United States – Employment Terms and Conditions

What are the standard working hours in the United States, and how is overtime regulated?

No federal statute caps the number of hours an adult employee may be asked to work each week. While 40 hours spread across five days has become the accepted norm for full-time and salaried positions, this is a convention rather than a legally enforceable limit. Employers across many industries can and do demand longer schedules, and workers generally enjoy limited statutory recourse against excessive hours beyond the obligation for overtime pay.

The Fair Labor Standards Act (FLSA) compels covered employers to pay the federal minimum wage for every hour worked, along with overtime compensation for all hours exceeding 40 in a single workweek. The overtime rate under the FLSA is one and one-half times an employee’s standard rate of pay — a figure commonly referred to as “time-and-a-half.”

Overtime eligibility does not extend to everyone. Certain categories of workers — chiefly those in executive, administrative, and professional roles — are classified as “exempt” when they satisfy both a salary-level threshold and a duties test. Following a November 2024 court ruling that invalidated a proposed upward revision, the minimum weekly salary required for these exemptions reverted to $684. The U.S. Department of Labor’s Wage and Hour Division publishes current exemption thresholds, which remain subject to ongoing legal and regulatory developments.

The FLSA imposes no federal requirement for rest breaks for adult employees, though many states have enacted their own rules in this area. Where an employer does permit short breaks — typically lasting between 5 and 20 minutes — federal guidance generally treats that time as compensable work time. Meal breaks lasting at least 30 minutes are ordinarily unpaid, provided the employee is completely relieved of all duties. Industries including healthcare, agriculture, and transportation may face additional sector-specific regulations governing hours of work.

What employment rights and benefits are workers entitled to in the United States?

The United States offers a comparatively modest statutory floor of employment benefits relative to most other high-income economies. Where countries such as Germany, France, and Japan mandate minimum paid leave and sick pay through legislation, the majority of employment benefits in the US flow from individual contracts or collective bargaining agreements rather than federal law. What you are actually entitled to will depend substantially on your employer and the state where you are based.

Annual leave: No federal law obliges employers to provide paid vacation time. Most full-time employees receive paid leave through their employment contract — typically 10 to 15 days per year for new starters, with allocations often growing in line with tenure. Several states have introduced their own accrual requirements, so it is worth checking the labour laws of your specific state.

Sick leave: There is no federal entitlement to paid sick leave for the majority of private-sector employees. A growing number of states and municipalities — including California, New York, and Washington — have introduced mandatory paid sick leave schemes, though requirements differ considerably from one jurisdiction to another. Consult the relevant state labour authority for the rules that apply to you.

Public holidays: Eleven federal public holidays are recognised, but private employers are under no legal obligation to grant employees paid time off on these days. Whether you receive holiday pay depends on your individual contract or any collective agreement in place.

Maternity and parental leave: The federal Family and Medical Leave Act (FMLA) entitles qualifying employees to up to 12 weeks of unpaid leave annually following the birth or adoption of a child, or to provide care for a seriously ill family member. To be eligible, a worker must have been employed by the same employer for a minimum of 12 months and have logged at least 1,250 hours during the preceding year, with the employer having 50 or more employees. States such as California, New York, New Jersey, and Washington have established paid family leave programmes that complement FMLA protections. Federal employees operate under a separate and more generous entitlement framework.

Notice periods: The United States is predominantly an “at-will” employment country, which means either party may bring the employment relationship to an end at any point and without prior notice, unless a contract or collective agreement dictates otherwise. There is no general federal minimum notice period applicable to private-sector employment.

Foreign nationals with valid employment authorisation are generally afforded the same statutory protections as any other worker. The Equal Employment Opportunity Commission (EEOC) enforces anti-discrimination laws without regard to national origin or immigration status.

What are the rules around minimum wage and pay in the United States?

The federal minimum wage has been fixed at $7.25 per hour since 2009. Unlike some other countries, the Fair Labor Standards Act contains no automatic mechanism to adjust the federal rate in line with inflation or economic indicators — raising it requires an act of Congress, and no such legislation has been passed since 2009 (as of 2025).

