The United States (US) labor market is evolving fast. Over 9 million* unfilled job openings, rising salaries, shifting employment regulations, and recent policy changes are shaping how businesses hire in 2025 and beyond.
Hiring trends in the US, 2025
- The government is rolling back federal affirmative action* requirements for contractors.
- New-hire salaries* are increasing across industries due to tight labor markets and inflation.
- Labor shortages* in key industries—from tech to healthcare—drive demand for domestic talent.
- Besides established hubs like Silicon Valley and New York City, IT talent hotspots are rising in more affordable cities such as Austin and Dallas.
- Visa restrictions and labor shortages make it harder for global businesses to bring in overseas talent.
Hiring employees within the US has become essential for businesses to succeed in this dynamic environment. But setting up an entity, managing payroll, and complying with federal laws and a patchwork of 50 different state laws can be challenging, especially for new entrants.
This guide offers clear, practical insights to help you confidently decide whether in-house hiring or partnering with an Employer of Record (EOR) is the smarter way to hire staff and build your US team.
Why do businesses hire people in the US
The US offers one of the world’s most diverse and dynamic talent pools. From Silicon Valley to financial hubs like New York, the workforce spans industries and specialties.
Some advantages include:
- A skilled talent pool
Access a workforce of over 168 million* people - Innovation-driven work culture
The US ranks 3rd out of 133* economies - Strong IP protection
The US leads globally in IP rights protection* - Expanded market reach
A mature consumer market and strong infrastructure
While the advantages of hiring employees in the US are clear, the actual recruitment process can be more complex.
US hiring: Complexities and cost considerations
When setting up an entity and hiring people in the US, employers must navigate federal employment regulations, like the Fair Labor Standards Act (FLSA) and anti-discrimination laws—and state-level laws governing wages, termination, and benefits.
They must also consider the hidden costs of hiring US staff.
Hiring an employee typically costs 1.25 to 1.4 times their base salary, factoring in:
- Payroll taxes. Social Security and Medicare contributions [FICA], federal and state unemployment taxes [FUTA/SUTA], state disability insurance [SDI], where applicable
- Mandatory benefits. Health insurance (for companies with 50+ employees) under the Affordable Care Act, workers’ compensation insurance, and unemployment insurance.
- Administrative costs. Payroll processing fees, HR administration time, legal and accounting services, compliance reporting, and employee onboarding expenses)
Before you begin the recruitment process, decide how you’ll manage this complexity: in-house or with an Employer of Record (EOR).
Simplifying US recruitment: What is an EOR and how does it help?
In a country like the US, where employment laws vary from state to state, navigating hiring can be complex. That’s where an Employer of Record (EOR) can help: it simplifies every step, from compliance to onboarding.
How to hire workers in the US: A strategic playbook
Let’s walk through what the hiring process actually looks like—and how it compares when hiring employees in-house versus partnering with an EOR.
Step 1: Set up your US entity and get an EIN
For in-house hiring, you must register your company in the US. This involves choosing your business structure (LLC, C-Corp, etc.) and registering it with the appropriate state authorities. Then, you must obtain a Federal Employer Identification Number (EIN) from the IRS for tax and payroll obligations.
With an EOR:
Setting up a US legal entity can take weeks, varies by state, and requires ongoing reporting and tax compliance. An EOR lets you bypass all that—legally hire full-time US employees without company registration.
This is especially valuable if you’re hiring in just one or two states, testing the market, or expanding gradually.
Step 2: Register for payroll and taxes in each state
Payroll in the US isn’t one-size-fits-all. You must register separately for state payroll taxes and unemployment insurance wherever your employees are based. You’ll also set up workers’ compensation insurance, which varies from state to state.
With an EOR:
An EOR manages payroll calculations, withholdings, and contributions in each state. It helps you ensure timely and accurate payments to employees across the US (and any other countries where you have employees or contractors).
Step 3: Familiarize yourself with federal and state employment laws
The US has employment regulations at multiple levels. Familiarize yourself with essential federal laws like:
- Fair Labor Standards Act (FLSA),
- Americans with Disabilities Act (ADA), and
- Family and Medical Leave Act (FMLA).
