves on the advice and guidance we provide to companies of all sizes who plan on hiring employees in the US, whether it's their first employee or their 100th. As an Employer of Record, we can employ your US employees on your behalf, offering a fully outsourced employment solution. We handle the complexities of payroll, tax filing, benefits, healthcare, employment compliance, and onboarding. As a result, if you leave hiring employees in the US to PGC, you can concentrate on what really matters; hiring at speed and growing your business in the US.
Disclaimer: All information written here is for general informational purposes only and is not intended to be a substitute for professional and/or legal services.