States are free to set their own minimum wage levels, provided they do not fall below the federal rate. Employers are required to pay workers whichever is the highest rate prescribed by federal, state, or local law. As of July 2025, 22 states and the District of Columbia have adopted minimum wages that exceed the federal level.

Among statewide or district-wide rates, the District of Columbia leads at $17.95 per hour, effective July 1, 2025. New York sets its rate at $17.00 per hour in New York City, Long Island, and Westchester, and $16.00 per hour elsewhere in the state. At the local level, some cities go further still: Tukwila, Washington, holds the highest locally mandated minimum wage as of 2026 at $21.65 per hour, while Seattle mandates $21.30 per hour for all employers.

Nineteen states and Washington D.C. index their minimum wages to inflation, enabling automatic annual adjustments in response to price changes. In states without indexing provisions, raising the minimum wage requires specific legislative action. Always verify the applicable rate in your location via the Department of Labor’s state minimum wage page.

Special rules apply to tipped workers. Under the FLSA, employers may credit employees’ tips against their wage obligation, reducing the cash wage they are required to pay directly. The federal tipped minimum wage stands at $2.13 per hour, though states may establish higher floors. Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington apply the same minimum wage to both tipped and non-tipped workers.

How does the employment contract system work in the United States?

Employment relationships in the US are underpinned by the doctrine of “at-will employment,” which distinguishes the American model from the more protective frameworks found in many other parts of the world. Much like Canada’s common law employment approach, contracts may be written or implied, but the default assumption — in the absence of any agreement to the contrary — is that either party may end the relationship without cause or prior notice.

Types of employment: The most prevalent arrangement is an open-ended permanent full-time role. Fixed-term contracts exist but are less common outside academic settings and project-based work. Part-time employment is widespread and carries the same FLSA protections on an hourly basis. Independent contractor arrangements are also frequently used, though the misclassification of employees as contractors is a significant legal issue and the subject of sustained regulatory scrutiny.

Contract content: Federal law does not require employment offers to be committed to writing, nor does it mandate that contracts contain particular terms — though written offer letters and employee handbooks have become standard practice. A typical contract covers pay rate, job title, working hours, benefits, and at-will status. Non-compete and non-disclosure clauses are common, particularly in technology, finance, and professional services; their enforceability varies by state, and California notably prohibits most non-compete agreements.

Probationary periods: These are not regulated at the federal level. Many employers informally designate the first 90 days as a probationary period during which full benefits may not yet apply, but the at-will principle means a worker can be dismissed at any point regardless of probationary status, unless a contract expressly states otherwise.

Termination protections: While at-will employment grants employers considerable latitude, dismissing an employee for discriminatory reasons — including race, sex, religion, national origin, disability, and age, among other protected characteristics — is unlawful under federal law. The EEOC enforces these protections. Some states provide additional wrongful dismissal remedies beyond the federal floor. Workers covered by collective bargaining agreements typically enjoy stronger “just cause” protections against dismissal.

How does the workplace pension system work in the United States?

The US retirement savings system is voluntary and largely employer-driven, standing in marked contrast to compulsory contribution frameworks such as Australia’s superannuation system or the United Kingdom’s auto-enrolment regime. Rather than mandating workplace pension contributions by law, the US encourages retirement saving through tax-advantaged accounts.

The most widely used employer-sponsored retirement vehicles are 401(k) plans for private-sector workers and 403(b) plans for employees of non-profit organisations and educational institutions. Both are defined contribution arrangements, meaning the eventual retirement balance reflects the amount contributed over time and the investment performance achieved. Contributions are typically made on a pre-tax basis, reducing taxable income in the year they are made, and investments accumulate tax-deferred until funds are withdrawn.

Many employers sweeten participation by matching a proportion of employee contributions up to a set ceiling — a common incentive for workers to save. However, there is no federal obligation requiring employers to offer a retirement plan at all, let alone to contribute to one. Vesting schedules, which determine when employer contributions become fully owned by the employee, differ from one plan to another.

