Hiring in the United States looks straightforward on the surface. There’s no universal paid leave mandate, no single national healthcare scheme, and no statutory minimum vacation entitlement. In practice, that flexibility creates its own complexity. What you’re required to provide depends heavily on your headcount, the states where your employees are based, and what the market expects. Get it wrong and you’re exposed to state-level penalties, retention problems, or both. This guide walks through every major category of benefits and leave for US-based employees in 2026, so you know exactly what’s mandatory, what’s market standard, and where state law steps in.
How benefits and leave work in the us
The US system is layered. Federal law sets a baseline that’s often minimal or silent on key topics. States and cities then add their own requirements, which can be significantly more generous. On top of that, market expectations push most employers to offer benefits that go well beyond the legal floor. As you build out your benefits package, you’ll need to account for all three layers, particularly if you’re hiring across multiple states.
Vacation and paid time off
There’s no federal law requiring employers to offer paid vacation. How much time off you provide, and on what terms, is entirely your decision unless a state or local rule applies.
That said, once you offer a paid vacation benefit, most states treat accrued but unused vacation as earned wages. California is the clearest example: employers can cap accrual, but they can’t implement a “use it or lose it” policy or forfeit accrued balances at termination. Several other states take the same position. If you’re operating in multiple states, your PTO policy needs to account for this variation.
Market standard for new employees is 10 to 15 days of paid vacation per year. Many employers move to unlimited or flexible PTO policies, but these require careful design to avoid inadvertently creating wage liability in states with strong accrued-vacation protections.
Federal and public holidays
The federal government recognises 11 public holidays. These obligations apply only to federal employees. Private employers are not required by federal law to give employees paid time off on any public holiday.
In practice, most private employers offer 8 to 11 paid holidays per year as a market-standard benefit. Closing your business on federal holidays without paying employees is legally permissible at the federal level, but your employment contracts, employee handbooks, and state law all shape what you can and can’t do in practice.
Fmla: federal family and medical leave
The Family and Medical Leave Act (FMLA) is the most significant piece of federal leave legislation. It provides eligible employees with up to 12 weeks of unpaid, job-protected leave per year.
Who it covers
FMLA applies to employers with 50 or more employees within a 75-mile radius. Employees must have worked for you for at least 12 months and logged at least 1,250 hours in the past year to be eligible.
What it covers
FMLA leave can be taken for a serious health condition affecting the employee or a close family member, the birth or adoption of a child, or the placement of a foster child. Leave can be taken all at once or intermittently, which adds administrative complexity, particularly for roles that require consistent coverage.
Key points for employers
The leave is unpaid at the federal level. You must maintain the employee’s group health benefits during the leave and restore them to the same or an equivalent role when they return. The 2026 eligibility thresholds and coverage rules are unchanged from prior years. If you have fewer than 50 employees, FMLA doesn’t apply to you federally, but check applicable state laws before assuming you have no obligations.
Paid family and medical leave: state programs
There’s no federal paid family and medical leave program. State programs fill part of that gap, and the list of states with active programs continues to grow.
As of 2026, states with paid family and medical leave programs include California, New York, New Jersey, Washington, Massachusetts, Connecticut, Colorado, Oregon, Delaware, Maryland, Rhode Island, and Minnesota. Minnesota’s program became effective in 2026, with a 90-day employment requirement for job protection to apply.
The structure, benefit levels, and funding mechanisms vary significantly by state. Some programs are employee-funded through payroll deductions, others involve employer contributions, and benefit amounts and duration differ. If you’re hiring in any of these states, you’ll need to understand the specific rules that apply, including registration, withholding, and reporting obligations.
For parental leave specifically, several state programs provide meaningful paid time: California offers up to 8 weeks, while New York, New Jersey, Washington, and Massachusetts each provide up to 12 weeks of paid leave. These state benefits run alongside federal FMLA rather than replacing it, and they can often run concurrently.
