United States — Statutory Benefits & Leave

The United States is the only OECD country without a national paid leave policy. An employer hiring its first US employee must understand that federal law imposes wage and overtime minimums but does not require paid vacation, paid sick leave, or paid parental leave. This contrasts sharply with nearly every other jurisdiction in the global-employment vertical, where statutory paid leave is a baseline obligation.

Fair Labor Standards Act (FLSA) – wage and overtime only, no leave mandate. The FLSA establishes minimum wage ($7.25 per hour effective July 24, 2009), overtime pay (time-and-a-half for hours worked over 40 in a workweek), recordkeeping, and child labor standards. It does not require payment for time not worked, including vacations, sick leave, or holidays. Covered nonexempt employees must receive overtime pay at a rate not less than one and one-half times the regular rate of pay for hours worked over 40 in a workweek. The FLSA applies to enterprises with annual gross volume of sales of at least $500,000, or engaged in interstate commerce on an individual-employee basis, and covers private-sector employers, state and local government employers, and federal employees.

Many states have higher minimum wage rates; when an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher rate. The federal framework is a floor, not a ceiling.

No federal paid leave of any kind. There are no federal laws requiring paid time off. Paid sick leave, paid family leave, paid vacation, and paid parental leave are matters of agreement between employer and employee (or the employee's representative, such as a union), not federal statutory mandates. According to the Bureau of Labor Statistics National Compensation Survey, as of March 2023, only 27% of private-sector workers in the United States had access to paid family leave through their employer.

Family and Medical Leave Act (FMLA) – unpaid leave for eligible employees. The FMLA provides certain employees with up to 12 weeks of unpaid, job-protected leave per year for qualifying family and medical reasons, including the birth or adoption of a child, the employee's own serious health condition, or caring for a spouse, child, or parent with a serious health condition. The FMLA also requires continuation of group health benefits during the leave on the same terms as if the employee had continued to work.

Employer coverage threshold: FMLA applies to private-sector employers who employ 50 or more employees in 20 or more workweeks in the current or previous calendar year, all public agencies (federal, state, and local government employers, regardless of employee count), and all local educational agencies (public and private elementary and secondary schools, regardless of employee count). Employers with fewer than 50 employees have no FMLA obligation.

Employee eligibility: To be eligible for FMLA leave, an employee must have (1) worked for the employer for at least 12 months, (2) worked at least 1,250 hours over the past 12 months, and (3) work at a location where the employer has 50 or more employees within 75 miles. An employee who does not meet all three criteria has no FMLA entitlement.

The 12 weeks of FMLA leave are unpaid unless the employee substitutes accrued paid leave (if the employer offers it) or the employer voluntarily pays during FMLA leave. There is no federal requirement that the employer pay wages during FMLA leave.

State paid-leave programs overlay the federal floor. Thirteen states and the District of Columbia have enacted paid family and medical leave programs that provide wage replacement during leave (including California, New York, Washington, Massachusetts, Connecticut, and New Jersey). These state programs are employee-facing obligations independent of the federal FMLA; an employer with operations in those states must comply with the state program in addition to (not instead of) federal FLSA and FMLA rules. See the individual state guides in the Employment vertical for details on state wage-and-hour and leave requirements.

Cross-border employer implications. A non-US employer hiring a US-based employee (whether directly or through an employer of record) should expect no statutory entitlement to paid leave at the federal level. If the company's home-country employment model assumes, for example, 20 days of paid annual leave and statutory sick pay, those benefits will need to be provided contractually (as part of the offer letter or employee handbook) rather than by operation of US federal law. The absence of a federal paid-leave floor is the single most important distinction between the US and other jurisdictions in this vertical.

Source: Fair Labor Standards Act, 29 U.S.C. § 201 et seq. Source: FLSA Fact Sheet #14: Coverage Source: DOL: FLSA does not require payment for time not worked Source: DOL: No federal laws regarding paid time off Source: Family and Medical Leave Act, 29 U.S.C. § 2601 et seq. Source: FMLA Fact Sheet #28 Source: DOL: Currently, there are no federal legal requirements for paid sick leave

A foreign employer hiring its first US-based employee must understand that the United States imposes mandatory employer-side payroll taxes for Social Security and Medicare under the Federal Insurance Contributions Act (FICA). Unlike most other employment-related costs in the United States, FICA is not optional, cannot be contracted around, and applies to nearly every employment relationship. The employer both withholds employee-side FICA from wages and pays a matching employer contribution directly.

Statutory framework and dual obligation. FICA imposes two distinct taxes, codified at 26 U.S.C. §§ 3101 (employee tax) and 3111 (employer tax). Section 3101 imposes a tax on the income of every individual equal to a percentage of wages received; section 3111 imposes an excise tax on every employer with respect to wages paid. The employer is required by statute to withhold the employee-side tax from wages when paid and to remit both the withheld employee portion and the employer's own matching contribution to the Internal Revenue Service.

2026 tax rates. For wages paid in 2026, the combined employee-employer FICA tax rate is 15.3 percent, split equally between employee and employer (7.65 percent each). The 15.3 percent breaks down into:

• 12.4 percent for Social Security (Old-Age, Survivors, and Disability Insurance, or OASDI): 6.2 percent withheld from the employee's wages and 6.2 percent paid by the employer.
• 2.9 percent for Medicare (Hospital Insurance, or HI): 1.45 percent withheld from the employee and 1.45 percent paid by the employer.