Individuals can also open an Individual Retirement Account (IRA) independently of any employer arrangement. These tax-advantaged personal savings accounts are particularly useful for self-employed workers or those whose employer does not sponsor a 401(k). For the 2025 tax year, eligible workers may contribute up to $7,000 per year to an IRA ($8,000 for those aged 50 or over), subject to having qualifying earned income. Rules governing private pension plans fall under the jurisdiction of the Internal Revenue Service (IRS) and the Department of Labor’s Employee Benefits Security Administration.

What types of pension arrangements are available to expats in the United States?

Expats working lawfully in the United States and subject to US payroll taxes are generally eligible to participate in the same 401(k) plans and IRAs as any other worker, provided they hold valid work authorisation and have qualifying earned income. There is no citizenship requirement for participation in employer-sponsored retirement savings schemes.

Regarding the Social Security system, foreign nationals who work and pay Social Security taxes in the US accumulate credits that may contribute towards a future US Social Security benefit — even if they subsequently return to their home country. The US has entered into totalization agreements with a number of countries designed to eliminate dual Social Security coverage, ensuring that workers pay taxes to only one system at a time. These agreements also assist individuals who have divided their working lives between the US and another country but have not built up sufficient credits in either to qualify for benefits independently.

Under these totalization arrangements, the Social Security Administration can combine work credits earned in a partner country with US credits to help a worker meet the eligibility threshold for US benefits. As of 2025, the US has active totalization agreements with approximately 30 countries. The Social Security Administration’s international agreements page lists current partner countries.

Foreign pension income received while residing in the US is generally taxable. Amounts received from overseas pensions or annuities may be fully or partially liable to US tax, even in the absence of a Form 1099 or equivalent reporting document. As a general principle, the pension and annuity articles of most income tax treaties allocate taxing rights to the country of residence, though the precise provisions vary from treaty to treaty. Always verify your personal circumstances with the IRS or a suitably qualified tax adviser.

Eligibility rules for both US Social Security and home-country pensions are subject to revision. Confirm your current position with the Social Security Administration and your home country’s pension authority before finalising any retirement planning decisions.

What is the retirement age in the United States, and how does the pension eligibility system work?

Workers who have met the qualifying criteria may begin drawing Social Security old-age payments from age 62. Claiming at that early age, however, permanently reduces the monthly benefit amount. For individuals claiming in 2025 — those born in 1960 or later — the full retirement age at which unreduced benefits become payable is 67. This age applies equally to men and women. Workers born between 1943 and 1959 reach full retirement age at 66, or at 66 plus a specified number of months depending on their precise birth year.

Deferring a claim beyond full retirement age increases the monthly benefit further. The maximum monthly benefit for those reaching full retirement age of 67 in 2025 stands at $4,018, climbing to $4,982 per month for those who postpone claiming until age 70. No further enhancement accrues beyond 70, making that the effective upper limit for delayed claiming.

Social Security is funded primarily through a 12.4% payroll tax applied to annual wages up to the taxable maximum, which is $176,100 in 2025. To qualify for a retirement benefit, a worker must generally have accumulated at least 40 work credits — broadly equivalent to around 10 years of covered employment. Workers who have accumulated fewer than 40 credits will not normally receive a US Social Security retirement benefit unless a totalization agreement with their home country permits the combination of credits from both systems.

No policy change raising the full retirement age beyond 67 has been announced as of 2025, though the long-term financial health of the Social Security trust fund continues to be debated by policymakers. The Social Security Administration (SSA) is the definitive source for up-to-date information on eligibility conditions and benefit calculations.

What taxes and social contributions are deducted from wages in the United States?

Employers in the US deduct several mandatory charges from employee wages through a payroll withholding system that broadly resembles the PAYE mechanisms used in countries such as the UK and Ireland. The principal deductions are federal income tax, state income tax (where it applies), Social Security tax, and Medicare tax.

