The United States is one of the largest countries in the world by both population and landmass: vast and culturally diverse, it is also one of the most popular business destinations, hosting employers and employees from across the globe. If your business is expanding to the US, and you need to move employees to your new location, you’ll need to take into account a range of global mobility issues, from navigating the employment tax and visa process and setting up a payroll, to finding suitable accommodation and the best local schools.
US Global Mobility Basics
When moving employees to the US (or anywhere in the world) you’ll need to explore a range of basic issues around the feasibility of their travel and relocation. More specifically, employers and employees will need to consider a range of personal and logistical issues prior to any move to the US and factor those into a mobility plan and budget. Examples of basic personal and logistical mobility considerations include:
- Possessions: Your employees will need to decide which personal items they need or want to take with them when they relocate, and which they will acquire in the US. Personal items may include clothes, entertainment devices, and vehicles: employers should consider customs requirements, shipping times and costs for any items being relocated - and storage options for those that are not.
- Travel: Aside from making travel arrangements for mobile employees that are relocating to the US, employers should also consider periodic return visits as part of their mobility plan.
- Relatives: Employees that are relocating with spouses, partners, and families may have certain additional personal needs to manage including family accommodation, travel, schooling, and medical considerations.
- Pets: if pets are being relocated as part of a move to the US, the cost and logistics of their travel must be considered. There may also be medical and vaccination arrangements to consider upon arrival.
- Property: If mobile employees own their property in their country of residence, they will need to consider how it is managed during their absence. They may wish to sell the property or rent it out.
Employees that are moving to the US for work purposes but who do not intend to live in the US permanently, need to obtain a non-immigrant visa. This type of visa is available in a range of categories, including E1 and E2 visas for investors, and J1 visas for workers (and students) on a recognised exchange program.
For global mobility purposes, many foreign employees will apply for the following categories of non-immigrant visa, however this is not an exclusive list of the options available or what would be most appropriate to your employees circumstances:
- H1B Visa: The H1B visa enables workers with a university-level qualification to take a job in the US in a speciality field. H1B visas also apply to foreign researchers working for the US Department of Defense, and to fashion models.
- H2B Visa: The H2B visa is intended for workers that will be employed in temporary roles, or that will be filling seasonal employment shortages that are not in the agricultural sector.
- L1 Visa: Intended for employees of multinational companies that are transferring to positions in the US from another country. The L1 visa also allows foreign companies to send employees to the US to establish a new company branch.
You should seek advice from an immigration specialist to ensure both you and your employee are compliant from an immigration perspective and that the visa applied for is appropriate in the circumstances.
Employers must consider how their mobile employees will be compensated in the US, taking into account exchange rates, the employment tax landscape, and other factors such as non-cash benefits and pensions. The specific details of a US compensation package will need to be discussed on an individual employee basis but should take into account personal factors such as accommodation, schooling, cost of living differentials, location allowances, and any extra costs associated with relocation.
Many companies may find it helpful to engage a benefits provider who will be able to provide guidance on what is normally offered to employees in terms of benefits in kind as this will almost certainly be different from the benefits landscape in the home location and may also vary sector to sector and depending on the seniority of the employees.
Related to an employee’s relocation compensation package, employers should carefully consider employee healthcare in the US. The US healthcare system is based on private insurance schemes which means that employees must purchase a plan, or receive one as part of their employment compensation, in order to receive medical treatment. Under US legislation, employers with more than 50 employees must provide a private healthcare plan to their employees.
Again, a benefits/healthcare provider will be able to provide tailored guidance based on your company’s individual needs.
US Payroll and Tax Considerations
One of the major challenges of moving a workforce into the US is setting up payroll in compliance with federal regulations as well as state and local rules. Payroll legislation and regulations vary significantly depending on the location within the US where the employee will live and work, with different income tax requirements existing from state to state. While federal income tax is levied at between 10-37%, US state and local income tax rates are applied in addition to the federal rate – in some cases, no state or local income tax is charged at all (Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming)!
US payroll departments must also consider federal social security contributions (6.2%), Medicare contributions (1.45%), additional Medicare (0.09%) and (aforementioned) health insurance contributions.
One of the major obstacles employers can encounter when mobilising employees to different locations within the US is the state employer payroll withholding and unemployment tax registration requirements. Whilst the registration process at a federal level is relatively straightforward, we recommend seeking advice on the state registration requirements as early as possible in the process of expanding into a new state.
Bear in mind that many US states also have state/local/city taxes which should also be taken into consideration.
Employers must consider whether to provide accommodation for employees that move to the US and how to reflect that provision in the employee’s compensation package. Employee accommodation should reflect welfare needs and the needs of family members, with important considerations including proximity to schools, shops, public transport, and other amenities.
While most major US cities have well developed infrastructure and transport systems, some rural and remote areas have fewer medical, education, shopping, and entertainment resources in close proximity.
Some companies look at the cost of living in that specific state/city to determine whether offering accommodation, accommodation allowance or an uplift in salary would be appropriate in the circumstances. As with all compensation offered, there may be an income tax and social security liability for the employer and/or the employee and so you should seek advice from a specialist mobility advisor to ensure you understand the full implications of the remuneration package you are looking to offer an employee.
Life in the US
The US is home to a diverse spectrum of people and cultures and it may be worth helping employees prepare for the transition from their home country so they know what to expect when they arrive. Since English is the most common language in the US, and the most commonly spoken language in business contexts, it might be worth offering language lessons to non-English speaking employees.
Similarly, employees may benefit from knowledge of everyday life in the US, including how to arrange banking facilities, utilities, internet connections and mobile phone contracts. Knowledge of the US governmental system at the federal, state, and local levels may also be helpful.
Learn more about global mobility, payroll and business challenges in the USA by exploring our Global Insight Guide to the USA.