These rates are set by statute (26 U.S.C. § 3101(a) and (b) for employees; § 3111(a) and (b) for employers) and have been in effect since 1990 for Social Security and 1986 for Medicare.

Social Security wage base ceiling. Only the Social Security component (12.4 percent combined) is subject to a wage base limit. For calendar year 2026, that limit is $184,500. Once an employee has earned $184,500 in wages from a single employer during 2026, the employer stops withholding the 6.2 percent Social Security tax and stops paying the 6.2 percent employer-side Social Security tax on any additional wages paid to that employee for the remainder of the year. The maximum Social Security tax withheld from an employee in 2026 is therefore $11,439 (6.2% × $184,500), and the maximum employer-side Social Security tax is likewise $11,439. The Social Security Administration adjusts the wage base annually to reflect increases in average wages.

No Medicare wage cap; Additional Medicare Tax above $200,000. The Medicare component (2.9 percent combined) has no wage base limit—it applies to all wages, no matter how high. In addition, employees (but not employers) pay an Additional Medicare Tax of 0.9 percent on wages in excess of $200,000 in a calendar year (the threshold is $250,000 for married individuals filing jointly and $125,000 for married individuals filing separately). Employers are required to begin withholding this 0.9 percent Additional Medicare Tax in the pay period in which they pay wages exceeding $200,000 to an employee and to continue withholding it for the remainder of the calendar year. There is no employer match for the Additional Medicare Tax; it is imposed solely on the employee under 26 U.S.C. § 3101(b)(2).

Cross-border employer implications. A non-US company establishing US payroll for the first time should expect a 15.3 percent total payroll-tax cost (employer's 7.65 percent share) on top of gross wages, subject to the Social Security wage cap. This is in addition to—not a substitute for—federal and state income tax withholding, state unemployment insurance, and any applicable local payroll taxes. FICA applies regardless of the employee's immigration status or work-authorization category; even employees on temporary work visas (H-1B, L-1, E-2, etc.) are generally subject to FICA unless they fall within a narrow treaty-based exemption (students and scholars on F-1 or J-1 visas have a limited exemption, and some countries have totalization agreements that may exempt certain posted workers from US Social Security tax).

The employer must register for a federal Employer Identification Number (EIN), enroll in the Electronic Federal Tax Payment System (EFTPS), and file quarterly Form 941 (Employer's Quarterly Federal Tax Return) reporting wages paid and FICA taxes withheld and owed. Employers with annual payroll tax liability below $2,500 may pay when filing; larger employers must deposit taxes on a semi-weekly or monthly schedule. Failure to withhold or remit FICA subjects the employer to penalties, interest, and—in cases of willful failure—personal liability for responsible officers under the trust-fund recovery penalty (26 U.S.C. § 6672).

Source: 26 U.S.C. § 3101 (Employee FICA tax rate) Source: 26 U.S.C. § 3111 (Employer FICA tax rate) Source: IRS Topic No. 751: Social Security and Medicare Withholding Rates Source: SSA: 2026 Social Security Wage Base ($184,500) Source: SSA: FICA & SECA Tax Rates (statutory authority)

A foreign employer hiring a US-based employee must understand that in addition to FICA, federal law imposes a separate federal unemployment tax (FUTA) that is entirely employer-borne—the employer pays FUTA from its own funds and may not withhold or deduct any portion of the tax from employee wages. FUTA is the third pillar of mandatory US payroll taxes and funds the federal-state unemployment insurance system that provides benefits to eligible unemployed workers.

Statutory rate and wage base. The Federal Unemployment Tax Act imposes an excise tax on every employer equal to 6.0 percent of the first $7,000 of wages paid to each employee during the calendar year. The tax applies only to the first $7,000 of wages per employee; once an employee has earned $7,000 in a calendar year, the employer stops paying FUTA on any additional wages paid to that employee for the remainder of the year. The maximum FUTA tax per employee is therefore $420 per year (6.0% × $7,000), though the effective tax after state credits is substantially lower.

The statutory 6.0 percent rate and $7,000 wage base are codified at 26 U.S.C. § 3301. The $7,000 wage base has not been adjusted since it was last increased by Congress and is fixed by statute; it does not index annually.

State unemployment tax credit reduces effective FUTA rate to 0.6 percent. Employers who pay required state unemployment insurance contributions on time may claim a credit of up to 5.4 percent against the 6.0 percent FUTA tax, reducing the effective federal tax rate to 0.6 percent. To receive the full 5.4 percent credit for wages paid in a given calendar year, the employer must pay all required contributions to the state unemployment fund by the due date of the employer's federal Form 940 for that year (ordinarily January 31 of the following year, or February 10 if all FUTA tax was deposited when due). Employers who pay state unemployment taxes after that deadline receive a reduced credit of 90 percent of the amount that would otherwise have been allowable.

The state unemployment tax credit is authorized by 26 U.S.C. § 3302. Most US employers pay state unemployment insurance taxes at rates that vary by state and by the employer's experience rating; state rates typically range from less than 1 percent to over 5 percent of wages, applied to state wage bases that range from $7,000 to over $50,000 depending on the state. Because the FUTA credit is capped at 5.4 percent regardless of how much the employer actually pays to the state, the effective FUTA cost is 0.6 percent of the first $7,000 of wages per employee in the overwhelming majority of cases. For a single employee earning $50,000 per year, the employer's FUTA obligation would therefore be $42 per year (0.6% × $7,000).

