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Payroll Service for Employees in the USA
We manage US payroll for international companies, even without their own US company or local entity.
Hire employees in the USA without your own company and manage US payroll?
Would you like to employ an employee in the United States but do not have your own company or permanent establishment there? IPS supports international companies with employing staff and managing payroll in the USA in accordance with local requirements.
US payroll involves more than Federal Payroll Taxes. Depending on the employee’s place of work, the requirements of the relevant state and, in some cases, local regulations must also be taken into account.
Two models are particularly relevant for employing staff in the USA:
1. Employer of Record in the USA
Your employee is employed through a suitable US employer structure while working operationally for your company.
✓ Fast start in the USA
✓ No US company required
✓ Payroll and administration outsourced
✓ Support with Federal and State compliance
2. Direct Employment in the USA
Your foreign company remains the employer and fulfills the required US payroll and registration requirements.
✓ Direct employment within your own company
✓ US payroll through IPS
✓ Support with EIN and State registration
✓ Federal and State payroll taken into account
IPS is your global payroll solution for successful and efficient
international expansion without your own local entity.
Full Time Remote Work from the USA: Information About Payroll and Employment in the United States
As your international payroll partner, IPS supports you with the compliant employment of your employees in the USA and with US payroll in accordance with both federal and state requirements.
The US payroll system consists of federal taxes and social security contributions as well as additional regulations in the relevant state. State Income Tax, State Unemployment Insurance, Workers’ Compensation, Paid Leave and local Payroll Taxes may therefore differ depending on the employee’s place of work.
Minimum Wage and Working Hours in the USA
The federal minimum wage under the Fair Labor Standards Act remains $7.25 per hour in 2026.
However, many states and cities require significantly higher minimum wages. If Federal, State or Local Minimum Wage rules apply to an employee, the higher applicable minimum wage must generally be observed.
For employees who are not exempt from overtime requirements, known as non-exempt employees, federal law generally requires overtime pay of at least 1.5 times the regular hourly rate after more than 40 working hours in a workweek.
Payroll Costs and Payroll in the USA
Employer costs in the USA cannot reliably be expressed as a single percentage of gross salary. In addition to federal Payroll Taxes, additional costs depend in particular on the state, the employee’s role, the unemployment insurance rate, Workers’ Compensation and the benefits offered.
Social Security 2026
For the Social Security component of FICA, employers and employees each pay 6.2% of taxable wages in 2026.
The Social Security wage base is $184,500 in 2026. The maximum regular employer Social Security contribution is therefore $11,439 per employee.
Medicare 2026
Employers and employees each pay 1.45% for Medicare. Unlike Social Security, there is no wage base limit for the regular Medicare contribution.
For employee wages above $200,000, the employer must additionally withhold 0.9% Additional Medicare Tax from the employee. There is no corresponding employer contribution for this additional tax.
Federal Unemployment Tax FUTA
FUTA is generally paid exclusively by the employer. The standard FUTA rate is 6% on the first $7,000 of FUTA taxable wages per employee.
If eligible State Unemployment Tax is paid in full and on time, a credit of up to 5.4 percentage points can generally be applied. This typically results in an effective FUTA rate of 0.6%.
In so called Credit Reduction States, the actual FUTA burden may be higher.
Additional Employer Costs
→ State Unemployment Insurance (SUI)
→ Workers’ Compensation Insurance
→ State Disability or Paid Family Leave contributions where applicable
→ Potential local Payroll Taxes
→ Health insurance and other employee benefits
Larger employers may also have obligations under the Affordable Care Act. Employers with an average of at least 50 full time employees including Full Time Equivalents may qualify as an “Applicable Large Employer”.
Illness and Sick Leave
At the federal level, most private sector employees currently have no general statutory entitlement to paid sick leave.
However, several states and cities have their own Paid Sick Leave laws. Whether paid sick leave must be provided and to what extent therefore depends significantly on the employee’s place of work.
Family and Medical Leave Act FMLA
The FMLA may provide eligible employees of a covered employer with up to 12 workweeks of unpaid, job protected leave within a year for certain family and medical reasons.
For private employers, the FMLA generally applies from 50 employees. Among other requirements, an employee must normally have been employed for at least 12 months, have worked at least 1,250 hours during the previous twelve months and work at a location where the employer employs at least 50 employees within 75 miles.
State and Local Leave laws may provide additional rights.
Vacation, Public Holidays and Salary Payments
Unlike in Germany, the federal Fair Labor Standards Act generally provides no general entitlement to paid annual vacation. Vacation or Paid Time Off is often offered voluntarily by employers, while additional state rules may also apply.
Federal Holidays
There are eleven federal holidays in the USA:
→ New Year’s Day
→ Birthday of Martin Luther King, Jr.
→ Washington’s Birthday / Presidents Day
→ Memorial Day
→ Juneteenth National Independence Day
→ Independence Day
→ Labor Day
→ Columbus Day
→ Veterans Day
→ Thanksgiving Day
→ Christmas Day
Important: Federal Holidays do not automatically mean that private employers must provide paid time off. Under federal law, there is generally no universal entitlement to paid public holidays.
Payroll Frequency
Pay frequency is also not standardized nationwide. Employees may, for example, be paid weekly, biweekly, twice monthly or monthly.
The permitted payroll frequency depends on the relevant state and, in some cases, the employee category. State Payday Requirements must therefore be taken into account for every US payroll.
Termination and Severance Pay
In most US states, the principle of “at-will employment” generally applies. This means that the employer or employee may generally terminate the employment relationship at any time unless an employment contract or another specific legal protection provides otherwise.
However, termination must not be based on an unlawful reason. For example, termination based on legally protected discrimination characteristics or unlawful retaliation is prohibited.
Montana is an exception to the general at will principle. Additional exceptions also exist in various states and specific situations.
Severance Pay
The federal Fair Labor Standards Act generally requires no universal severance payment for an individual termination.
An entitlement to Severance Pay may, however, arise from the employment contract, a company policy or an individual agreement.
WARN Act for Larger Layoffs
Special advance notice requirements may apply to larger plant closings and mass layoffs. The federal Worker Adjustment and Retraining Notification Act, known as WARN, requires covered employers with generally at least 100 employees to provide at least 60 calendar days of written advance notice in certain circumstances.
Individual states may also have additional or stricter Mini WARN rules.
US Payroll Means Federal + State + Local Compliance
Whether California, Texas, Florida, New York or another state, minimum wage, Sick Leave, Payday rules, State Income Tax, Unemployment Insurance, Workers’ Compensation and other employment regulations can differ significantly.
US payroll should therefore always be aligned with the employee’s actual place of work. For Remote Work, it should also be reviewed whether moving to another state creates new payroll and registration requirements.
Employ and Pay Employees in the USA in Compliance with Local Requirements
Employing your own staff in the United States involves payroll, tax and compliance requirements at federal, state and sometimes local level. With our international payroll solutions, we support you with efficient and locally compliant processing.
Your benefits:
✓ US payroll processing
✓ Calculation of Social Security, Medicare and FUTA
✓ Consideration of State Unemployment and additional State Payroll Taxes
✓ Support with EIN and required payroll registrations
✓ Consideration of state minimum wage, Payday and Leave rules
✓ Employer of Record for suitable employment situations
✓ Direct employment through foreign employer structures depending on the individual case
✓ Payroll support for Remote Work across different states
✓ Flexible expansion into the US market
Request a non binding consultation now and employ and pay employees in the USA professionally.
Where We Can Support You
Any Questions About Payroll in the USA?
We are here to help quickly and easily!
Simply call us: +49 2173 2039568
or send us an email!