Federal income tax operates on a progressive basis. For the 2025 tax year, rates range from 10% on the lowest band of taxable income up to 37% on income above approximately $626,350 for single filers. Employees submit a Form W-4 to indicate their withholding preferences, and any difference between amounts withheld and actual liability is settled when filing an annual tax return (Form 1040) by the April deadline. The Internal Revenue Service (IRS) is the federal tax authority.

Social Security tax is levied at a combined rate of 12.4% on annual wages up to $176,100 in 2025, shared equally between employer and employee — meaning 6.2% is withheld from the employee’s pay and a matching 6.2% is contributed by the employer.

Medicare tax adds a further 2.9% payroll levy, again split equally at 1.45% apiece, which finances the federal health insurance programme for people aged 65 and over. Individuals earning above $200,000 as single filers are subject to an additional 0.9% Medicare surtax on the excess.

State income tax differs substantially across the country. The majority of states impose their own income tax, but Florida, Texas, Nevada, Washington, and a small number of others levy none. Rates and brackets vary widely, and certain cities impose a local income tax on top of state obligations.

Foreign nationals employed in the US are generally subject to the same payroll taxes as domestic workers. Non-resident aliens may be taxed differently on particular income streams and may be liable to a flat 30% withholding rate on certain US-source income unless a bilateral tax treaty reduces that figure. The IRS International Taxpayers section and Publication 519 (US Tax Guide for Aliens) provide detailed guidance for those in this position.

What are the rules around trade unions and collective bargaining in the United States?

Union membership in the United States is markedly lower than in most comparable economies. Data from the Bureau of Labor Statistics indicate that union membership has hovered around 10% of the workforce in recent years, with the greatest concentration in public-sector roles spanning education, government, transport, and utilities, as well as sectors such as construction, healthcare, and manufacturing. Private-sector union density overall remains considerably lower.

The principal federal statute governing union activity is the National Labor Relations Act (NLRA), which is administered and enforced by the National Labor Relations Board (NLRB). The NLRA confers on most private-sector employees the right to organise, affiliate with a union, and bargain collectively with their employer. Public-sector union rights are governed by distinct federal and state legislation and vary considerably depending on the state. A number of states have enacted “right-to-work” laws, which prohibit making union membership or the payment of union dues a condition of employment.

Where a collective bargaining agreement (CBA) is in force, it typically establishes wages, working hours, leave entitlements, health benefits, and grievance procedures. Employees covered by a CBA generally enjoy more robust job security than their at-will counterparts, as dismissal ordinarily requires a demonstrable “just cause.” CBAs are negotiated between the union and the employer and apply to all workers in the bargaining unit, irrespective of whether they are individually union members.

Foreign nationals working lawfully in the US are generally entitled to join and participate in trade unions on the same footing as domestic workers. The NLRA imposes no citizenship or permanent residency requirement for union membership. The National Labor Relations Board can provide further guidance on workers’ rights under the Act.

Are there any particular employment protections or challenges that expats should be aware of in the United States?

Visa-tied employment: Most employment-based visas — including the H-1B, L-1, and O-1 — bind the holder to a particular employer or position. If you change jobs, are made redundant, or have your role substantially altered, your visa status may be affected, potentially requiring a fresh application or a transfer of employer sponsorship. This dependency creates an imbalance that can make it harder to push back against unfavourable employment terms or workplace mistreatment. If your employment comes to an end, you typically have a limited window — often 60 days for H-1B holders — to secure new sponsorship before your immigration status lapses.

At-will employment risk: Because the US affords little statutory protection against dismissal without cause, expats on employer-sponsored visas face a compounded vulnerability: losing a job simultaneously jeopardises their right to remain in the country. Wherever possible, negotiating contractual protections such as a severance arrangement or a guaranteed notice period before signing is a sensible precaution.

Overseas qualification recognition: The US has no unified national framework for recognising professional qualifications obtained abroad. Regulated occupations — encompassing medicine, law, nursing, engineering, and teaching, among others — are licensed at the state level, and requirements differ from one state to the next. Foreign-trained professionals should approach the relevant state licensing board before assuming their overseas credentials will be accepted. Additional examinations or supervised practice periods are often required regardless of the length of experience gained abroad.

