Hiring in the US: An Intro

You’re growing and you're ready to go after the US market but first, you need someone on the ground. For most European startups at this stage, that first hire is a commercial one: a VP of Sales, a Head of Business Development, or an Account Executive who can open the market and start generating revenue. But whatever the role, the mechanics of actually hiring someone in the US as a foreign company are confusing, and most of the advice out there assumes you already have a legal team. This blog post is for everyone else.

Entity vs. EOR

Before you post a job description, you need to answer a structural question. Are you going to set up a US legal entity, or are you going to use an Employer of Record?

A US entity means you incorporate, open a bank account, register for payroll in whichever state your employee lives, get workers' compensation insurance, and take on full legal responsibility for the employment relationship. That process takes two to four months and costs upward of $8,000 to $15,000 in formation fees before you've paid anyone a salary. If your first hire is in California and your second is in New York, you're registering in two states.

An Employer of Record is a third party that becomes the legal employer of your US staff on your behalf. You manage the work; they handle payroll, taxes, benefits administration, and compliance. The major EOR platforms, Deel, Remote, Remofirst, and Multiplier among them, are global platforms built specifically to serve foreign companies hiring in countries where they don't have an entity. Costs run roughly $500 to $700 per employee per month plus benefits.

For most European startups making their first US hires, an EOR is probably the right starting point. You can always set up your own entity later.

The "employment contract" situation

Almost all US employment is at-will, meaning either party can end the employment relationship at any time, for any legal reason or no reason at all, with no required notice period and no statutory severance.

A US employee is provided an offer letter, not a contract. And even if an offer letter looks a lot like a contract, it is not a contract! An offer letter sets out the role, compensation, benefits, and start date, but it does not create a fixed term or require cause for termination. Review the language carefully before you send it: nothing in the letter should imply job security or a guaranteed employment period.

Every US offer letter should include: job title and reporting structure, base salary, any bonus or commission structure, equity if applicable, a benefits summary, start date, and a clear at-will statement.

What US employees expect in terms of benefits

The US has very few federally mandated benefits for small employers. This is not a surprise to most European founders, but it does mean you're making decisions that in Europe would simply be set by law.

Here's what you can expect, keeping in mind that the seniority and level of the role matters a lot here:

• Health insurance is a significant factor in attracting talent. You are not legally required to offer it below 50 employees, but going without it puts you at a real disadvantage, particularly for senior hires. If you're not ready get into the insurance weeds, a health reimbursement that gives employees a fixed monthly stipend, often $200 to $300, to purchase their own coverage could be used. And if you use an EOR, they will be able to help you provide health insurance at an additional cost.

• A company should offer PTO to be competitive, and in some states, PTO is required by law. Unlimited PTO policies became common at startups a few years ago but have fallen out of favor. They are genuinely difficult to administer at a small company without an HR function, and PTO laws vary significantly by state in ways that catch small employers off guard. A straightforward policy with a clear number is easier to manage.

• A 401(k) retirement plan may be worth setting up even without an employer match. Under the SECURE 2.0 Act, small employers with 50 or fewer employees can claim up to $5,000 per year in federal tax credits for the first three years of a new plan, which in many cases covers the full cost of setting it up.

• As for equity, many US startup candidates expect stock options early: US employees joining a startup with fewer than 100 staff expect options from the start. Make sure your option plan is set up and that you can explain the terms clearly.

What you're going to pay

The US is an expensive hiring market, punto. Major cities are expensive, and the cost of living and inflation has risen significantly in recent years, pushing salary expectations up across the board.

For the commercial roles that typically make up a first US hire, benchmark against current market data using LinkedIn Salary, Glassdoor, or Carta's compensation tool. A senior sales or business development hire in a major US market will expect a base salary meaningfully higher than a comparable European hire, with a clear commission plan or variable income.

The employer cost structure in the US is lower than in Europe on paper, because there are no mandatory pension contributions and statutory payroll taxes are lighter. Once you add higher salaries and benefits contributions, your total employment cost will be high regardless.

The state-by-state problem

Employment law in the US is not uniform. Federal law sets a floor, but states layer significantly on top of it. California has some of the most employee-protective laws in the country, including strict rules on termination, pay transparency requirements, specific leave entitlements, and severe limitations on non-compete agreements. New York has its own paid leave requirements. Colorado and several other states require salary ranges in job postings.

If your first hire is in California, you are operating under a materially different legal environment than if they're in Florida. Your EOR provider, if you have one, should walk you through state-specific requirements before you make the hire.

The bottom line

Hiring in the US as a European startup is doable without a team of lawyers. Start with an EOR to reduce setup time and compliance risk. Offer benefits that reflect US market expectations for the level you're hiring at. Price roles against US benchmarks and go in knowing it costs more than you think. Know which state your employee is in before you finalize anything.

If you're navigating this and want a thought partner, get in touch.