You must also understand state-specific rules for minimum wage, overtime pay, paid leave, termination policies, and required notice periods — especially when hiring across multiple states.
Violating employment laws can mean expensive penalties and reputational damage. If you do not have the internal expertise to understand and manage compliance, you may need to hire employment lawyers, tax advisors, and HR compliance consultants.
With an EOR:
You don’t need to learn or keep track of the changing state and federal laws and mandates. The EOR is responsible for adherence to employment laws and manages employee benefits according to local regulations.
Step 4: Define roles, source talent, and evaluate candidates
The next step is talent acquisition: defining job requirements, choosing the right hiring channel, and evaluating your candidates.
In the US, choosing the right employment type is critical as it affects tax obligations, benefits, legal protections, and management. When creating your job descriptions, start by deciding if the role is:
- A full-time employee who works 30+ hours per week and is eligible for benefits like health insurance, paid leave, and retirement plans.
- Part-time employee, working fewer hours, and who may not be eligible for the same benefits, but is still subject to wage and hour laws.
- Contractor (independent contractor) who works independently on specific projects or time-bound tasks and is ineligible for employee benefits and subject to different tax treatment.
Clearly defining the role from the start can help prevent misclassification errors early on (more on this in the next step).
Next, identify where your target candidates spend time—whether that’s LinkedIn, niche job boards, or industry-specific recruiters. In the US, different roles call for different channels: tech talent often comes through LinkedIn or GitHub, while it’s easier to reach healthcare and hourly workers through specialized platforms.
Once you’ve identified potential candidates, use structured interviews, role-specific assessments, and background checks to assess candidates based on skills and job fit — not personal details. In the US, interviews are typically formal and focused on the role. Asking about age, marital status, family plans, or health can violate anti-discrimination laws.
After selecting your candidate, extend a conditional offer contingent upon successful background verification. Your background check should cover references, criminal records, education, and employment history.
A role-based evaluation process improves hiring quality and creates a better candidate experience. It strengthens your employer brand and helps you make faster, more confident decisions.
With an EOR:
Sourcing and engaging the right candidates takes time and effort. An EOR reduces your HR team’s administrative workloads, handling onboarding compliance, employment contracts, and payroll, so your team can focus on what matters.
Step 5: Draft compliant contracts, prevent misclassification
Now that your role is defined and a candidate selected, it’s time to put it into an employment contract or offer letter. This document must clearly outline:
- Salary and payment terms
- Working hours and job duties
- Benefits offered
- At-will status (where applicable)
- Termination clauses and notice periods
A watertight contract protects you and the employee. This is where the classification decisions we mentioned earlier become critical. In the US, misclassification penalties can go as high as $1000 per worker, 100% of employees’ unpaid taxes, and 20% of missed employee wages.
To avoid this, you must understand the differences between employees and independent contractors as defined by the IRS and Department of Labor(DOL) guidelines*. Your HR teams must maintain proper documentation and stay updated on evolving classification standards, especially as they vary by state.
With an EOR:
An EOR involves local HR and legal expertise to draft compliant contracts and ensure every hire is classified correctly — reducing your risk of audits or legal disputes.
Step 6: Onboard compliantly
Onboarding is an important step for engaging your new hires, but in the US, it is also critical for compliance. A structured process helps you streamline the process.
- Have each new US hire complete Form I-9 to confirm their eligibility to work.
- Share mandatory labor law posters and policies.
- Set up employee accounts and payroll information immediately.
- Coordinate IT setup in advance so your employees get timely access to company systems, tools, and devices.
Getting all these steps right supports productivity, strengthens data security, improves employee experience from day one, and sets a strong foundation for compliant workforce management.
With an EOR:
Your EOR simplifies and accelerates onboarding across states by standardizing documentation and automating compliance steps. You stay aligned with state-specific regulations, your new hires are prepped to contribute from day one, and your business remains agile and ready to scale.
Compliant, streamlined hiring in the US takes time, effort, and deep local knowledge. You’re navigating different rules in every state, ongoing payroll administration, and the constant risk of falling out of compliance.
And if you’re managing all of that in-house, it’s easy to fall behind — especially as the talent market moves fast. An EOR simplifies every step and checks every compliance box so you can focus on building a high-performing team.
