Do I Have to Provide Employee Benefits in the US?
Employers are expected to contribute towards employee benefits in the US, including their health insurance plans as it is not universally provided by the government.
This video talks through what percentage employers should contribute towards plans, and how using a US Employer of Record can save you sourcing quality healthcare plans.
Here are some common FAQs on employee benefits in the US.
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According to the Affordable Care Act (ACA), all full-time employees in the US (who work 30+ hours a week) are eligible for an employer-sponsored healthcare plan.
For employers with 50 or more full-time employees to comply with the ACA, they must offer health insurance that meets ACA-established minimum coverage and affordability requirements.
Employer-sponsored health coverage must also be available to the employees’ dependents.
If you do not offer health insurance to your US employees, you will have to pay a fee to the IRS per employee, per year.
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The US Bureau of Labor Statistics provides some insightful data on average employee contribution costs across the US:
Employee benefits for private industry workers averaged at $13.17 per hour worked (30% of employer contribution costs)
Life insurance was available to 57% of private industry workers via their employers in 2022.
Retirement and savings costs for private industry US workers averaged $1.36 per hour worked.
Offer Top Employee Benefits via PGC
Offering competitive employee benefits in the US is crucial for attracting and retaining talented workers, as it is often a deciding factor for job offers.
Through PGC you will be able to offer all your US employees an Affordable Care Act compliant medical plan, with three different health insurance medical plans, two different dental plans, as well as vision insurance.
Standard US employee benefits employers offer include:
Health insurance plans
Retirement plans (401(k))
Vision insurance
Dental plans
Commuter Benefits
Short and long term disability
Pharmacy RX
There is a minimum contribution to your employees' benefits in the US that you would have to provide each month.
PGC’s US Employer of Record service not only provides your employees with comprehensive benefits. We also manage payroll, and back office HR tasks, including administration and renewal of benefits, and provide your workers with a Workforce Experience Team.
How Long is Maternity Leave in the US?
In the US, there is no federal requirement for employers to provide paid parental leave to their employees, including paternal leave. Some states do require paid parental leave.
Maternity Leave in the US Varies per Business and State
In states that do not have such requirement, maternity leave is at an employer’s discretion and often seen as a benefit. This means that maternity leave duration in the US and requirements differs per state and business.
Maternity Leave in the US if you Have 50+ Employees
Unpaid, job-protected maternity leave is regulated by the Family and Medical Leave Act (FMLA) in the US at the federal level.
Under FMLA, eligible employees are entitled to take up to 12 weeks of unpaid, job-protected leave for:
The birth or placement of a child with the employee for adoption or foster care.
To care for a spouse, child, or parent with a serious health condition.
A serious health condition that makes the employee unable to work.
Reasons related to a family member’s service in the military.
Some states implement their own maternity leave laws with more benefits than the federal requirements.
Additionally, many US employers offer their own paid maternity leave policies or a longer duration entitlement as part of a benefits package to attract employees.
Communicate Your US Maternity Leave Policy
Overall, it's important to clearly communicate your US maternity leave policy in employment handbooks, review state regulations, and understand your rights under FMLA to determine the length and type of maternity leave your US employees are entitled to.
Or you could use a US employer of record to assist in your employment compliance when employing in the US.
Disclaimer: The information provided here does not, and is not intended to, constitute legal advice. Instead, the information and content available are for general informational purposes only.
What Does At Will Employment Mean in the US?
A common question people ask when entering the US market for the first time is, ‘What does at will employment mean?’ This video covers the definition of at will employment in the US.
At will employment means that employers can terminate employees with or without notice. Similarly, employees can leave their job immediately without an explanation.
It is, however, generally best practice to provide at least two weeks’ notice, to protect both the US employer's and employee reputation. Legitimate reasons for employment termination include:
Poor performance
Misconduct
No longer a requirement for the job role
Are there Exceptions to at Will Employment?
A US employee or employer can terminate their work relationship at any time without notice, if the termination is not for illegal or discriminative reasons, or contrary to an agreed-upon policy between the employer and employee. There might also be situations that cause employers to follow stricter guidelines to the typical at-will employment.
Some exceptions to at will employment include:
Collective bargaining agreements - If an employee is covered by union agreements that state how an employee can be terminated.
