United States of America: A Guideline to Payroll and Employer of Record

Run your business seamlessly with Neeyamo as we help you go beyond borders to manage your international payroll and hire new talent in the United States of America (USA). 

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Overview

United States of America is a diverse and influential country in North America, comprising 50 states and a federal district, Washington, D.C. USA is a global economic powerhouse with a mixed-market economy, encompassing industries like technology, finance, entertainment, and manufacturing. A tapestry of diverse backgrounds, languages, and beliefs weaves its social fabric.

Neeyamo assists with onboarding and managing employees in the United States and the processing of a firm's payroll, compliance, benefits, and more.

Our Presence

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Americas
Los Gatos, USA
Neeyamo Inc
14317 La Rinconada Drive, CA, Los Gatos, 95032

Tools And Instances

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Global Payroll

Neeyamo’s global payroll solution covering 180+ countries

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Global Work

A tech-based EOR solution to manage your extended workforce

Facts And Stats

Capital

Washington, D.C   

Currency

United States Dollar (USD) 

Official Language

None

Fiscal Year

1 October to 30 September

Date Format

MM/DD/YYYY

Country Calling Code

+1

Time Zone

  • Hawaii-Aleutian Standard Time (GMT -10:00)
  • Alaska Daylight Time (GMT -08:00)
  • Pacific Daylight Time (GMT -07:00)
  • Mountain Standard Time (GMT -07:00)
  • Mountain Daylight Time (GMT -06:00)
  • Central Daylight Time (GMT -05:00)

The Federal government allows Americans to speak any language they want and USA has no official language.

Global Payroll

Overview

Payroll: Meaning

Payroll means the list of compensation to be paid to employees of a company or organization for a set period or date. Global payroll providers allow organizations to outsource their payroll, allowing employers to focus on other aspects of their business.

What is Global Payroll?

Handling payroll for a widespread workforce can pose a significant challenge for any organization, and the added complication of compliance can make things worse. If companies spend more time processing payroll, it directly impacts day-to-day operations and their overall productivity. The solution to this is global payroll outsourcing.

What is a Payroll System?

A payroll system is a software that is used to manage employee payments, inclusive of their wages, deductions, bonuses, etc. Global payroll processing is typically done with the assistance of an outsourced payroll provider.

What is a global payroll system? 

Over the years, Neeyamo – Global Payroll Services has observed these complexities and strived to provide global payroll solutions through a single technology platform – Neeyamo Payroll. Neeyamos global payroll systems ease the process for companies looking to outsource their global payroll requirements and aid them in maneuvering the tricky payroll system in America. Neeyamos payroll software provides the perfect solution for all your global payroll needs – for employees working in primary geographies, the long-tail region, remote or internationally located.

What are Payroll Taxes?

Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards aiding both short-term and long-term benefits for their employees.  

How to calculate payroll taxes? 

Neeyamo – a Payroll Specialist, acts as your personalized Payroll tax Calculator. Ensuring adherence to local regulatory requirements using multi-level controls. Providing timely and accurate payroll, courtesy of our experts worldwide and using a tech-based integrated smart helpdesk solution with seamless support experience manned by payroll experts - Neeyamo has all your payroll needs covered. 

Payroll Taxes

Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the welfare of the general population. 

Employee Taxes

Employee Payroll Contributions 

7.65% – 8.55% Total Employee Cost 

6.20% (Maximum taxable wages is 147,000 USD) FICA Social Security (Federal) 

1.45% FICA Medicare (Federal) 

0.90% Additional tax on earnings over 200,000 USD (High-income earners also pay an additional 0.90% in Medicare taxes) 

Employee Income Tax 

Federal Income Tax For Single Filers 

  • 10.00% -  Up to 10,275 USD 

  • 12.00% - 10,276 USD to 41,775 USD 

  • 22.00% - 41,776 USD to 89.075 USD 

  • 24.00% - 89,076 USD to 170,050 USD 

  • 32.00% - 170,051 USD to 215,950 USD 

  • 35.00% - 215,951 USD to 539,900 USD 

  • 37.00% - 539,901 USD or more 

Federal Tax – Married, filing jointly 

  • 10.00% - Up to 20,550 USD 

  • 12.00% - 20,551 USD to 83,550 USD 

  • 22.00% - 83,551 USD to 178,150 USD 

  • 24.00% - 178,151 USD to 340,100 USD 

  • 32.00% - 340,101 USD to 431,900 USD 

  • 35.00% - 431,901 USD to 647,850 USD 

  • 37.00% - 647,851 USD or more 

Federal Tax – Heads of Households 

  • 10.00% - Up to 14,650 USD 
  • 12.00% - 14,651 USD to 55,900 USD 
  • 22.00% - 55,901 USD to 89,050 USD 
  • 24.00% - 89,051 USD to 170,050 USD 
  • 32.00% - 170,051 USD to 215,950 USD 
  • 35.00% - 215,951 USD to 539,900 USD 
  • 37.00% - 539,901 USD or more 

