With the US accounting for almost a third of the global staffing market’s total revenue, it presents significant opportunities for those looking to expand their operations internationally. The American recruitment market is particularly attractive to ambitious overseas recruitment firms, as more businesses recognize its potential. 

However, entering a market of this size also comes with numerous challenges, particularly in navigating the legal landscape. Each of the 50 states has its own set of laws and regulations concerning worker classification, employment, taxes, and benefits.  

Here are some potential pitfalls to avoid: 

Employment Laws and Regulations: 

• The US has both federal and state-specific employment laws. Federal laws set the baseline, but states can impose more stringent requirements. It’s crucial to understand the specific regulations of each state you operate in. 

• At-Will Employment – most states follow “at-will” employment, allowing termination of employment by either party at any time. However, there are exceptions and anti-discrimination laws that must be adhered to. 

Wage and Working Hours Laws 

• Familiarize yourself with the Fair Labor Standards Act (FLSA), it outlines federal wage and hour laws, including minimum wage, overtime pay, and recordkeeping. 

• Keep in mind that you also have state and local laws to take into consideration. Each state and locality may have additional wage and hour laws that exceed federal requirements. 

Worker Benefits and Protections 

• Health insurance compliance – under the Affordable Care Act (ACA) most Americans are required to have health insurance coverage, either through their employer, a government program like Medicare or Medicaid, or by purchasing a plan through the health insurance marketplace. Many employers offer health insurance as part of their employee benefits package.  

• Retirement and other plans such as family and medical leave under the Family and Medical Leave Act work differently from most European countries for example. From duration to legal requirements, again you may have to consider both federal and state laws. 

Anti-Discrimination Laws 

Another factor to keep in mind is anti-discrimination laws, which you should adhere to in the recruitment process as well as during employment. 

• Equal Employment Opportunity (EEO), prohibiting discrimination based on race, color, religion, sex, national origin, age, disability, or genetic information. 

• Americans with Disabilities Act (ADA) ensuring reasonable accommodations for employees with disabilities. 

Immigration Compliance 

If you plan to relocate any of your employees to the US from overseas, you may also need to familiarize yourself with the following: 

• I-9 Forms  

• E-Verify 

Contractual Obligations 

• Clear Contracts – drafting clear and enforceable contracts with clients and contractors, outlining the scope of work, payment terms, and termination conditions is a crucial and will likely require you to take a legal partner on board so you can navigate any legal complexities.  

• Non-compete and non-solicit agreements are another part of the employment process that can result in costly mistakes for your business if not done correctly.  

Tax Compliance 

• Federal, state, and local taxes – similar to wage and working hour regulations, when it comes to taxes you will have to consider regulations on federal, state and local level.  

• Nexus laws – understand how different activities may create tax obligations in various states. 

Health and Safety Regulations 

• If you plan to open a physical office in the US, you should stay familiar with Occupational Safety and Health Administration (OSHA) regulations to ensure a safe workplace. 

Litigation and Dispute Resolution 

• Dispute Resolution and litigation risk management are another two things you should be prepared to face, that may hurdle your operation if not prepared. 

You can avoid some of the most common legal pitfalls by working with a specialist  Employer of Record.