US employment law is set at two levels. Federal laws such as the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA) set a floor, and states, and sometimes cities, add their own rules on minimum wage, paid sick leave, paid family leave and income tax. This guide covers the federal rules; always check the rules of the state where each employee works.
Federal law does not require paid vacation, paid sick leave or paid public holidays. Most employers offer paid time off anyway to stay competitive, and a growing number of states and cities require paid sick leave and paid family leave.
Vacation is set by company policy or contract. Some states require accrued vacation to be paid out when employment ends.
Unpaid, job-protected leave in a 12-month period, with group health cover continued as if the employee were working.
Under the FMLA, in a single 12-month period, to care for a servicemember with a serious injury or illness.
The FMLA applies to private employers with 50 or more employees in 20 or more workweeks, and to all public agencies and schools. An employee qualifies after 12 months with the employer and at least 1,250 hours worked in the previous 12 months, at a location where the employer has 50 or more employees within 75 miles.
There is no federal paid maternity, paternity or sick leave. Many states and cities require paid sick leave, and several states run paid family and medical leave insurance programmes funded by payroll contributions. The number of days, accrual rates and who pays differ from state to state.
Set up PTO, sick leave and FMLA as separate leave types in IceHrm, each with its own accrual, carry forward and approval rules, and use leave groups where states need different policies. Employees see their live balance before they apply, and managers see who is away on a shared calendar. Leave management →
The FLSA sets the federal minimum wage and overtime rules for non-exempt employees. Where state or local law sets a higher minimum wage, as most states and many cities do, the employer must pay the higher rate.
Unchanged since 24 July 2009. Many states and cities set higher rates, often adjusted each year.
Time and a half the regular rate for hours over 40 in a workweek. Some states also require daily overtime.
The FLSA does not limit hours for adults, only requires overtime pay. Child labour rules restrict hours for under-16s.
Executive, administrative and professional employees can be exempt from minimum wage and overtime if they are paid a salary above the federal threshold and meet the duties tests. Some states set higher salary thresholds. Misclassifying employees as exempt, or workers as independent contractors, is a common source of back pay claims.
Capture attendance and overtime for non-exempt staff in IceHrm and feed the hours straight into payroll, so overtime reflects what was actually worked and the records are there if you need them. Time & attendance →
Employers withhold federal income tax from each paycheck based on the employee's Form W-4, along with the employee's share of FICA. Most states, and some cities, also levy income tax that must be withheld.
| Rate | Single filers | Married filing jointly |
|---|---|---|
| 10% | $0 – $12,400 | $0 – $24,800 |
| 12% | $12,401 – $50,400 | $24,801 – $100,800 |
| 22% | $50,401 – $105,700 | $100,801 – $211,400 |
| 24% | $105,701 – $201,775 | $211,401 – $403,550 |
| 32% | $201,776 – $256,225 | $403,551 – $512,450 |
| 35% | $256,226 – $640,600 | $512,451 – $768,700 |
| 37% | Over $640,600 | Over $768,700 |
Most states tax wages, at flat or graduated rates, while a handful levy no tax on wages at all. Some cities and counties add local income taxes. Withhold for the state where the employee works, and check reciprocity rules for employees who live in a different state.
Bonuses and other supplemental wages can be withheld at a flat 22% federal rate, rising to a mandatory 37% on supplemental wages over $1 million in a year.
Employers match the employee's Social Security and Medicare taxes (FICA) and pay federal and state unemployment taxes. Workers' compensation insurance and any state disability or paid leave programmes add to the cost.
| Tax | Employer rate | Wage base |
|---|---|---|
| Social Security (FICA) | 6.2% | First $184,500 of wages |
| Medicare (FICA) | 1.45% | All wages |
| Federal unemployment (FUTA) | 6.0%, usually 0.6% after state credit | First $7,000 of wages |
| State unemployment (SUI) | Varies | Set by each state, based on the employer's claims history |
Workers' compensation insurance is required in nearly every state. Some states also require contributions to state disability or paid family leave programmes. Under the Affordable Care Act, employers with 50 or more full-time equivalent employees must offer affordable health coverage to full-time staff or risk a penalty.
Build US pay the way you already structure it, with your own salary components, deductions and formula columns, such as a 401(k) or benefits deduction column. Want to know how well IceHrm handles payroll calculations for the United States? Contact us or see Payroll →
Employment in every state except Montana is presumed to be "at will": either side can end it at any time, for any lawful reason or none, without notice. The limits come from contracts, collective agreements and anti-discrimination and anti-retaliation laws.
There is no general statutory notice period or severance pay. Two weeks' notice is a common courtesy, and severance is paid only where a contract, policy or separation agreement provides for it. The main exception is the WARN Act: employers with 100 or more employees must give 60 calendar days' notice of plant closings and mass layoffs, and some states have their own stricter versions.
Deadlines for the final paycheck and whether unused vacation must be paid out depend on state law. Employers with 20 or more employees must usually offer departing employees continued group health coverage under COBRA, at the employee's cost.
There are 11 federal holidays. They are guaranteed days off only for federal employees; private employers decide which holidays to give and whether to pay a premium for working them. States add their own holidays.
When a federal holiday falls on a Saturday, federal employees observe it on the Friday before; on a Sunday, on the Monday after. Many private employers follow the same rule.
Leave groups give each office its own holiday calendar, so teams in different states, or different countries, each get the days off your policy gives them. Holiday calendars →
Most US employees don't have a formal employment contract; an offer letter and employee handbook are typical. Offer letters usually state that employment is at will so they aren't read as a promise of continued employment.
There is no statutory probation period. Many employers use a 60 or 90 day introductory period, but in an at-will relationship it does not change the right to end employment.
Send offer letters and handbook acknowledgements for e-signing, store onboarding documents on the employee's record, and track I-9 and other onboarding steps with task lists so nothing is missed. Documents & e-signing →
This guide is general information to help you plan HR processes, not legal, tax or financial advice. Employment law and rates change regularly and awards, enterprise agreements and state rules may give employees more than the minimums shown here. Always confirm current requirements with the official sources or a qualified adviser.
Configure leave types, accrual rules and public holidays for United States, keep employee records and contracts in one place, and run payroll with your own salary components. Want to know how IceHrm handles payroll calculations for United States? Talk to us.
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