🇺🇸 Hiring in the United States

💡 Everything you need to know to hire and manage employees in the United States through Toku. Toku handles payroll processing, tax withholding, social contributions, and statutory compliance. This guide covers what you need to plan costs and manage your team.

At a Glance

A note on the US: employment rules vary significantly by state, including minimum wage, overtime, paid leave, and final pay requirements. Toku applies the correct state rules for each employee's work location.

Onboarding a New Hire

Plan for 5 business days between submitting a new hire and their start date. Your new hire completes Form I-9 (employment eligibility verification) and their federal and state tax withholding forms within 3 business days of starting, and Toku guides them through it.

Submit your new hire through the Toku platform and we take it from there: local employment agreement, statutory registrations, and payroll setup. See Onboard Contributors as a Client Admin in Toku for the step-by-step process, and the Country Readiness Live Tracker for lead times across all countries.

Employer Costs

On top of gross salary, employers in the US pay:

As a rule of thumb, total cost of employment is roughly 108-112% of gross salary, depending mainly on the employee's state. There is no 13th month salary in the US.

Employees pay their own share too: 6.2% Social Security and 1.45% Medicare (plus 0.9% additional Medicare tax on wages above USD 200,000), federal income tax of 10-37%, and state income tax in most states (nine states have no broad wage income tax). These are withheld from gross salary, not charged on top. Toku calculates and remits all of the above.

Compensation & Payroll

Toku runs two payrolls per month in the United States, and employees receive a pay stub each cycle. The federal minimum wage is USD 7.25 per hour, but over 30 states and many cities set higher minimums, some above USD 15 per hour, and the higher rate always applies. Salaries are paid in USD.

Employment Contracts & Probation

• Toku issues a compliant local employment agreement for every hire, reflecting the pay-notice and onboarding documentation rules of the employee's state.
• Employment is at-will: either party can end the relationship at any time, for any lawful reason, with or without notice.
• There is no probationary period in Toku's US employment agreement, since at-will employment makes one unnecessary.
• Non-compete enforceability varies widely by state (California, for example, largely prohibits them).

Working Hours

The standard workweek is 40 hours, with no federal daily maximum. Non-exempt employees earn overtime at 1.5x their regular rate for hours over 40 per week; salaried employees in executive, administrative, professional, and certain computer roles earning at least USD 35,568 per year are typically exempt. Some states add daily overtime thresholds and mandatory meal and rest breaks, which Toku applies based on the employee's location.

Leave Entitlements

Because there is no federal PTO mandate, your PTO policy is the main lever, and state rules can affect accrual caps and whether unused PTO must be paid out at termination. Parental leave is unpaid at the federal level, but state paid family leave programs cover it in many states.

Public Holidays (2026)

The US designates 11 federal holidays in 2026. Private employers are not legally required to give these as paid days off, and observance varies by employer, though most offer the majority of them as market practice.

Benefits: Required vs. Common Extras

Statutory (included in employer costs above): Social Security (retirement, disability, and survivors' benefits), Medicare, unemployment insurance, and workers' compensation. Employer-sponsored health coverage is required by the Affordable Care Act for large employers, and in the US market it is effectively essential for hiring.

Through Toku, your US team can enroll in US WorkCo International Benefits, which covers Cigna medical, dental, and vision insurance, a 401(k) retirement plan, disability insurance, and tax-advantaged savings accounts. For retirement plan details, see the US 401k Guide.

Other common extras include life insurance, 401(k) employer matching, HSAs and FSAs, employee assistance programs, commuter benefits, tuition reimbursement, and equity compensation, which is especially common in the technology sector. Toku can advise on the cost impact of any of these.

Ending Employment

US employment is at-will, so no statutory notice or severance applies to individual terminations, but anti-discrimination laws, state final-pay deadlines, and PTO payout rules still make process important, so involve Toku early. For the process, see How to Terminate an Employee or Contractor and U.S. State PTO Payout Requirements Upon Termination.

Severance is not required by law. Where offered, it is commonly 1-2 weeks of base salary per year of service, usually in exchange for a release of claims. On termination, the final paycheck must be issued on the timeline set by the employee's state (some states require immediate payment), and departing employees receive COBRA health coverage continuation information, all of which Toku handles.

Hiring Someone from Overseas?

Foreign nationals need work authorization before they can be employed in the US. The main employer-sponsored route is the H-1B visa for specialty occupations, which is subject to an annual cap and significant new government fees for certain petitions, with alternatives including the O-1 (extraordinary ability), L-1 (intracompany transfer), and TN (Canadian and Mexican citizens). Talk to Toku before extending an offer to a candidate who needs sponsorship.

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Last verified July 2026. This guide is for general information and doesn't constitute legal or tax advice. Your Toku account manager can confirm specifics for your situation.