Federal law sets a floor for employment: a $7.25 minimum wage, overtime under the Fair Labor Standards Act, unpaid family and medical leave for eligible staff, and payroll taxes. States and cities often go further, with higher minimum wages, their own leave rules and wrongful discharge laws. Employers must verify every new hire's right to work on Form I-9 and withhold social security and Medicare tax. Work visas for foreign staff are a federal matter and were not confirmed.
Federal floor, state rules
The federal minimum wage is $7.25 an hour, but where a state or city sets a different rate the higher one applies, so the effective minimum depends on where staff work. The Fair Labor Standards Act also gives eligible workers overtime pay, and the Department of Labor's Wage and Hour Division enforces these rights.
The Family and Medical Leave Act gives eligible employees unpaid leave for medical or family reasons. Rules on dismissal come from both federal and state law, and an employee dismissed for an illegal reason may bring a claim under state wrongful discharge laws, so termination practice must be checked state by state.1234
Payroll taxes
For 2026 the employer and employee each pay 6.2% social security tax on wages up to $184,500, and 1.45% Medicare tax on all wages. Employees also bear Additional Medicare Tax of 0.9% above a threshold, which the employer withholds.
Each new employee should complete the 2026 Form W-4 so the right federal income tax is withheld. States with an income tax, and state unemployment insurance systems, add their own registrations and filings.5678
Right to work and classification
Every employer must verify that each new employee is legally eligible to work in the US, including by completing USCIS Form I-9. This applies to US citizens as well as foreign nationals.
Treating a worker as an independent contractor when they are in substance an employee is job misclassification and can lead to unpaid wages and taxes. Foreign groups that start with US contractors should review classification before scaling.910
How it works, step by step
- Obtain an EIN before running payroll11Internal Revenue Service
- Complete Form I-9 for each new hire to verify eligibility to work9Employer, using USCIS Form I-9
- Collect a 2026 Form W-4 from each new employee and withhold federal income tax, social security and Medicare856Employer; Internal Revenue Service
No timings or fees are shown unless an official source states them.
Documents usually needed
- Form I-9 (Employment Eligibility Verification) for each employee
- Form W-4 for each employee
- Written offer letter or employment agreement reflecting state law
- State withholding and unemployment insurance registrations (state-specific)
Common mistakes
- Paying the federal minimum wage where the state or city rate is higher.
- Skipping or delaying Form I-9 for US-citizen hires on the assumption it only applies to foreign nationals.
- Engaging long-term workers as contractors without checking classification.
- Using a single national termination process without checking state wrongful discharge laws.
- Forgetting that the social security wage base changes each year.
When the business crosses borders
- Staff sent from the parent to the US need a work-authorising visa; categories, quotas and fees were not confirmed.
- Whether home-country social security can continue for seconded staff depends on a bilateral totalisation agreement, which was not confirmed here.
- Employing staff in several states means separate state payroll, leave and termination rules for each.
Questions businesses ask
What is the minimum wage?
$7.25 an hour federally, but a higher state or city rate applies where one exists.1
What payroll taxes does the employer pay?
In 2026, 6.2% social security on wages up to $184,500 and 1.45% Medicare on all wages, plus state taxes and unemployment contributions not covered here.56
Does federal law require paid leave?
The federal Family and Medical Leave Act provides unpaid leave for eligible employees. Some states and cities require paid leave; check each location.3
What this guide does not yet confirm
These points need checking with a qualified local professional in the United States before you rely on them.
- Work visas (for example H-1B, L-1 and E-2) were not confirmed, including any current changes to H-1B fees or selection; Department of Labor and USCIS pages were rate-limited during research.
- FMLA employer threshold, eligibility conditions and length of leave were not confirmed (Department of Labor employer guide could not yet be checked).
- WARN Act notice requirements for mass layoffs were not confirmed.
- FUTA rate and wage base, state unemployment insurance, and the Additional Medicare Tax threshold were not confirmed.
- At-will employment and state paid leave rules were not confirmed and vary by state.
- Social security totalisation agreements were not researched.
Sources and review status
Each statement is numbered to the source it was checked against. We use official sources where we can, and each statement says whether it was checked against an official or a secondary source. Sources last checked on 19 October 2026. None of it has been professionally reviewed yet: it is research checked against official and secondary sources by WONE Global, not legal or tax advice.
The federal minimum wage is $7.25 per hour for covered nonexempt workers, and where a state or city sets a different rate the higher rate applies. Federal floor under the Fair Labor Standards Act; many states and cities set higher rates.
The Fair Labor Standards Act gives eligible workers rights to a minimum wage and overtime pay, enforced by the Department of Labor's Wage and Hour Division. Federal. Eligibility for overtime depends on exemption status; state laws may add further protection.
The Family and Medical Leave Act lets eligible employees take unpaid leave for medical or family reasons. Federal. Coverage and eligibility thresholds were not confirmed on the page opened; some states provide additional or paid leave.
Rules on how and when employees can be dismissed come from both federal and state law, and employees dismissed for an illegal reason may have wrongful termination claims under state wrongful discharge laws. Federal and state; the content of state law varies.
For 2026, social security tax is 6.2% each for employer and employee on wages up to a wage base limit of $184,500. Federal (FICA). Wages above the wage base are not subject to social security tax.
Medicare tax is 1.45% each for employer and employee, with no wage base limit. Federal (FICA). Rate unchanged from 2025.
Additional Medicare Tax applies to employees at a rate of 0.9% on wages above a threshold. Federal; employee-only. The withholding threshold was not confirmed in the portion of the page read.
Rate confirmed from a passage stating 0.18% is 20% of the employee rate of 0.9%; threshold not confirmed.
Employers should ask each new employee to complete the 2026 Form W-4 so the correct federal income tax is withheld. Federal income tax withholding. States with income tax have their own withholding forms.
Employers must verify that each new employee is legally eligible to work in the US, including by completing USCIS Form I-9. Federal; applies to every new hire, whatever their nationality.
Job misclassification occurs when a company incorrectly treats a worker as an independent contractor instead of an employee. Federal and state; tests differ between federal tax, federal wage law and state law.
An applicant for an employer identification number (EIN) whose principal place of business is outside the US can apply by phone, fax or mail; online application is available where the principal place of business is in the US. Federal (IRS). The IRS limits applicants to one EIN application per day. International applicant phone line: +1 267-941-1099.
Questions on this topic
10 statements on employment, payroll and mobility in the United States
