This is it! Whether your startup has a California dreaming CEO, your company needs to legitimatize its U.S. market entry, or the management team took the executive decision to open offices in the United States, there are essential things you need to be aware of. Luckily, we’re here to help.
Welcome to the land of the free! This is where you can build great projects without legal compromises, where everything goes fast if you’re confident and talented enough to assert yourself, where your employees can leave your company at a moment’s notice …
Wait … what was that again?
Yes, if you weren’t aware of this last fact, carefully read the rest of this blog post. Despite what it looks like, hiring and firing in North America is not a simple game. That’s why we will provide you with insightful facts and advices about U.S. employment laws, various characteristics of California’s hiring practices, as well as federal and state laws that come into play.
Back to the United States’ practice of: at-will employment. One can leave his/her job without notice/reason; one can fire an employee without notice/reason. Of course most companies and employees are diligent towards their line of work and people strive to stay in good terms, nonetheless this hiring & firing principal is widely respected. To protect the interests of your company, you should consider including specific clauses in your employment contracts and specify a time fixed notice in case of resignation or dismissal. Nevertheless, carefully prepare these kinds of documents as the law is often strict on employment matters.
Practically, an employment agreement can be oral or written. Everything that is said regarding the position and its specifications applies. The wages as well as holidays are regarded as parts of an employment contract. Therefore, a company should consider having a written agreement for each employee it recruits. It is important to pay attention to the law, as it will always win over what is stated in an employment contract, even if it is agreed and signed by each party.
Additionally, an employer may need to include restrictive covenants in employment agreements. It secures several clauses like non-competition, non-solicitation, confidentiality, patent-related rules etc. Again, the law regarding these specificities varies from state to state; for example in California there is only a few particular cases where it is possible to enforce a non-competition clause.
Other clauses you should include in your employment agreement are:
– Any specific scenario that can happen in the employer / employee relation: office location change, maternity leave …
– The counterparts linked to these scenarios: additional bonuses, end of agreement, wage revision …
– Policies that are specific to your company: IT, media relations, safety and security …
These specificities can be added amongst others to an employee handbook. It is a legal piece commonly used by U.S firms that states company-wide rules to be followed by every employee. It is strongly recommended to establish an employee handbook when you hire more than one person.
In regards to hiring, the U.S employment law pays great attention to undeclared work. It is not just about illegal labor, but also referring to freelancer hiring. If the mission and status of a freelance worker are too close to a full-time employee, there is a high risk of legal infringement.
Last but not least, keep in mind that taxes are state dependent; therefore employment taxes differ from state to state. As an employer, you should be prepared for taxes particularities (including states reciprocal agreements) ex: if you need to hire someone in a state other than the one where you are incorporated in.
In the United States, the wage is delivered following one of these methods: per hour worked or per weekly/monthly salary. A standard salary is fixed on a 40-hour work week. The minimum wage is again state dependent. As of January 2015, the minimum wage in the U.S. is $7.25 per worked hour, and $9 per worked hour in California.
The law governing overtime payment is also state dependent. While the federal law states that there are two cases for overtime payment duty, exempt or non-exempt, a state like California adds another layer of complex rules to the condition, depending on employee and employer statuses.
We cannot stress enough the need to know or be surrounded with people who know the characteristics of both federal and state laws.
Lawsuits are a particularly common employee threat for companies in the U.S and are often costly. That is why it is really important to follow the rules, write everything on the employment agreement and on the employee handbook. You won’t be able to control every facets of your company; you may face a potential lawsuit. If it happens, do not retaliate; it could make things worse. Having an offensive behavior / strategy is rarely a good option.
Keep in mind that within a company, people are held accountable for their actions and can be subject to personal lawsuits regardless of their title / position that includes the CEO, CFO, Manager, HR etc.
The final point that we will touch upon here is harassment. Whether it is sexual, racial, discriminatory in any way, it is a really big deal in the U.S. Be really careful with what subject you discuss with your staff, any misplaced word or gesture can cost literally millions to your business, and can dramatically damage your personal reputation.
The fact is that there are many specific federal and state laws to abide to; this is just a quick glance at a few U.S employment laws.
If you are interested in establishing your business in the U.S. and want to learn more about hiring and firing in North America, consider applying to our Silicon Valley accelerator program: ubi i/o.
Don’t hesitate too long! The deadline for application submission is January, 31st 2015.