Standard Deduction and Personal Exemption 

  • Single - 12,950.00 USD 

  • Married Filing Jointly - 25,900.00 USD 

  • Head of Household - 19,400.00 USD 

Employer Taxes

Federal payroll tax rates for 2023 are: 

Employer Payroll Contributions 

  • 8.25% – 13.65% Total Employment Cost 
  • 6.20% (Maximum taxable wages is 147,000 USD) FICA Social Security (Federal) 
  • 1.45% FICA Medicare (Federal) 
  • 0.60% -6.00% (Maximum taxable wages is 7,000 USD) FUTA (Federal Unemployment Tax Act) The FUTA tax rate is 6.0% with a taxable wage base of 7,000 USD. However, if states operate their unemployment insurance programs in compliance with federal law then the FUTA tax is reduced (credit) by 5.4% to 0.6%.Employee 

Payroll Cycle

Overview

Undoubtedly, payroll is a critical process for any organization. The pay cycle in the United States of America refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt. The payroll system in America is tricky to maneuver, but with Neeyamos global payroll software, it could be a comfortable click of a button for you.

Frequency

State laws vary concerning the timing of payment after a pay period ends and payment in light of holidays and weekends, as well as requiring specific paydays. 
The majority of states require payment of wages semimonthly; however, some states allow for monthly payment of wages, while other states require weekly payment. 

13th Month Cycle

A 13th-month salary is not required 

Global Work

Overview

What is an Employer of Record?

An Employer of Record services / EOR services provider helps you eliminate the hassle of handling complexities while onboarding a new employee in an international location. They help bridge the gap that otherwise mandates organizations to have a local registered entity and a local bank account, prior to making a job offer to an international hire. 

An Employer of Record services / EOR services provider acts as a legal employer, facilitates salary payments, and manages other statutory requirements such as health insurance, payroll taxes, and employee benefits, ensuring compliance with local tax laws and regulations.  

This allows organizations to focus on collaborating with the employee in America for operational tasks, with the knowledge that they have a cost-effective solution to support their global HR and payroll software requirements, as they continue their global expansion.  

HR Mandates and Practices

Minimum Wage

The federal minimum wage is $7.25 per hour. This rate applies to covered nonexempt workers. The minimum wage for employees who receive tips is $2.13 per hour. The amount of tips plus the $2.13 must reach at least $7.25 per hour.

Overtime

Working Hours 

General 

In the US, a full-time employee is typically engaged for a 40-hour workweek. Part-time employees are classified as employees who work less than 30 hours a week. In addition, part-time employees are not entitled to medical benefits. 

Overtime 

Nonexempt hourly employees must be paid one-and-a-half times their regular rate of pay for all hours worked over 40 in a workweek. Employers are not required to pay overtime for work on Saturdays, Sundays, holidays, or regular days of rest, unless overtime is worked on such days. 

FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. They should also meet the minimum salary threshold to qualify as exempt. 

A few states require that employers provide employees with a day of rest each week and/or compensate them at a premium rate for work performed on the seventh consecutive day of work  

Data Retention Policy

According to the U.S. Department of Labor, the Fair Labor Standards Act (FLSA) requires employers to maintain records for a period of at least three years. Records to compute pay, which include time cards, work and time schedules and records of additions to or reductions from wages, must be kept for two years. 

Hiring and Onboarding Requirements

Hiring

New Hire Forms 

Complete the following forms in USA Staffing Onboarding.  

  • Appointment Affidavit (SF-61) 

  • Employment Eligibility Verification (I-9) 

  • Declaration for Federal Employment (OF-306) 

Submit online after you have attended the virtual orientation 

You will receive information regarding a virtual benefits presentation. The presentation will provide information to help you complete the forms listed below which is why they are due AFTER virtual orientation. Refer to the due dates listed in the system for each of the forms. 

  • Health Benefits Election Form (SF-2809) 

  • Life Insurance Election (FEGLI) (SF-2817) 

  • Thrift Savings Plan Enrollment (TSP-1) 

  • TSP Catch-Up Contribution (TSP-1-C) (if applicable) 

Note: Beneficiary forms may have been assigned to you via the Onboarding system. You may complete the forms electronically; however, the system will prompt you to print the forms so that you may submit them in hard copy to the NIH Benefits office. Beneficiary forms can only be accepted via hard copy. 

Onboarding

Onboarding Documents:

Submit online after you have attended the virtual orientation 

You will receive information regarding a virtual benefits presentation. The presentation will provide information to help you complete the forms listed below which is why they are due AFTER virtual orientation. Refer to the due dates listed in the system for each of the forms. 