Credit reduction states. If a state has borrowed money from the federal government to pay unemployment benefits and has not repaid the loan by November 10 of the second consecutive year the loan is outstanding, employers in that state face a FUTA credit reduction—the 5.4 percent credit is reduced, increasing the employer's net FUTA tax. The reduction is 0.3 percent for the first year the state is a credit reduction state, an additional 0.3 percent for the second year, and an additional 0.3 percent for each year thereafter until the state's loan is repaid. The Department of Labor announces credit reduction states each year. Employers who pay wages in a credit reduction state must calculate and pay the additional FUTA tax using Schedule A (Form 940).

Employer coverage threshold. An employer is subject to FUTA if (1) it paid wages of $1,500 or more to employees in any calendar quarter during the current or preceding calendar year, or (2) it had one or more employees for at least some part of a day in any 20 or more different weeks in the current or preceding calendar year. Nearly every employer with regular employees meets one or both of these thresholds and therefore owes FUTA.

No employee withholding; employer pays from own funds. Unlike FICA, FUTA is imposed solely on the employer. Federal law explicitly prohibits the employer from collecting or deducting the FUTA tax from employee wages. The employer must pay FUTA from its own funds, in addition to gross wages and the employer's share of FICA.

Reporting and deposit. Employers report FUTA on Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, filed annually by January 31 of the following year (or February 10 if all FUTA tax was deposited when due). Employers whose FUTA tax liability for a quarter exceeds $500 must deposit the tax electronically by the last day of the month following the end of the quarter; if the cumulative liability for the year is $500 or less, the employer may pay the full amount with the Form 940 filing.

Cross-border employer implications. A non-US company establishing US payroll should budget for a 0.6 percent federal unemployment tax (in addition to the 7.65 percent employer-side FICA and separate state unemployment insurance contributions, which vary by state). The combined federal and state unemployment tax cost is typically 1 to 3 percent of total wages, depending on the state and the employer's experience rating. Unlike FICA, FUTA applies only to the first $7,000 of wages per employee; for a highly paid employee, the employer's FUTA obligation of $42 per year is a de minimis cost, but the employer must register, track quarterly liability, and file the annual return regardless of the dollar amount.

Source: 26 U.S.C. § 3301 (Rate of tax) Source: 26 U.S.C. § 3302 (Credits against tax) Source: IRS Topic No. 759: Form 940 – FUTA Tax Return filing and deposit requirements Source: IRS: FUTA credit reduction Source: IRS Publication 926 (2026), Household Employer's Tax Guide (FUTA employer-only rule) Source: DOL: Federal Unemployment Tax

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires most employers with group health plans to offer temporary continuation of coverage to employees and their dependents following certain qualifying events. This obligation applies to employers with 20 or more employees on more than 50 percent of typical business days in the previous calendar year, regardless of whether the employer is foreign or domestic.

Covered employers and plans. COBRA applies to all private-sector employers and state and local governments that sponsor group health plans. Churches and certain church-related organizations are exempt. Federal employees are covered by a similar but distinct federal program, not COBRA. The 20-employee threshold aggregates all employees, full- and part-time (part-time employees count as a fraction based on their work hours vs. a full-time schedule). If an employer is using a Professional Employer Organization (PEO) or EOR employing 20+ people in the US, the PEO is likely the plan sponsor for COBRA purposes, but the underlying statute is silent on international co-employment nuances.

Qualifying events. Employers must provide COBRA continuation coverage in the event of an employee’s voluntary or involuntary job loss (except for gross misconduct), reduction in work hours, divorce or legal separation, death of the covered employee, or a dependent child ceasing to be eligible for coverage. Coverage must be identical to the plan offered to similarly-situated active employees, and must continue for up to 18 months after termination or reduction in hours (extendable up to 36 months in certain dependent-loss scenarios).

Notice and election procedures. Employers must notify the plan administrator within 30 days of a qualifying event. The administrator then has 14 days to notify eligible individuals, who have 60 days to elect continuation coverage. Employers who fail to provide COBRA notice or coverage may be subject to excise taxes, penalties, and liability for medical expenses that would have been covered under the plan.

Cost and employee payments. COBRA allows employers to require the covered individual to pay up to 102% of the applicable premium (the full cost of coverage plus a 2% administrative fee). There is no employer subsidy requirement.

COBRA does not apply to employers with fewer than 20 employees or to plans sponsored by the federal government or certain religious organizations. Many states have "mini-COBRA" laws that extend similar continuation rights to employees of smaller firms.

Source: 29 U.S.C. §§ 1161–1169 (COBRA continuation coverage requirements) Source: DOL Employee Benefits Security Administration (COBRA overview) Source: DOL: An Employer's Guide to Group Health Continuation Coverage Under COBRA

The Patient Protection and Affordable Care Act (ACA) imposes a federal employer mandate on organizations classified as "Applicable Large Employers" (ALEs) to offer health coverage to at least 95% of full-time employees (and their dependents) or face penalties. This mandate is codified at 26 U.S.C. § 4980H and applies to both US-based and foreign entities with a sufficient workforce on US soil.

Applicable Large Employer (ALE) definition (statute and IRS guidance): An ALE is any employer (including a controlled group, which can aggregate foreign and US entities under IRS rules) that had an average of at least 50 full-time employees (including full-time equivalents) during the prior calendar year. Full-time means working an average of at least 30 hours per week or 130 hours per month. IRS guidance clarifies that seasonal workers may be excluded from the calculation if they work 120 or fewer days during the year (IRS: Employer Shared Responsibility Provisions – "Seasonal Worker Exception"). All employees of a US controlled group are aggregated for ALE status.

