🇺🇸 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 approximately 5 business days between submitting a new hire and the proposed start date. The employee completes Form I-9 for employment eligibility verification and applicable federal and state withholding forms. The steps have different deadlines. Toku will confirm the required documents and timing for the hire.

Submit the new hire through the Toku platform for the employment agreement, statutory registrations and payroll setup. See Onboard Contributors as a Client Admin in Toku for the steps. Toku will confirm the expected onboarding timing for your hire.

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 generally at-will, but state law, contractual terms and other protections can limit how employment ends. Toku will confirm the applicable terms for the employee's work location.
• Confirm any probation provisions and state-specific requirements with Toku before agreeing the employment terms.
• 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

Statutory US benefits are Social Security (retirement, disability, and survivors' benefits), Medicare, unemployment insurance, and workers' compensation, all included in Employer Costs above. 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's EOR benefits program (WorkCo International), US employees receive a full package: medical, dental, vision, life and disability, tax-advantaged accounts, and a 401(k), with the employer sponsoring 100% of employee-only premiums. Toku's global SafetyWing Remote Health plan can't cover US residents.

Benefits at a Glance

Medical: Cigna

Employees choose between two plans (administered by Edison Health Solutions):

Medical premiums and employer contributions vary by plan year, coverage tier and program. Ask Toku for the current plan documents and an itemized quote before offering coverage.

Dental & Vision: Unum

• Dental: High Plan ($2,000 annual max; preventive 100%, minor 90%, major 60%, ortho 50%) or Low Plan ($1,500 max; preventive 100%, minor 80%, major 50%, ortho 50%). Employer pays 100% of the employee premium and 70% for dependents.
• Vision (EyeMed): $10 exam copay, $25 lens copay, $130 frames and contacts allowances. Employer pays the employee premium ($7.00/month); dependent cost is employee-paid. Dental and vision premiums vary by plan year and coverage tier. Ask Toku for the current rates and contribution details.

The employer pays the balance of each premium.

Life & Disability (Mandatory, Employer-Paid)

All employees receive Basic Life & AD&D at 1× salary (max $250,000), short-term disability at 60% of salary (max $1,000/week), and long-term disability at 60% (max $6,000/month). An Employee Assistance Program (24/7, 3 counseling sessions per issue) is included. Voluntary extras (hospital indemnity, critical illness, accident insurance) are available employee-paid and portable.

Tax-Advantaged Accounts

Medical FSA (up to $3,200/year), Dependent Care FSA (up to $5,000/household), and HSA for HDHP enrollees (IRS limits). Elections are fixed for the plan year unless a qualifying life event occurs.

Retirement: 401(k) with Slavic401k

Employees are automatically enrolled at 3% pre-tax after two full months of employment (opt-out available), with automatic 1% annual escalation up to a 10% cap. Roth and pre-tax options and 40+ investment funds are available. Ask Toku about employer match options for your team. For plan details, see the US 401k Guide.

Enrollment & Key Rules

• Eligibility: full-time employees working 30+ hours/week; dependents include spouse/domestic partner and children to age 26.
• Medical coverage is effective the first of the month following the hire date; Unum benefits the first of the month on or following hire.
• New hires have 30 days from their start date to enroll (via Employee Navigator); after that, changes wait for open enrollment or a qualifying life event (submitted within 30 days).
• Plan years vary by benefit. The medical plan year runs from November 1, 2026 to December 31, 2027; other benefits have different periods. See US WorkCo International Benefits and confirm current terms with Toku.

What You Need to Know About Benefits

• ACA consistency rule: every employee in the same group must receive the same waiting period, contribution scheme, and termination timeline, with no individual exceptions.
• COBRA: after qualifying events, employees can continue coverage for 18 - 36 months at up to 102% of the total cost. You may choose to subsidize COBRA for a period.
• Employee premium shares are deducted from the semi-monthly payroll (half the monthly amount each cycle).
• Some clients are set up on separate US programs (e.g., UnitedHealthcare plans with different contribution schemes). Your account manager can confirm which program and rates apply to your team. For the full employee-facing detail of each plan, see US WorkCo International Benefits, which covers Cigna medical, dental, and vision insurance, a 401(k) retirement plan, disability insurance, and tax-advantaged savings accounts.

Common Extras

Beyond the Toku package, other common extras include 401(k) employer matching, 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

Employment is generally at-will, but state law, contractual protections, the reason for termination and the circumstances can affect notice, severance and procedure. Contact Toku before communicating an end date. For the process, see How to Terminate an Employee or Contractor and U.S. State PTO Payout Requirements Upon Termination.

Severance obligations depend on applicable law, the agreement and the circumstances. When severance is offered, its amount and any release of claims depend on the case. Final-pay deadlines vary by state. Health coverage continuation notices may also be required for eligible plans and individuals. Toku will confirm the required steps and costs before termination.

Annual Leave at Termination

This section describes statutory annual leave. Any additional contractual or company-provided leave above the statutory minimum may follow different carryover, expiry, or payout rules under the employee's agreement or applicable policy, subject to local law.

Statutory leave termination payout: State dependent. Some states treat earned vacation/PTO as wages and require payout at termination. Other states permit a properly drafted forfeiture or no-payout policy.

Statutory carryover / look-back: Carryover, accrual caps, “use it or lose it” rules, and payout requirements vary materially by state and sometimes by local law.

Admin responsibility: Always provide Toku the employee's work state and do not apply one nationwide PTO payout or forfeiture rule. Keep the written PTO policy consistent with the employee's state requirements.

Important exceptions: Policy wording matters in states that permit forfeiture, while other states prohibit forfeiture of earned vacation regardless of policy language. Toku should confirm the state rule before final pay or any balance expiration is communicated.

See the Annual Leave / PTO Carryover & Termination Payout Guide and the U.S. State PTO Payout Requirements Upon Termination for state-specific treatment.

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 updated November 5, 2026 (benefits, onboarding and termination guidance only). Other information last verified October 2026. This guide is general information, not legal or tax advice. Your Toku account manager can confirm specifics for your situation.