  • Health Benefits Election Form (SF-2809) 

  • Life Insurance Election (FEGLI) (SF-2817) 

  • Thrift Savings Plan Enrollment (TSP-1) 

  • TSP Catch-Up Contribution (TSP-1-C) (if applicable) 

    Note: Beneficiary forms may have been assigned to you via the Onboarding system. You may complete the forms electronically; however, the system will prompt you to print the forms so that you may submit them in hard copy to the NIH Benefits office. Beneficiary forms can only be accepted via hard copy. 

Probation

An employee probationary period is organized at the discretion of an employer and undertaken at the start of a new employment agreement. They can last anywhere from 3 months to 6 months in length. It is not unusual, though, to see see shorter or longer periods. 

Leave

Public Holidays

There are 13 holidays in USA:

  • January 1 - New Year's Day 
  • January 2 - New Year's Day (substitute) 
  • January 16 - Martin Luther King Jr. Day 
  • February 20 - Presidents' Day 
  • May 29 - Memorial Day 
  • June 19 - Juneteenth 
  • July 4 - Independence Day 
  • September 4 - Labor Day 
  • October 9 - Columbus Day 
  • November 10 - Veterans Day (substitute) 
  • November 11 - Veterans Day 
  • November 23 - Thanksgiving Day 
  • December 25 - Christmas Day  

Public Holidays 

There are ten federal holidays in the United States, and there are 9 US Stock Exchange holidays that are observed annually. 

The federal Fair Labor Standards Act does not require employers to pay their employees for time not worked, such as holidays. The same is true in the vast majority of states. These benefits are generally a matter of contract between the employer and the employee.

Sick Leave

The Family Medical Leave Act (FMLA) provides certain employees with up to 12 weeks of unpaid, job-protected leave per year or for certain family and medical reasons (maternity leave, serious illnesses, or if the employee needs to care for a spouse or child). Employers are required to maintain the employees’ health benefits during their leave and keep their jobs open. 

Employees are eligible for leave if they have worked for their employer at least 12 months, at least 1,250 hours over the past 12 months, and work at a location where the company employs 50 or more employees within 75 miles. Whether an employee has worked the minimum 1,250 hours of service is determined according to the Fair Labor Standards Act principles for determining compensable hours or work. 

Many states will have additional Family, Medical, Maternity, and parental leave that will either work concurrently with FMLA leave or in addition. 

Parental Leave

Falls under the FMLA.

Paid Time Off 

In general, there is no statutory requirement to pay employees for time off for vacations or holidays. 

Termination

Overview

When dismissing a worker, the employer has a responsibility to ensure federal, state, and city ordinances are followed when off-boarding an employee. Some jurisdictions will impose a penalty if the following items are not processed as per the jurisdictions’ timeframe, including providing the employee a termination/unemployment notice, processing final pay, and ensuring a worker’s COBRA (benefit) information is processed. 

Notice Period

Employees are employed ‘at will’ and U.S. law does not require a formal notice period to terminate an individual employee. Therefore, either party can terminate the employment relationship with no notice. 

In mass dismissal cases the Worker Adjustment and Retraining Notification Act (WARN Act) must be followed and employers must give 60 days’ notice to impacted employees. There are a number of states that have their own provisions for mass layoffs that go above the federal requirement.

Severance Pay

There is no requirement for severance pay, and it is a matter of agreement between an employer and an employee. Employers who choose to offer severance would need to have the provisions within the employee’s contract and agreed upon by both parties. Some employers choose to offer severance based on their employee’s length of service, as example.

Visa

Overview

To obtain a temporary US work visa, employers must file a petition with USCIS, which must be approved. There are various types of visas available, including H-1B for specialized college degree applicants, H-1B1 for Chile and Singapore citizens, H-2A for temporary agriculture work, H-2B for temporary non-agricultural work, L for intercompany transfers, and E-1 for employment-based immigrant visas. The process must be repeated if an employer changes employers. 

Noncitizens seeking employment in the US can use employment-based nonimmigrant and immigrant visa classifications. Temporary workers can work with a prospective employer filing a USCIS petition. Permanent workers can seek an employment-based immigrant visa based on skills, education, and work experience.  

Employee Background Checks

Legal and Background Checks

When making personnel decisions -- including hiring, retention, promotion, and reassignment -- employers sometimes want to consider the backgrounds of applicants and employees. Except for certain restrictions related to medical and genetic information, it is not illegal for an employer to ask questions about an applicant or employee’s background or to require a background check. However the employer cannot conduct background checks or use the information obtained in a manner that denies equal employment opportunity to anyone on a protected basis, by intent or by unlawful disparate impact.

 

Last updated on November 10, 2023

If you have any queries or suggestions, reach out to us at irene.jones@neeyamo.com

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