Coverage and affordability requirements: ALEs must offer "minimum essential coverage" that is "affordable"—meaning the employee's share of self-only coverage does not exceed an IRS-set percentage of household income (indexed to 9.96% for 2026)—and provides minimum value (at least 60% of total allowed benefit costs). The specific affordability threshold is updated annually by IRS notice. Offers must cover at least 95% of full-time employees and their dependents by the first day after a waiting period not exceeding 90 days (26 CFR § 54.9815-2708; see IRS Q&A #6).

Penalties for noncompliance (2026 indexed amounts):

• If an ALE fails to offer coverage to at least 95% of full-time employees and any one obtains a Premium Tax Credit through a Marketplace, the penalty under 26 U.S.C. § 4980H(a) applies: $3,340 per full-time employee (beyond the first 30), per year for 2026 (indexing per IRS Rev. Proc. 2025‑26, IRS employer mandate Q&A).
• If the ALE offers coverage that is not affordable or fails minimum value, and at least one full-time employee receives a Premium Tax Credit, the employer pays the lesser of the above or $5,010 per affected employee for 2026 (4980H(b) penalty; also indexed annually).

Reporting obligations: ALEs must report annually to the IRS (Forms 1094-C, 1095-C) and provide 1095-C to employees by January 31 after the tax year. Failure to file or furnish these forms may trigger further penalties under 26 U.S.C. §§ 6721–6722.

Cross-border employer/EOR note: IRS guidance requires employee aggregation across all entities in a controlled group, including US subsidiaries of foreign parents, for ALE status. The treatment of Employer of Record (EOR)/PEO arrangements hinges on "common-law employer" status—a fact-intensive IRS determination with limited agency guidance. Most foreign group health plans do not satisfy ACA minimum essential coverage unless they expressly and documentably meet US minimum standards.

Material changes (effective 2026):

• 4980H(a) penalty indexed to $3,340.
• 4980H(b) penalty indexed to $5,010.
• IRS affordability threshold set at 9.96% for 2026.

Source: 26 U.S.C. § 4980H (Shared responsibility for employers regarding health coverage) Source: IRS: Employer Shared Responsibility Provisions Source: IRS: Information Reporting by Applicable Large Employers Source: IRS Rev. Proc. 2025-26—ACA indexed amounts for 2026

The United States recognizes eleven federal public holidays ("legal public holidays") under 5 U.S.C. § 6103, including New Year's Day, Independence Day, Thanksgiving, and Christmas. However, critically for inbound employers, there is no federal requirement that private employers observe or provide paid leave on any public holiday. The statutory holiday schedule applies only to federal government offices and to certain government contractors, not to private business.

Statutory background. The list of federal holidays is set forth at 5 U.S.C. § 6103(a). Federal government offices close and federal employees generally receive paid leave on these dates. The schedule includes: New Year's Day (Jan 1), Martin Luther King Jr. Day (third Monday in Jan), Washington's Birthday (third Monday in Feb), Memorial Day (last Monday in May), Juneteenth National Independence Day (June 19), Independence Day (July 4), Labor Day (first Monday in Sept), Columbus Day (second Monday in Oct), Veterans Day (Nov 11), Thanksgiving Day (fourth Thursday in Nov), and Christmas Day (Dec 25). When a holiday falls on a weekend, federal offices close on the nearest weekday (Friday or Monday) under 5 U.S.C. § 6103(b).

Applicability to private-sector employers. US law imposes no obligation on private employers to close on federal holidays, provide paid time off, or pay a premium rate for work performed on a holiday. The Fair Labor Standards Act (FLSA) does not require payment for time not worked, nor does any federal statute create a right to premium "holiday pay" for private-sector employees (see DOL Wage & Hour Division guidance). Any such benefit is purely a function of the employment agreement, company policy, or collective bargaining agreement.

State and local overlay. While certain states designate additional public holidays or provide guidance for observance, these laws—where present—overwhelmingly apply only to state and local government employees, not the private sector. There are isolated exceptions (e.g., Massachusetts and Rhode Island "blue laws" requiring premium pay or closure in retail/hospitality), but these are rare and not federal in nature. For up-to-date state specifics, see the relevant state guide in the Employment vertical.

Cross-border employer implications. Employers new to the US often assume that statutory paid public holidays—common in most other OECD countries—are a legal baseline. In the US, unless contractually agreed, private employers may require employees to work on public holidays at straight time, or may elect to close business without pay (unless employees use accrued paid time off). Many competitive employers voluntarily provide paid leave for some or all federal holidays as a market practice, but it is not required by federal law.

Source: 5 U.S.C. § 6103 (Federal public holidays) Source: DOL: Public Holidays, Fair Labor Standards Act

The Uniformed Services Employment and Reemployment Rights Act (USERRA), codified at 38 U.S.C. §§ 4301–4335, is the primary federal statute that protects the job rights of employees who serve in the U.S. military—including active duty, reserves, and National Guard service—whether involuntary or voluntary. USERRA applies to all U.S. employers, regardless of size, including foreign companies with U.S.-based employees. Unlike the Family and Medical Leave Act (FMLA), there is no minimum employee threshold: a single-employee U.S. entity is covered.

Military leave and protection from discrimination. USERRA entitles covered employees to leaves of absence for military duty or training and strictly prohibits discrimination or retaliation based on military service or obligations. Employers may not deny initial employment, retention, promotion, or any employment benefit because of an employee’s membership, application for membership, or service in the uniformed services (38 U.S.C. § 4311).