Healthcare: Unlike the NHS in the UK or Germany’s statutory health insurance model, the US provides no universal public healthcare for working-age adults. Employer-sponsored health insurance is the most prevalent arrangement for full-time workers, but it is not legally required of all employers — the Affordable Care Act compels employers with 50 or more full-time equivalent staff to offer coverage, but smaller employers face no such obligation. Expats should clarify healthcare provision before commencing work and build private insurance costs into their financial plans if employer coverage is not available.

Language and contract clarity: All employment documentation in the US is in English. If you are not fully comfortable reading legal English, having a lawyer or trusted adviser look over your contract before you sign is strongly advisable. Many employment agreements contain detailed restrictive provisions — including non-compete clauses, mandatory arbitration requirements, and broad intellectual property assignment terms — that could significantly constrain your future options.

The U.S. Department of Labor and the Equal Employment Opportunity Commission (EEOC) are the primary federal bodies responsible for handling workers’ rights complaints and providing guidance.

How do I navigate the US employment system as an expat: a step-by-step overview

1. Confirm your work authorisation. Before accepting any employment offer, ensure you hold valid work authorisation — whether through an employment-based visa (such as the H-1B, L-1, O-1, or TN), a Green Card, or another status that permits work. Your employer will verify this through the I-9 Employment Eligibility Verification process.
2. Review your employment contract carefully. Examine at-will clauses, notice periods, non-compete and non-disclosure provisions, arbitration requirements, and the conditions under which your visa sponsorship is linked to your continued employment. If any clause is unclear, consider engaging an employment lawyer before signing.
3. Understand your payroll deductions. Complete IRS Form W-4 for federal income tax withholding purposes, along with any equivalent form required by your state. Confirm with your payroll department that Social Security and Medicare contributions are being correctly deducted — these accumulate towards future US benefit entitlements.
4. Enrol in your employer’s benefits and retirement plans. Most employers schedule an open enrolment period — typically around the time you start — for health insurance and 401(k) plan participation. Missing this window may mean waiting up to a year for the next opportunity. Clarify whether your employer makes matching retirement contributions and familiarise yourself with the applicable vesting schedule.
5. Register with the relevant tax authorities. Obtain a Social Security Number (SSN) or, if you are ineligible for one, an Individual Taxpayer Identification Number (ITIN). Submit a US federal income tax return each year by the April deadline; non-resident aliens file using Form 1040-NR. Investigate whether your home country has a tax treaty with the US that influences your withholding obligations.
6. Check your state’s specific labour protections. Rules governing paid sick leave, minimum wage, break entitlements, and the enforceability of non-compete agreements vary by state. Consult the labour standards division of the state where you work to identify any additional rights that go beyond the federal floor.
7. Know your rights if your employment ends. Familiarise yourself with the grace period your visa allows following termination and seek prompt advice from an immigration attorney if your employment ends unexpectedly. Submit a claim for any unemployment insurance benefit to which you may be entitled through your state’s workforce agency.

Frequently asked questions

Are my overseas professional qualifications recognised in the United States?

There is no single national recognition framework in place. Regulated professions — including medicine, law, nursing, architecture, and engineering — are licensed at the state level, and the requirements that apply differ significantly between states. Foreign-trained professionals generally need to approach the relevant state licensing board directly and may be required to sit US-specific examinations or complete a supervised practice period before being permitted to practise. For roles that do not require a state licence, employers have discretion over whether to accept overseas qualifications.

What happens to my Social Security contributions if I leave the United States?

Totalization agreements between the US and partner countries are designed to assist workers who have divided their careers between two countries but have not accumulated sufficient credits in either to qualify for benefits on their own. If you have built up US credits but fewer than the 40 required, and your home country has a totalization agreement with the US, credits from both systems may be combined to establish eligibility. US Social Security benefits can be claimed from abroad once you reach the qualifying age. Visit the SSA website to see whether your country has a current agreement and to understand the options available to you.

