TL;DR, Hiring in United States
- Fully-loaded federal employer cost: ~8–10% of gross (FICA + FUTA)
- State unemployment (SUTA) adds 0.5–6% depending on state and experience rating
- At-will employment in 49 states, no statutory severance
- Health insurance is not federally mandated under 50 employees but is market-standard
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Statutory employer costs in United States
In the United States, federal employer payroll taxes total roughly 7.65% (FICA, Social Security 6.2% up to the wage base + Medicare 1.45%) plus 0.6% FUTA on the first $7,000. State unemployment insurance (SUTA) adds another 0.5–6% depending on the state and the employer's experience rating. Most employers also fund health insurance, 401(k) match, and PTO as market-standard benefits, even though none are federally mandated for small employers.
| Contribution | Employer rate | Notes |
|---|---|---|
| Social Security (FICA) | 6.20% | Capped at the annual SSA wage base (~$168,600 in 2024) |
| Medicare | 1.45% | No cap; additional 0.9% employee-only above $200k |
| FUTA (federal unemployment) | 0.6% | On first $7,000 of wages after state credit |
| SUTA (state unemployment) | 0.5–6.0% | Varies by state and experience rating |
| Workers' compensation | 0.3–2.0% | Mandatory in every state except Texas; rates by SIC code |
Mandatory employee benefits
Beyond statutory contributions, United States law requires the following benefits the employer must fund.
- Health insurance
- Required for employers with 50+ FTEs under ACA; market-standard below that threshold.
- 401(k)
- Not federally mandated, but several states now require state-run IRA programs (e.g., CalSavers).
- PTO
- No federal minimum; market norm is 10–20 days plus 6–11 federal holidays.
Termination, notice and severance
Probation
No statutory probation, at-will employment is the default in 49 states.
Notice period
No federal notice requirement; WARN Act requires 60 days for mass layoffs (100+ employees).
Severance
Not statutory; offered in exchange for a release of claims. 1–2 weeks per year of service is typical.
Common compliance pitfalls
- Worker classification, misclassifying employees as 1099 contractors triggers IRS, DOL, and state penalties.
- State-specific wage laws (CA, NY, WA) on overtime, meal breaks, and pay transparency are far stricter than federal.
- Final paycheck timing varies by state, California requires payment on the last day; others allow next pay period.
Frequently asked questions
Yes for direct hires, you need a US entity, EIN, state registrations, and state-by-state payroll/unemployment accounts. An EOR avoids all of this by employing the worker on your behalf.
No. ACA's employer mandate applies only at 50+ full-time equivalents. Below that, health insurance is optional but expected by most US candidates.
Only if they meet the IRS and state common-law tests for independent contractor status. California (AB5) and similar state laws make this much harder than it used to be, misclassification penalties run into the tens of thousands per worker.
Sources
Statutory rates and rules verified against the following authorities. We update this page when rates change.