Guaranteed reemployment rights—eligibility and timeframe. Employees who leave their job to perform military service (voluntary or involuntary) are entitled to reemployment in their civilian job (or a comparable position) if:

• The absence was for military service (active duty, training, National Guard, reserves, or related fitness exams) and did not exceed five cumulative years with the same employer;
• The employee provided advance notice, unless notice was impossible or unreasonable;
• The employee was discharged under honorable conditions;
• The employee submits a timely application for reemployment (generally within 14–90 days after completion of service, depending on the length of absence).

The five-year limit has exceptions for certain recurring or involuntary campaigns and training (see DOL guidance for exclusions).

Status, pay, and benefits during military leave. USERRA does not require paid military leave—leave may be unpaid unless the employer provides paid military leave by policy or contract. However, employees are entitled to continue any existing health plan coverage for up to 24 months while serving (at their own cost after 30 days), and must be allowed to use accrued vacation time if desired. Upon return, employees are entitled to reinstatement in the job they would have attained (“escalator principle”), with full credit for seniority, pension vesting, and other rights as if continuously employed (38 U.S.C. § 4316).

Enforcement and remedies. USERRA violations are enforced by the U.S. Department of Labor’s Veterans’ Employment and Training Service (VETS), with private right of action in federal court. Remedies include reinstatement, back pay, benefits, and liquidated damages for willful violations.

Source: USERRA, 38 U.S.C. §§ 4301–4335 Source: DOL USERRA Employee Guide Source: DOL USERRA Notice Poster

The United States does not guarantee statutory paid maternity or parental leave at the federal level, but federal law provides baseline protections for pregnant and nursing employees. These center on two principal laws: the Pregnancy Discrimination Act (PDA) and the Fair Labor Standards Act (FLSA) as amended by the Providing Urgent Maternal Protections for Nursing Mothers Act (PUMP Act), both with effect for 2026. The Family and Medical Leave Act (FMLA) overlays these statutes by providing unpaid leave rights for qualifying employees (see section on FMLA in this guide).

Pregnancy Discrimination Act (PDA): Non-discrimination standard The PDA, codified at 42 U.S.C. § 2000e(k), requires employers with 15 or more employees to treat women affected by pregnancy, childbirth, or related conditions the same as other employees similar in their ability or inability to work. This covers hiring, leave, health benefits, and reinstatement. If an employer provides accommodations for temporarily disabled workers, it must extend equivalent accommodations to pregnant workers. The PDA does not require preferential treatment—only equal treatment. Retaliation for requesting pregnancy-related accommodation is also prohibited, but PDA itself does not create a right to paid maternity leave or job-protected leave unless the employer provides such benefits to similarly situated employees.

FLSA “Break Time for Nursing Mothers”: Expanded coverage under the PUMP Act The PUMP Act (effective December 29, 2022, codified at 29 U.S.C. § 218d) amended the FLSA to extend the right to reasonable break time and a private (non-bathroom) space for expressing breast milk to virtually all nursing employees, including both non-exempt (hourly) and most exempt (salaried) workers. The law requires that breaks be provided for up to one year after the child’s birth, and the designated space must be shielded from view and free from intrusion. Employers with fewer than 50 employees may claim exemption if compliance would impose undue hardship (requiring proof of significant business difficulty). Time spent expressing milk may be unpaid unless the employee is working during the break, or unless breaks are compensated for other purposes.

Cross-border employer note Federal law prohibits discrimination based on pregnancy or related conditions and now requires nursing break accommodation for nearly all covered employees. Any short-term disability leave or benefit must cover pregnancy on an equal basis with other conditions, but federal law does not itself require short-term disability or paid maternity benefits. State law and company policy may expand these rights.

Material update (July 2026): This section updates prior text to reflect the PUMP Act amendments, broadening the FLSA nursing break mandate to most employees and recodifying the rule at 29 U.S.C. § 218d.

Source: Pregnancy Discrimination Act, 42 U.S.C. § 2000e(k). Source: FLSA Break Time for Nursing Mothers, 29 U.S.C. § 218d). Source: DOL Fact Sheet #73: FLSA Break Time for Nursing Mothers (rev. 2025).

The United States imposes a baseline protection for employees called to serve as jurors in federal court: under the Jury System Improvements Act, 28 U.S.C. § 1875, employers may not discharge, threaten to discharge, intimidate, or coerce any permanent employee because they have been summoned for or served as a juror in federal court. This applies to all employers in the private sector, regardless of size, including foreign entities with U.S.-based employees. There is no minimum workforce threshold—the protection attaches as soon as an individual is engaged as an employee in the U.S.

Scope of coverage. The statute protects employees "permanently employed" in any business in the U.S. or its territories. It applies when the employee is called for jury service in a United States District Court or United States Circuit Court (i.e., federal—not state—jury duty). It is silent on state or local jury service, which is governed by state law and may not have a similar anti-retaliation component at all.

Employer obligations. While federal law does not require an employer to pay employees for time missed due to federal jury service, the employer must allow the employee to take unpaid leave as necessary for federal jury service and must restore them to their position upon return. The employer may not take adverse actions (such as discharge, demotion, loss of seniority or benefits, or intimidation) because of the jury-related absence. Violations can result in reinstatement, back pay, and civil penalties. Additionally, individual managers or officers may be held personally liable under the statute.

Enforcement. Employees alleging violation of 28 U.S.C. § 1875 may file a complaint in the appropriate federal district court. The court may order reinstatement, back pay, and other relief, including penalties of up to $5,000 per violation.