Do I have employment rights during a visa transfer or change of employer?

Your entitlements under federal and state employment law — including minimum wage, anti-discrimination protections, and overtime — continue to apply for as long as you are working with valid authorisation. During the interval between positions while a visa petition is pending with USCIS, however, your right to continue working depends on the type of visa involved and any applicable portability provisions. H-1B portability rules, for example, permit workers to begin a new job once a transfer petition has been filed, subject to certain conditions being met. Consult an immigration attorney before switching employers to fully understand your position.

Can my employer require me to work more than 40 hours a week without extra pay?

If you are classified as “non-exempt” under the FLSA, your employer is obliged to pay you at the overtime rate — 1.5 times your regular hourly rate — for every hour worked beyond 40 in a workweek. If you are classed as “exempt” — typically salaried professionals, managers, and executives who meet both the relevant salary threshold and a duties test — no additional overtime pay is required by law. There is no federal ceiling on the number of hours an adult employee may be required to work. If you believe you have been wrongly classified as exempt, you may lodge a complaint with the Department of Labor’s Wage and Hour Division.

Is there any statutory paid parental leave in the United States?

At the federal level, the Family and Medical Leave Act (FMLA) entitles qualifying employees to up to 12 weeks of unpaid leave following the birth or adoption of a child. Eligibility requires a minimum of 12 months’ service with the same employer, at least 1,250 hours worked during the preceding year, and the employer must have 50 or more employees. Several states — among them California, New York, New Jersey, Washington, Colorado, and Massachusetts — have introduced paid family leave programmes funded through payroll contributions. Federal government employees are covered by a separate and more generous paid parental leave entitlement.

How does the US healthcare system work for expats in employment?

The United States has no universal public healthcare system for working-age adults. Health insurance is most commonly provided as part of a full-time employment package — employers with 50 or more full-time equivalent staff are generally required under the Affordable Care Act to offer affordable coverage. Premiums are typically shared between employer and employee. Where employer-sponsored insurance is not on offer, coverage can be purchased through the federal Health Insurance Marketplace (healthcare.gov) or directly from a private insurer. Healthcare costs represent a significant financial consideration for anyone relocating to the US and should be factored carefully into pre-move planning.

Am I entitled to unemployment benefits if I lose my job?

Unemployment insurance in the US is administered by individual states and financed jointly through federal and state payroll taxes levied on employers. To be eligible, you generally must have been laid off rather than having resigned or been dismissed for misconduct, and your eligibility will depend on your employment duration and earnings history. Both benefit levels and the maximum duration of payments vary from state to state. It is important to note that claiming unemployment benefits may have implications for your immigration status if you are on a non-immigrant visa — seek advice from an immigration lawyer before applying if this situation applies to you.

Can I access my 401(k) retirement savings if I leave the United States?

Withdrawals are possible, but they carry tax and penalty consequences. Taking 401(k) funds before reaching age 59½ will generally trigger income tax liability plus a 10% early withdrawal penalty. In many cases it is more tax-efficient to leave the funds invested until you reach the eligible age, transfer them into an IRA, or — in certain circumstances — roll them into a qualifying plan in your new country of residence, though applicable tax treaty provisions differ widely. Income from foreign pensions or annuities may remain partially or fully taxable under US rules even after you have left the country, so obtaining tailored financial advice before initiating any withdrawal is strongly recommended.

Does working in the United States affect my home-country pension entitlement?

The answer depends entirely on the rules of your home country’s pension system and whether it has a totalization agreement with the US. Where such an agreement exists, contribution periods in both countries may be combined to satisfy minimum qualifying periods for benefits in either jurisdiction. You should contact your home country’s pension authority directly to establish how your US earnings and tax contributions are treated under its rules. Do not assume your home-country entitlements will remain unaffected — some systems require ongoing contributions or continued residency to preserve existing rights, and gaps in contribution records can reduce future benefit levels.