Company policy – Most US employers state clearly in their employee handbooks and offer letters that employment is at will. However, if you have a company policy that details how employment can be terminated, and whether employees at risk of being fired have to be given warnings, the guidelines must be followed.
Implied covenant of good faith and fair dealing – This exception to at-will employment means employers cannot terminate an employee in order to avoid their responsibilities, such as paying for healthcare plans, and retirement.
If an employee refuses to commit perjury at a trial on behalf of an employer and as a result their position is terminated.
Reporting an employer’s violation of the law.
Joining the National Guard or performing jury duty.
Filing a claim under the state workers’ compensation law.
Public policy – This is the most widely recognized common law exception to at-will employment in the US. It protects employees against adverse employment actions that violate the public interest. Employers cannot fire or seek damages from an employee if their reason for leaving benefits the public. Examples include:
If an employee refuses to commit perjury at a trial on behalf of an employer and as a result their position is terminated.
Reporting an employer’s violation of the law.
Joining the National Guard or performing jury duty.
Filing a claim under the state workers’ compensation law.
There are eight states in the US that do not recognize the public policy exception. These are Alabama, Florida, Georgia, Louisiana, Maine, Nebraska, New York, and Rhode Island.
Implied contracts – When oral assurances are provided to an employee that counteract at-will employment status. For example, ‘You’ve got a job for life.’ Thus, even though there is no express written contract between the employer and an individual employee, that employee may have an expectation of fixed term or even indefinite employment based on a employer’s statement.
As a general rule, courts disregard language promising long-term, lifetime, or permanent employment as aspirational and consider the relationship to be at-will.
Employers can further protect themselves by using a clear and unambiguous disclaimer on written materials stating that its policies and procedures do not create contractual rights. Employers can also reserve the right to modify policies and procedures at any time.
Document and Communicate Performance Concerns
If an employer wants to terminate an employee, they should address performance concerns early in the employment relationship or when the performance issue arises.
If problems are not communicated, employees may not realize their performance isn’t acceptable, thus later disciplinary action may come as a surprise and be seen as unfair or discriminatory.
This is why it is important for US employers to store clear evidence and documentation to support termination decisions. Without proper documentation, the employee has an opportunity to claim wrongful termination.
Document Company Policy on At-will Employment
Most US employers state clearly in their employee handbooks that employment is at-will. While this is not explicitly necessary, it can help prevent disputes from arising later on.
Other employers may have new employees sign a document acknowledging that they are at-will employees and they agree to all conditions that come with that status.
If you use an Employer of Record to employ your US workers, they can provide guidance on steps to take before terminating an employee.
Disclaimer: The information provided here does not, and is not intended to, constitute legal advice. Instead, the information and content available are for general informational purposes only.
Why is it Important to Comply With US Labor Laws?
There are three different layers of US labor laws you must comply with when employing someone in the US, as explained in this video.
US Labor Laws Differ Per Area
The three US labor laws you must comply with when employing someone in the US are:
Federal law
Federal law is determined by the federal government and is the overarching US labor laws that govern all 50 states in the United States. You must be aware of federal US labor law requirements when you hire US employees.
State specific laws
Each state has its own government who can set their own tax system and state labor laws. This means labor law will vary depending on the state your employee is operating in. Remember, there are 50 different states, which equates to 50 different US labor laws to track, on top of federal compliance.
Local/city laws
Each city or local jurisdiction may have its own labor laws you must follow when hiring employees in the US, in addition to federal and states laws.
For example, let's say you want to employ a worker in San Francisco. You will have to navigate a multi-dimensional tax and legal system:
US federal laws and taxes
The state of California’s laws and taxes
Local government laws and taxes of San Francisco
Navigate US Employment With PGC
It is important to complete research in the areas you are hiring in and keep track of employment laws which change frequently. A specialized US Employer of Record like PGC can help you maintain compliance at a federal, state, and local level when employing someone in the USA. Whether you’re new to US employment or want to hire in another state without the hassle, using an EOR can simplify and speed up the employment process.
Disclaimer: The information provided here does not, and is not intended to, constitute legal advice. Instead, the information and content available are for general informational purposes only.