(ii) Employers must comply with federal retirement benefits regulations, such as Social Security and Medicare contributions, and may also offer 401(k) retirement plans.
7.4 Employment Contracts and At-Will Employment (i) Generally, the U.S. follows an at-will employment doctrine, meaning that employers can terminate employees without cause, except in cases of discrimination or retaliation. (ii) Some states (e.g., Montana) and industries (e.g., healthcare, entertainment, finance, and technology) require written employment contracts outlining job responsibilities, compensation, and termination conditions. (iii) N on-compete, non-solicitation, and confidentiality agreements may be enforceable in some states but restricted in others (e.g., California bans most non-compete agreements). (iv) Foreign employers accustomed to stricter employment protections in their home countries should adjust their contract policies accordingly. 7.5 Worker Classification: Employees vs. Independent Contractors Misclassifying workers can result in legal and tax penalties. Employers must distinguish between employees and independent contractors based on the degree of control over work performed. 7.5.1 Employees Typically work under the employer’s direct supervision, follow set schedules, and use company resources. Employers withhold payroll taxes, provide benefits (where applicable), and comply with wage and hour laws. 7.5.2 Independent Contractors Operate with more autonomy, often set their own schedules, and use their own equipment. They are responsible for their own taxes and do not receive employer- provided benefits. (i) The IRS and DOL provide guidelines for classification, and some states have stricter tests (e.g., California’s ABC test for independent contractors). (ii) Foreign businesses hiring U.S.-based remote workers should carefully classify them to avoid unexpected tax liabilities.
35
Made with FlippingBook Ebook Creator