No federal mandate for paid jury leave. The federal statute does not require that employers pay employees for time spent on federal jury duty; any such pay is a matter of contract or company policy unless state law provides otherwise. Many competitive employers voluntarily provide paid jury duty leave, but it is not required by federal law.

Cross-border employer note. This protection is strictly for federal jury duty; state-level obligations vary and are not covered by this statute. A non-U.S. employer with personnel in the U.S. must ensure policies and practices do not penalize employees for responding to a federal jury summons. Contractors and non-permanent employees (such as temporary staff) are generally outside the scope of the federal protection.

Source: 28 U.S.C. § 1875 (Protection of jurors’ employment)

No federal requirement for employer-provided short- or long-term disability pay for illness or injury.

Unlike most other OECD countries, the United States does not require private-sector employers to provide statutory short-term or long-term disability (STD/LTD) wage replacement for employees unable to work due to non-work-related illness or injury. At the federal level, there is no statutory framework guaranteeing disability pay for private-sector employees outside narrowly targeted federal social insurance programs. Employers may, and often do, offer STD or LTD coverage as a contractual benefit, either self-insured or via a private insurance carrier, but there is no legal mandate for these benefits under federal law.

ERISA: Federal regulation of voluntary employer disability plans, not a mandate. The Employee Retirement Income Security Act of 1974 (ERISA), codified at 29 U.S.C. §§ 1001–1461, governs employer-provided benefit plans, including disability insurance. Crucially, ERISA regulates the administration of any employer-sponsored STD/LTD plan (setting standards for claims procedures, disclosures, and fiduciary duties), but does not require employers to establish or provide such plans. There is no federal intervention creating a wage replacement floor for private-sector employees unable to work; the decision to offer short- or long-term disability coverage remains at the employer's discretion, subject only to nondiscrimination and ERISA process rules if a plan is offered.

Federal Social Security Disability Insurance (SSDI): Not an employment benefit. The only nationwide, statutory wage replacement for disability is Social Security Disability Insurance (SSDI) under Title II of the Social Security Act (42 U.S.C. §§ 401–434). SSDI is a social insurance program administered by the federal government and funded through employer and employee payroll taxes. However, SSDI is not tied to the employment relationship or employer mandate; instead, workers must accumulate sufficient Social Security work credits and meet a strict definition of "disability" (expected to last at least one year or result in death) to qualify. The application and entitlement process is entirely outside employer control or obligation, and the approval rate is less than 40% nationally. SSDI is not a substitute for statutory sick pay or income replacement for short-term illness.

State overlay: Five states and Puerto Rico require employer-provided disability benefits. A minority of states—California, Hawaii, New Jersey, New York, and Rhode Island—plus Puerto Rico mandate employer-funded disability income replacement through separate state-run or state-mandated private programs. These obligations are state law overlays and not federal requirements; a federal baseline employer in the other 45 states and DC has no statutory disability-pay mandate. See the relevant state guide for details.

Cross-border employer implications. A non-US employer accustomed to statutory sick pay or mandatory disability insurance in the home jurisdiction should not assume any such federal requirement in the US system. Short- or long-term disability pay is generally a matter of contract, and where provided, is regulated procedurally (by ERISA) rather than substantively at the federal level.

Source: ERISA, 29 U.S.C. §§ 1001–1461 Source: Social Security Disability Insurance, 42 U.S.C. §§ 401–434

The Fair Labor Standards Act (FLSA) establishes the federal baseline for child labor in the United States, governing when minors may work, the types of work allowed, and associated hour restrictions. These rules apply to any employer—including foreign and EOR operators—hiring workers under 18 for work performed in the US.

Minimum age and allowable work.

• Under 14: Minors generally may not be employed in non-agricultural work. Permitted exceptions include newspaper delivery, acting, and casual babysitting.
• Ages 14–15: May work outside school hours in non-manufacturing, non-mining, and non-hazardous jobs, subject to strict hour constraints: a maximum of 3 hours on a school day, 18 hours in a school week, 8 hours on a non-school day, and 40 hours in a non-school week. Permitted hours are between 7:00 a.m. and 7:00 p.m., extending to 9:00 p.m. from June 1 through Labor Day (29 CFR § 570.35(a); see DOL guidance).
• Ages 16–17: No hour limits, but employment in hazardous occupations is prohibited.
• Age 18+: Federal child labor restrictions no longer apply.

Hazardous Occupations. The Secretary of Labor has identified 17 hazardous occupation categories off-limits to those under age 18, including material handling, power-driven machinery, roofing, and excavation. The list is detailed in 29 CFR §§ 570.50–570.68.

Penalties. Employers violating FLSA child labor standards are subject to civil money penalties up to $16,035 per violation, and as much as $72,876 for violations resulting in serious injury or death (2024 indexed amounts). Willful or repeated violations causing death may be penalized at up to $145,752 per violation. The Department of Labor regularly updates these figures to keep pace with inflation.

Cross-border and EOR employment. FLSA child labor rules apply whether the employer is US-based or overseas if work is performed in the US. The Act is silent on independent contractors, but DOL treats misclassified minors as employees for enforcement.

State overlays. Some states set stricter standards—higher minimum ages, narrower roles, or more limited hours. Employers must comply with the most protective standard in any jurisdiction of employment.