US Hiring: An employer’s checklist
- Job descriptions that align with US classification rules
- Contracts that reflect federal and state labor laws
- Payroll and tax registrations in every hiring state
- Mandatory benefits setup (e.g., Social Security, unemployment insurance)
- Form I-9 verification and required documentation
- State-specific onboarding and reporting requirements
Beyond the checklist, compliance doesn’t stop at onboarding. From tax filings and benefits eligibility to labor law updates and classification reviews, staying compliant is an ongoing responsibility.
An EOR manages these tasks continuously—so you don’t have to. Here is a snapshot view of what hiring looks like in-house versus with an Employer of Record.
In – house hiring vs. using an Employer of Record (EOR)
If you already have an entity and a strong HR and legal team in the US, in-house hiring may work. But if you’re just starting, or speed, compliance, and cost-efficiency matter — an EOR like Multiplier could be an elegant and practical alternative.
With Multiplier, you get:
- Compliant US employment contracts within minutes
- Automated tax withholdings and payroll
- All-in-one platform to simplify HR tasks across onboarding, benefits, and more
- Complete compliance with federal and state laws
Why HR teams love Multiplier for global hiring in the US and beyond
When moving into the US, your EOR should provide compliance, cost-efficiency, and ease of use—without hidden complexities.
Multiplier delivers on all three. We ensure full compliance across 50 states, provide dedicated, hands-on support, and offer flat, transparent pricing that allows you to scale without unexpected costs.
HR teams love how they can manage their US workforce without chasing state-by-state legal updates, juggling multiple payroll systems, or relying on third-party vendors for basic compliance.
Book a demo today to see how Multiplier can help you expand into the US with confidence.
Frequently asked questions (FAQs)
1. What are the legal requirements for hiring employees in the US?
Employers must obtain an Employer Identification Number (EIN) from the IRS and verify each employee’s identity and employment eligibility using Form I-9. Compliance with federal statutes such as the Fair Labor Standards Act (FLSA), which governs minimum wage, overtime pay, and child labor laws, is mandatory. Additionally, you must adhere to Occupational Safety and Health Administration (OSHA) standards to ensure workplace safety. As an employer, you are also obligated to establish payroll systems for accurate tax withholding and reporting.
2. How do I navigate state-specific labor laws in the US?
Each state enforces distinct employment laws addressing aspects like wages, benefits, leave policies, and termination procedures. Employers must stay informed about these changing regulations to ensure compliance. Engaging an Employer of Record (EOR) can be advantageous, as they specialize in managing such complexities and mitigating compliance risks.
3. How much does it cost to hire an employee in the US?
The average cost per hire is approximately $4,700, encompassing recruitment, onboarding, and training expenses. Beyond the base salary, employers should anticipate additional costs ranging from 25% to 40%, which cover benefits, payroll taxes, and compliance-related expenditures.
4. How do companies ensure compliance with US payroll regulations?
Companies must meticulously calculate wages, withhold appropriate taxes, and on-time file payroll tax returns. Compliance with regulations such as the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA) is essential. You must implement reliable payroll software or outsource to payroll experts for accuracy and regulatory adherence.
5. Can small businesses in the US benefit from EOR services?
Absolutely. EORs assist small businesses by managing payroll, compliance, and human resources tasks, allowing business owners to concentrate on growth initiatives. They facilitate hiring without the necessity of establishing a legal entity, rendering expansion both cost-effective and efficient.
6. What are the advantages of hiring in the US for global businesses?
Hiring in the US provides access to a skilled workforce, strong legal infrastructure, and market insights. It enhances brand credibility, fosters innovation through R&D, and offers tax incentives. A US presence strengthens competitive positioning, accelerates growth, and builds long-term success in one of the world’s largest and most dynamic markets.
*Sources
U.S. Chamber of Commerce: Understanding America’s Labor Shortage
SHRM: Trump Rescinds Affirmative Action Requirements for Federal Contractors
Aon: New-Hire Salaries Are Rising Along With Concerns About Pay Equity
Statista: Civilian Labor Force in the US since 1990
WIPO: United States of America ranking in the Global Innovation Index 2024
Property Rights Alliance: International Property Rights Index 2024
US Department of Labor: Small Entity Compliance Guide
