EOR.net.au
Employing in the United States
The United States is the largest market Australian companies expand into, and often the hardest. There is no single employment law: federal rules sit underneath 50 sets of state law, and cities such as New York, San Francisco and Seattle add their own requirements on pay, sick leave and pay transparency.
Employment is at will in almost every state, which makes hiring and firing simpler, but registering for payroll tax and unemployment insurance in every state where staff live is a real administrative load. An EOR is a common way to put the first US hires on the ground without registering in each state.
Why Australian businesses go there
- The largest consumer and enterprise market in the world
- Deep venture capital and talent pools
- The E-3 visa is reserved for Australian citizens in specialty occupations
- At-will employment gives flexibility
What to watch
- State and city law often sets higher minimum wages and paid sick leave
- Each new state with an employee means new payroll tax and unemployment insurance accounts
- Candidates expect health insurance as part of any serious offer
- Overtime rules depend on whether a role is exempt under the Fair Labor Standards Act
Hiring and contracts
- Employment contracts
- Outside Montana, every state treats employment as "at will", so either party can usually end it at any time for a lawful reason. Below executive level an offer letter is normal rather than a full contract. All new hires complete Form I-9.
- Probation
- Federal law has no probation requirement, and with at-will employment a probation period means little legally. Montana is the exception, where state law provides for one.
- Working hours
- Adult working hours have no federal limit. The Fair Labor Standards Act requires 1.5 times the regular rate for non-exempt employees beyond 40 hours in a workweek, and states such as California also impose daily overtime.
- Minimum wage
- The federal minimum wage is $7.25 an hour. Many states and cities set a higher figure, and employers must pay whichever is higher.
Leave and holidays
- Annual leave
- Federal law gives no right to paid vacation. Paid time off comes from employer policy and is an important part of a competitive package.
- Sick leave
- Most private employers have no federal duty to provide paid sick leave, though more and more states and cities require it.
- Parental leave
- At employers with 50 or more employees, the Family and Medical Leave Act gives eligible staff up to 12 weeks of unpaid leave with job protection. A number of states operate paid family leave schemes.
- Public holidays
- There are 11 federal holidays. Private employers do not have to give them as days off or pay extra for working them.
Employer costs
- Retirement and social security
- Employers and employees each pay 6.2% Social Security tax on wages up to $184,500 in 2026, plus 1.45% each for Medicare with no wage cap. There is no compulsory employer pension, though some states require access to a payroll savings scheme.
- Payroll taxes
- On top of withholding income tax at federal, state and sometimes local level, employers fund federal unemployment tax (FUTA) and state unemployment insurance. A separate registration is needed in each state with employees.
- Mandatory benefits
- Every employer needs workers' compensation and must fund unemployment insurance. The Affordable Care Act adds a health cover obligation once a business has 50 or more full-time equivalent staff: offer affordable cover or risk a penalty.
Ending employment
- Notice periods
- Individual at-will dismissals carry no statutory notice requirement. The WARN Act does apply to employers of 100 or more, who must warn staff 60 days ahead of a plant closing or mass layoff.
- Dismissal protection
- Employers may dismiss at will, but never for discriminatory or retaliatory reasons, which federal laws such as Title VII, the ADA and the ADEA prohibit, along with state laws.
- Severance
- Federal law requires no severance. It is often offered in return for a signed release of claims.
Contract terms and visas
- IP and restraint clauses
- Whether a non-compete is enforceable depends on the state, and California, Minnesota, North Dakota and Oklahoma largely prohibit them. The Federal Trade Commission rule of 2024 banning most non-competes never came into force. Invention assignment agreements are routine.
- Visas and right to work
- I-9 verification applies to every hire. Sponsored options include the lottery-based H-1B and the E-3, a visa only Australian citizens in specialty occupations can hold.
Compared with Australia
| United States | Australia | |
|---|---|---|
| Annual leave | Federal law gives no right to paid vacation. Paid time off comes from employer policy and is an important part of a competitive package. | Full-time employees get 4 weeks of paid annual leave a year (5 weeks for some shift workers), built up progressively. Unused leave is paid out when employment ends, and many awards add 17.5% leave loading. |
| Sick leave | Most private employers have no federal duty to provide paid sick leave, though more and more states and cities require it. | Full-time employees get 10 days of paid personal/carer's leave a year, plus 2 days of unpaid carer's leave and 2 days of paid compassionate leave per occasion. Every employee can also take 10 days of paid family and domestic violence leave a year. |
| Notice | Individual at-will dismissals carry no statutory notice requirement. The WARN Act does apply to employers of 100 or more, who must warn staff 60 days ahead of a plant closing or mass layoff. | Under the National Employment Standards an employer gives 1 week of notice for up to 1 year of service, rising to 4 weeks for more than 5 years, plus an extra week for employees over 45 with at least 2 years of service. Pay in lieu is allowed, and awards set the notice employees must give. |
| Retirement and social security | Employers and employees each pay 6.2% Social Security tax on wages up to $184,500 in 2026, plus 1.45% each for Medicare with no wage cap. There is no compulsory employer pension, though some states require access to a payroll savings scheme. | On top of wages, employers pay the Superannuation Guarantee at 12% of qualifying earnings. Payday Super has applied since 1 July 2026, so contributions go out with each pay and must arrive in the fund within 7 business days. Australia has no separate employer social security levy. |
| Dismissal protection | Employers may dismiss at will, but never for discriminatory or retaliatory reasons, which federal laws such as Title VII, the ADA and the ADEA prohibit, along with state laws. | After the minimum employment period, employees can claim unfair dismissal if an award or agreement covers them or they earn under the high income threshold, $190,100 from 1 July 2026. Protection against adverse action under the general protections starts on day one, and small businesses may rely on the Small Business Fair Dismissal Code. |
Frequently asked questions
Do US employees get annual leave?
Not by law. No federal rule requires paid vacation, so leave depends on your own PTO policy, and a generous one is usually needed to compete for good people.
What is the E-3 visa?
A US work visa available only to Australian citizens in specialty occupations. It is often the simplest route for moving an Australian employee to the US.
Can I give notice and end employment at any time?
In every state except Montana, employment is usually at will. Dismissal still cannot be discriminatory or retaliatory, and severance is often paid in exchange for a signed release.
