Hiring in the US: costs, rules and the best EOR providers

An EOR does not automatically remove the client’s employment responsibilities. Under the FLSA, where joint employment exists, both employers must ensure the worker receives the law’s protections. The worker’s state and the actual working relationship matter; the commercial contract alone does not settle the issue.

The employing provider needs the payroll accounts required for the employee’s work and residence locations, not just an account in its headquarters state.

It supplies registration details to the relevant revenue and unemployment agencies, obtains account numbers and applies local withholding rules. Your company’s own business registrations and tax nexus need separate analysis. Tell the provider about a move before payroll is run.

The EOR handles the applicable state income-tax withholding, unemployment contributions and any local payroll charges for the actual work location. The mix varies: California has employer-paid UI and employment-training tax, with disability and personal-income-tax deductions from wages.

Federal payroll obligations sit alongside these. An employee deduction is not an additional employer cost, and one state’s rates cannot be copied nationwide.

It can. Using an EOR does not itself decide California tax nexus for your UK company. California considers the activities carried out for profit in the state as well as sales, property and payroll tests; home-based staff can matter even below the numeric thresholds.

Separate the EOR’s payroll registrations from your company’s corporate-tax exposure, and assess the employee’s actual activities and authority.

The EOR and client can both have employment obligations; the service contract does not decide the issue by itself. The applicable law, court jurisdiction and actual control over the work matter, and wage-hour, leave and labour-relations tests are not interchangeable.

The DOL’s April 2026 joint-employer proposal is a proposal, not a universal enacted safe harbour. Allocate duties in writing and assess the working relationship under the rules that actually apply.

A PEO normally shares employment responsibilities with your existing US business; an EOR supplies the employment relationship through its own employing operation.

For a company without a US entity, that makes EOR the practical starting comparison. Neither label by itself removes every client liability. Check the contract, the employing entity and the payroll-tax arrangement, rather than assuming all third-party payroll services work alike.

Yes, providers can give a small US hire access to health cover and a 401(k), but “competitive” depends on the actual plan.

Remote publishes US health-plan options and retirement access; RemoFirst describes similar EOR benefits subject to provider and plan terms. Compare the insurer network, deductible, employer premium contribution, dependants, waiting periods and retirement match before including the package in an offer.

The EOR must assess the employee’s actual duties and the applicable pay tests; a senior title or a salary alone does not establish an overtime exemption.

Federal executive, administrative and professional exemptions generally involve both salary and duties conditions, while some categories differ. State rules can be stricter. If non-exempt, record working hours and pay the overtime required for that worker.

The EOR must review New York withholding and registrations, unemployment coverage and the employment terms that apply at the new location. A Texas payroll setup cannot simply continue unchanged after a move.

Give the provider the move date and work address before the first affected payroll, and review insurance and benefits coverage. New York City or Yonkers can add local considerations.

An EOR can employ the person through its own US payroll operation, so you do not obtain an EIN merely to run that employee’s payroll yourself.

That is different from hiring a payroll processor for your own employees. It is not a blanket exemption from US registrations: your company may still need an EIN for separate business or tax obligations, depending on its activities.