Health insurance
Health insurance is the most consequential benefit you’ll manage as a US employer. The Affordable Care Act (ACA) distinguishes between employers based on size.
Employer mandate for large employers
If you’re an Applicable Large Employer (ALE) with 50 or more full-time equivalent employees, you’re required to offer affordable health coverage that meets minimum value standards. In 2026, coverage is considered affordable if the employee’s share of the premium for self-only coverage doesn’t exceed 9.96% of their household income. Failing to offer qualifying coverage exposes you to the ACA employer shared responsibility payment.
Employers under 50 fte
If you have fewer than 50 FTE employees, the federal employer mandate doesn’t apply. You’re not required to offer health insurance. In practice, however, offering a group health plan is market standard across employer sizes. Candidates in most professional roles expect it, and going without it puts you at a competitive disadvantage.
Hsa-compatible plans
If you offer a High Deductible Health Plan (HDHP), your employees can contribute to a Health Savings Account (HSA). The 2026 limits are:
- Self-only coverage: $4,400 employee contribution limit; minimum HDHP deductible of $1,700; maximum out-of-pocket of $8,500
- Family coverage: $8,750 employee contribution limit; minimum HDHP deductible of $3,400; maximum out-of-pocket of $17,000
- Catch-up contributions (age 55 and over): additional $1,000 per year
HSAs are a tax-efficient way for employees to manage healthcare costs, and many employers contribute to employee HSAs as part of their benefits strategy.
Retirement benefits: 401(k)
There’s no federal requirement for private employers to offer a retirement plan. A 401(k) is market standard, and the absence of one will cost you in recruiting, particularly for experienced candidates.
In 2026, employees can contribute up to $24,500 to a 401(k) plan. Employer matching contributions are discretionary: there’s no statutory minimum, and you set the terms. Vesting schedules determine when employees gain full ownership of employer contributions, and these are governed by plan documents rather than federal law.
Several states have introduced state-run retirement savings programs for private-sector employees whose employers don’t offer a plan. If you don’t offer a 401(k) and you’re hiring in California, Oregon, Illinois, Colorado, or a growing number of other states, you may be required to facilitate employee enrollment in the state program instead.
Sick leave
There’s no federal sick leave mandate for private employers. FMLA provides unpaid protected leave for serious health conditions, but it doesn’t require you to pay employees for ordinary sick days.
State and local law picks up a significant amount of this gap. As of 2026, states with paid sick leave requirements include California, New York, New Jersey, Washington, Massachusetts, Connecticut, Colorado, Maryland, Oregon, Michigan, Minnesota, Illinois, Nevada, Rhode Island, Vermont, Arizona, and Maine, along with a large number of cities and counties with their own ordinances.
If you’re hiring across multiple states, you’ll likely be subject to multiple sick leave regimes with different accrual rates, caps, carryover rules, and permitted uses. Tracking these requirements manually is error-prone. Building your sick leave policy around the most generous applicable state law is a common approach, but you’ll still need to document compliance jurisdiction by jurisdiction.
How an EOR manages us benefits
Benefits administration in the US is genuinely complex. You’re navigating a patchwork of federal rules, state mandates, market expectations, and plan administration requirements that vary by headcount and geography. An Employer of Record (EOR) handles this infrastructure on your behalf.
When you hire through an EOR, the EOR becomes the legal employer of record in each state where your employees are based. That means the EOR handles state-specific sick leave compliance, PFML registration and withholding, ACA reporting, 401(k) plan access, group health plan administration, and payroll tax filings. You retain full control over who you hire, what they work on, and how you manage performance.
For companies hiring US employees without a domestic entity, or expanding into new states without the infrastructure to manage multi-state compliance, EOR services remove the operational burden and reduce the risk of costly missteps.
To see how RemotePass handles US benefits and leave compliance across every state, book a demo at remotepass.com/request-demo.