Source: 29 U.S.C. § 212 (child labor provisions)) Source: 29 CFR pt. 570 (child labor regulations, hours, occupations) Source: DOL: Child Labor, Civil Money Penalties Source: DOL: FLSA Child Labor Rules (elaws)

Wage garnishment occurs when an employer is required by law to withhold a portion of an employee’s earnings and remit it to a third party, typically to satisfy a debt, child support, tax levy, or court judgment. In the United States, the federal baseline for wage garnishment is set by the Consumer Credit Protection Act (CCPA), 15 U.S.C. §§ 1671–1677, and Department of Labor regulations at 29 C.F.R. part 870. These limits apply to all employers operating in the U.S.—including foreign entities with U.S.-resident employees—and override any less-protective state law.

CCPA garnishment caps: The CCPA limits the aggregate amount that can be garnished from an employee’s "disposable earnings" (gross pay minus mandatory withholdings for taxes and Social Security) to the lesser of:

• 25% of disposable earnings for that week, or
• the amount by which disposable earnings exceed 30 times the federal minimum wage (currently $7.25/hour, so $217.50/week as of 2026; this figure is subject to change if the federal minimum wage changes).

For child support and alimony obligations, a higher cap applies: up to 50% or 60% depending on whether the employee is supporting another spouse or child, with an additional 5% permitted for support in arrears (15 U.S.C. § 1673(b)). Federal tax levies and bankruptcy orders may follow different rules under their respective statutes.

Employer obligations: The employer must begin withholding promptly upon receipt of a valid garnishment order, remit withheld funds as instructed, and is prohibited from firing or retaliating against an employee because of any one garnishment (15 U.S.C. § 1674). "Disposable earnings" are defined by 29 C.F.R. § 870.10 as pay remaining after legally required deductions.

State overlay: If a state law is more protective of the employee, the employer must follow the state standard. Many states mirror the federal caps, but a minority prescribe greater protection. The DOL provides a summary and tools for determining the applicable limits.

Cross-border employer implication: Foreign and EOR employers paying U.S. workers are subject to these federal caps, and non-U.S. practices are overridden. Ignoring or mishandling garnishments exposes the employer to substantial compliance risk, including liability for unremitted amounts and penalties.

Source: 15 U.S.C. §§ 1671–1677 (CCPA: restrictions on garnishment) Source: DOL Wage Garnishment Fact Sheet

The United States does not impose a federal statutory requirement for paid or unpaid sick leave in the private sector. Unlike nearly every OECD peer, there is no US-wide baseline requiring employers to provide any form of paid or job-protected sick leave to private employees.

Federal law: No paid sick leave requirement. The Fair Labor Standards Act (FLSA) sets federal wage/hours floors but contains no mandate for paid time off, including for sickness. The Family and Medical Leave Act (FMLA) offers only unpaid, job-protected leave, and only for qualifying health conditions and employers with 50+ employees (see section in this guide on FMLA); it does not guarantee paid or general-purpose sick leave for short-term absences due to ordinary illness. The US Department of Labor states unambiguously that there are "currently no federal legal requirements for paid sick leave" for private employees. Federal paid sick leave applies only to federal government employees under separate statutes, not the private sector.

COVID-19 temporary exception (now expired). The Families First Coronavirus Response Act (FFCRA) did temporarily require certain employers to provide paid sick leave, but those obligations expired after December 31, 2020. No residual federal mandate remains in effect post-pandemic.

State and local overlay: Mandatory sick leave as a US compliance patchwork. While there is no national standard, more than a dozen states (including California, New York, New Jersey, Massachusetts, Connecticut, and others) plus many major US cities require private employers to provide paid sick leave or paid time off that may be used for illness. The scope, accrual, carryover, and notice rules vary widely between jurisdictions, and these obligations apply based on where the employee physically works, not the employer's place of incorporation. Cross-border employers must check and comply with each relevant state/local regime in addition to any contractual promise of sick pay. For up-to-date analysis, see the guide for the individual state in the Employment vertical.

Cross-border employer takeaway. Non-US employers are often surprised that employees in the US have no federal right to paid or unpaid sick leave (outside FMLA-qualifying conditions). As a result, any statutory sick pay must be extended through contract, policy, or compliance with overlay state/local mandates, not federal law.

Source: US Department of Labor: Sick Leave

At the federal level, US law does not generally require employers to offer group health insurance or retirement plan participation to part-time employees. Statutory entitlements to employer-provided benefits are governed by full-time status definitions in the Affordable Care Act (ACA) and participation thresholds set out in the Employee Retirement Income Security Act (ERISA), with recent material updates for both health and retirement plan eligibility effective 2025–2026.

Group health coverage: ACA full-time designation, updated affordability and penalty thresholds (2026). Under the ACA, only "full-time" employees must be offered minimum essential health coverage by "Applicable Large Employers" (ALEs)—those with 50 or more full-time or full-time-equivalent employees. "Full-time" is defined as averaging at least 30 hours per week or 130 hours per month, unchanged by recent law. Part-time employees—those working less—are not entitled to be offered group coverage under federal law (26 U.S.C. § 4980H(c)(4)).

As of the 2026 plan year, the maximum employee share considered "affordable" under the employer mandate is 9.96% of household income (up from 9.12% in 2023–24), and noncompliance penalties are indexed at $3,340 under § 4980H(a) (failure to offer qualifying coverage) and $5,010 under § 4980H(b) (unaffordable or non-minimum-value coverage). Only full-time employees (under the ACA's 30-hour rule) and their dependents must be included in the employer's offer to avoid these penalties. There is no federal requirement for group health coverage to be available to part-time staff, though employers may choose to extend such offers contractually or by policy.

