Employer of Record (EOR) in United States of America
An EOR in the United States allows businesses to enter the market quickly and maintain compliance with complex federal, state, and local laws, all while reducing the overhead costs of establishing a local entity. Atlas HXM offers a seamless EOR service that handles all aspects of employment for workers who already have valid authorization to work in the United States, from payroll processing to comprehensive compliance administration.
Partner with Atlas HXM for a cost-effective, compliant solution to hire and manage your workforce across all 50 states.
Quick Overview of EOR in United States of America
Expanding into the United States does not have to mean drowning in paperwork or hefty setup costs. With an Employer of Record (EOR), you can bypass the complexities of federal, state, and local regulations and quickly hire employees, all while maintaining compliance with America's intricate labor laws. From payroll processing and tax compliance to benefits management, an EOR takes care of the legal essentials like Social Security, Medicare, and unemployment insurance contributions, so you can focus on growing your business without the need to set up a costly local entity.
The EOR model offers a low-risk, cost-effective alternative to setting up a subsidiary. Establishing a local entity in the United States can cost anywhere from USD 15,000 to USD 50,000 plus the cost of maintaining human resources (HR), legal assistance, accountants and more. Ongoing costs including HR, legal, and accounting support add further to this figure. It can also become highly administrative. By partnering with an EOR, you can avoid these setup costs and enter the market faster, without the overhead of a physical office. This is especially beneficial for startups, SMEs, and businesses testing new markets, who need to act quickly and comply with complex multi-jurisdictional regulations.
How an EOR Works
Atlas HXM provides EOR services that ensure your business remains compliant with US labor laws while you focus on growing your operations, free from administrative and legal burdens.
Candidate Selection
Atlas HXM does not recruit candidates, but will conduct compliance checks for new hires like validating right-to-work, reviewing contract terms against US federal and state rules, and configuring payroll and statutory obligations correctly. Anyone hired via EOR must already hold valid work authorization or be sponsored by the client's own entity.
Employment Contracts
Atlas HXM drafts and administers employment contracts in compliance with federal and state employment laws. In the contract, we clearly outline employment terms to reduce the risk of future disputes, such as:
Job title and responsibilities
Salary, benefits, and working hours
Leave entitlements and notice periods
Payroll & Benefits Management
Payroll is processed in US dollars (USD), including:
Accurate tax withholdings and Social Security/Medicare contributions
Statutory benefits such as unemployment insurance and workers' compensation
The EOR also helps maintain compliance with mandatory benefits, so employees are protected under US laws.
Work Permit Compliance
In the United States, EOR providers typically cannot sponsor work visas but can verify work authorization through Form I-9 compliance. Once a worker already has valid authorization, Atlas HXM manages compliant employment, payroll, tax obligations, and statutory requirements in alignment with federal and state regulations.
Ongoing HR Support
Atlas HXM provides ongoing HR support throughout the employee's tenure, including leave management, employee relations, and regulatory updates. This allows businesses to focus on core operations, while Atlas HXM handles ongoing compliance.
What to Choose: EOR vs PEO
Work Life in USA
The United States employment framework is designed around the at-will employment doctrine while balancing operational needs with employee protections. Here's what you need to know:
Employment Types:
Permanent: At-will employment with full statutory benefits.
Fixed-Term: Hired for a specific project or defined duration.
Temporary: Short-term assignments; entitled to statutory benefits like overtime and workers' compensation.
Probation Periods: There is no federal legal requirement for probation periods, but they are commonly used and typically range from 30 to 180 days (90 days most common). These periods allow employers to assess employee suitability and may affect benefit eligibility. The EOR ensures that all terms are compliant with federal and state employment laws.
Working Hours & Overtime: In the United States, the standard full-time workweek is typically 40 hours. Under the Fair Labor Standards Act (FLSA), non-exempt employees must receive overtime pay at 1.5 times their regular rate for hours worked over 40 in a workweek. Some states have additional daily overtime requirements. The EOR ensures that all overtime is calculated correctly and that employee work hours comply with federal and state regulations.
Leave Entitlements
Leave Type | Eligibility / Duration | Payment / Notes |
|---|---|---|
Annual Leave | No federal requirement; typically 10-25 days based on employer policy | Paid by employer when provided; varies by state for payout requirements |
Maternity/Paternity Leave | Up to 12 weeks under FMLA (unpaid); some states offer paid programs | Unpaid federally; state programs provide partial wage replacement |
Sick Leave | No federal requirement; many states mandate paid sick leave | Varies by state; typically 1 hour per 30-40 hours worked |
Public Holidays | No federal requirement for private employers | Voluntary benefit; typically 8-12 paid holidays when provided |
Vacation Leave | No federal requirement; employer discretion | Paid when provided; unused leave payout varies by state |
Payroll & Benefits: Wages must meet federal and state minimum wage requirements, with overtime for non-exempt employees. Atlas HXM manages payroll in USD, Social Security and Medicare contributions, federal and state tax withholdings, unemployment insurance, and workers' compensation. Supplemental benefits can include health insurance, 401(k) retirement plans, and professional development options.
