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
Last reviewed:
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
Do I need an entity to hire an employee in the US?
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.
Is health insurance mandatory for a single hire?
No. ACA's employer mandate applies only at 50+ full-time equivalents. Below that, health insurance is optional but expected by most US candidates.
Can I just pay a US worker as a 1099 contractor?
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.