Retirement plans (401(k)/pension): ERISA minimum service rules and SECURE 2.0 update. ERISA allows employers to exclude employees working less than 1,000 hours in a 12-month period from participation in tax-qualified retirement plans (29 U.S.C. § 410(a)(3)). However, under the SECURE 2.0 Act, for plan years beginning after December 31, 2024, long-term part-time employees working at least 500 hours in each of two consecutive 12-month periods must now be permitted to make elective deferrals to 401(k) and ERISA-covered 403(b) plans (prior law required three consecutive years). This expansion means part-time workers who do not meet the traditional 1,000-hour threshold but satisfy the new standard cannot be excluded from salary deferral eligibility solely due to part-time status, though employer matching or other employer contributions remain optional, and further eligibility conditions may apply.

No federal mandate for paid leave, disability, or other benefits for part-time employees. Federal law does not require employers, regardless of size, to offer paid vacation, paid sick leave, paid family or parental leave, or disability coverage to any category of private-sector employees. Any extension of benefits to part-time staff is driven by employer policy, group insurance terms, or (where present) state law overlays beyond the federal minimum.

Cross-border employer takeaway: Federal law sets participation floors only; state law, collective bargaining, or insurance requirements may be more expansive. Employers new to the US system should confirm local law overlays and plan policy requirements before limiting access to part-time staff.

Material update note: This section was revised on June 18, 2026 to reflect:

• The 2026 ACA affordability threshold (9.96%) and revised penalty amounts (4980H(a): $3,340; 4980H(b): $5,010) per IRS Rev. Proc. 2025-25 and 2025-26.
• The new SECURE 2.0 long-term part-time retirement plan eligibility rules (500 hours in each of two consecutive years, effective January 1, 2025, superseding the prior three-year requirement).

Source: 26 U.S.C. § 4980H (ACA employer shared responsibility) Source: IRS: 2026 Employer Shared Responsibility Indexed Penalties (Rev. Proc. 2025-26) Source: IRS: ACA Affordability Thresholds (Rev. Proc. 2025-25) Source: 29 U.S.C. § 410(a)(3) (ERISA minimum hours for participation) Source: IRS: SECURE 2.0—Long-Term, Part-Time Employee Eligibility

Employers sponsoring a tax-qualified 401(k) retirement plan in the US must comply with comprehensive ERISA (Employee Retirement Income Security Act of 1974) regulations and associated IRS and DOL rules. For plan years beginning in 2026 and beyond, key aspects of employer obligations have seen material updates, particularly regarding fiduciary status, disclosure, and enforcement risks:

1. Fiduciary duties—return to the five-part test (effective March 2026): In March 2026, the DOL reinstated the historic “five-part test” for ERISA fiduciary status, replacing the expanded definition vacated by the courts in 2022. To be an ERISA fiduciary regarding investment advice, an individual (or entity) must: (a) render advice as to the value of securities or make recommendations; (b) do so on a regular basis; (c) under a mutual agreement; (d) that the advice will serve as a primary basis for plan investment decisions; and (e) be rendered for a fee or other compensation (direct or indirect). This impacts how employer plan sponsors engage third-party advisers and monitor plan investments. The DOL’s Technical Release 2026-01 further clarifies fiduciary exposure when using proxy advisory services and requires plan fiduciaries to maintain documentation of their process in selecting and monitoring third parties.

2. Nondiscrimination and top-heavy rules—no material statutory change: 401(k) plans remain subject to nondiscrimination testing (ADP/ACP) under 26 U.S.C. § 401(k) and § 401(m), plus general qualification under § 401(a)(4). If a plan becomes top-heavy (over 60% of assets for key employees), minimum funding and accelerated vesting apply (26 U.S.C. § 416). No new federal testing requirements were issued for 2026.

3. New disclosure and reporting requirements under SECURE 2.0 (effective for plan years after Dec. 31, 2025): Employers must now provide at least one paper benefit statement each year to plan participants, regardless of electronic delivery preference, under SECURE 2.0. However, DOL Field Assistance Bulletin 2026-02 establishes a temporary non-enforcement policy for minor administrative failures as long as sponsors make good faith efforts.

4. Proposed safe harbor for investment selection (proposed in 2026): In March 2026, DOL proposed new safe-harbor guidance (not yet final) outlining a six-factor, process-based approach for prudent selection of designated investment alternatives, including oversight of private equity options for participant-directed accounts. While not effective, employers are encouraged to review their decision-making process to align with these factors in anticipation of final regulations.

5. Other plan administration, vesting, and deposit timing rules: Eligibility, vesting, and contribution deposit timing rules remain as previously described, including:

• Minimum service: part-time employees (per SECURE 2.0) must be eligible to defer after two consecutive years of at least 500 hours (see section on part-time eligibility for details)
• Vesting: cliff vesting after 3 years or graded over 6 years (29 U.S.C. § 1053)
• Deposits: Employee deferrals must be deposited as soon as practicable, no later than the 15th business day of the following month (29 C.F.R. § 2510.3-102), with smaller plans (under 100 participants) having a 7-business-day safe harbor
• Form 5500: Unchanged; annual filing continues to be required for nearly all plans.

Source: 29 U.S.C. §§ 1001–1461 (ERISA statutes and fiduciary duties) Source: DOL Technical Release 2026-01 (Proxy Advisory and Fiduciary Duties) Source: DOL Field Assistance Bulletin 2026-02 (SECURE 2.0 paper statement enforcement) Source: 29 C.F.R. § 2510.3-102 (timeliness of employee contributions) Source: IRS: Operating a 401(k) Plan