Atlas HXM can help you manage these aspects and ensure that employees are supported and compliant with US labor laws while businesses can focus on operations without administrative burdens.
What to Choose: Indirect vs Direct EOR
Taxes & Compliance
The United States operates on a calendar-year tax system, running from January 1 to December 31. Employers must make payroll tax deposits according to monthly or semi-weekly schedules, file quarterly returns (Form 941) by the last day of the month following each quarter, and submit annual unemployment tax returns (Form 940) by January 31. Annual wage statements (W-2s) must be provided to employees and filed with the Social Security Administration by January 31.
Category | Details |
|---|---|
Employer Payroll Tax | Social Security: 6.2% (up to wage base of $184,500 in 2026)
|
Employee Payroll Tax | Federal income tax: progressive rates based on W-4 elections
|
Pension System | Social Security provides foundation retirement benefits
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Sales Tax & EOR Costs: The United States does not have a federal VAT system but uses state and local sales taxes. EOR services may be subject to sales tax depending on state regulations, with some states exempting business services while others may tax professional services.
Atlas HXM handles tax compliance, including federal and state income tax calculations, Social Security and Medicare contributions, unemployment insurance, and multi-state tax obligations, ensuring businesses remain compliant with local laws while minimizing administrative burden.
Termination
The United States follows at-will employment in most states, allowing either party to terminate employment at any time with or without cause or notice, subject to anti-discrimination laws and contractual obligations. Under the federal WARN Act, employers with 100 or more employees are generally required to provide 60 days' advance notice of mass layoffs or plant closings affecting 50 or more employees. Some states have enacted their own "mini-WARN" laws with lower thresholds. Severance pay is not legally required but is often provided voluntarily. The EOR helps ensure proper handling of terminations, including final paycheck requirements, COBRA notifications, and required documentation.
Visas & Work Permits
In the United States, workers must hold valid work authorization to be employed legally.
EOR providers typically cannot sponsor work visas but can verify work authorization through Form I-9 compliance. To be employed through an EOR, the employee must already hold valid authorization or have sponsorship from the client's own entity. Once authorization is in place, Atlas HXM can employ the individual under the EOR model and then manage payroll, tax obligations, benefits, and compliant employment administration.
5 Things to Look for in an EOR Provider in USA
Multi-state expertise and knowledge of federal, state, and local employment laws, tax requirements, and compliance obligations.
Advanced technology for payroll processing, benefits administration, and integration with existing HR systems.
Experience in your industry and handling complex employment situations across different jurisdictions.
Strong compliance track record with proper insurance coverage and relationships with government agencies.
Scalable solutions to support business growth, with verified security and compliance standards (SOC 2, ISO certifications).
Atlas HXM provides direct EOR services, managing payroll, compliance and benefits efficiently across all 50 states. Atlas HXM's unified platform automates HR, payroll, and compliance tasks, while offering comprehensive employee support, competitive benefits packages, and access to professional development resources. Recognized by leading industry analysts, Atlas HXM combines compliance expertise, advanced technology, and scalable solutions.
FAQs
How quickly can I hire employees through an EOR in the United States?
With an established EOR provider, you can typically hire employees within 1-3 business days once all necessary documentation is completed, including background checks and I-9 verification.
Can an EOR help with visa sponsorship for international employees?
Most EOR providers do not sponsor work visas but can employ workers who already have valid work authorization or are sponsored by the client's entity.
What happens to employees if I decide to establish my own US entity?
Employees can typically be transferred from the EOR to your new entity through a planned process that maintains employment history and benefits continuity.
Are there restrictions on employee types I can hire through an EOR?
EORs can hire most employee types but may have restrictions on high-risk positions. Independent contractors cannot be hired through an EOR.
How does an EOR handle employees working in multiple states?
Experienced EOR providers manage multi-state employment, ensuring compliance with each state's laws, tax requirements, and benefit regulations.
What compliance risks does an EOR help mitigate?
An EOR helps mitigate risks related to employment law compliance, payroll tax obligations, benefits administration, workers' compensation, and federal/state reporting requirements.