Global coverage
Available in +150 countries
Employer costs, taxes, minimum wage and leave rules for hiring here, plus the faster route: hire a contractor with Ontop, no local entity needed.
2026
Currency
USD $ (US Dollar)
Employer contributions
~6.2% Social Security + 1.45% Medicare = 7.65% (plus FUTA 0.6%)
Minimum wage
$7.25/hour (unchanged since 2009) ≈ $1,257/month
Payment frequency
Bi-weekly / Semi-monthly
Calendar year (Jan 1 - Dec 31)
Capital
Washington D.C.
Timezone
Multiple (EST/CST/MST/PST)
Short answer: The minimum wage in the United States in 2026 is $7.25 an hour, unchanged since 2009 (about $1,257 a month). A typical full-time salary is around $5,417 a month. Professionals paid as contractors through Ontop earn a median of $2,620 a month (101 active contracts, September 2026).
| 2026 figure | Local currency | USD |
|---|---|---|
| Minimum wage, monthly | $1,257 | $1,257 |
| Minimum wage, hourly | $7.25 | $7.25 |
| Average salary, monthly (approx.) | $5,417 | $5,417 |
| Median contractor pay through Ontop, monthly | n/a | $2,620 |
Minimum wage details: Federal floor unchanged since 2009-07-24; 30 states + DC higher: WA 17.13, CA 16.90, NY 16.00 (17.00 NYC/LI/Westchester), CT 16.94, DC 18.40 (from 2026-07-01); ~20 states (e.g. TX) use federal 7.25.. USD figures use exchange rates from 1 October 2026. Updated October 2026.
Next step: compare contractor rates in the United States with other countries or estimate the full cost of an employee.
Two kinds of companies land on this page. A company based outside the US that wants American talent without opening a US subsidiary, and a US company weighing a W-2 hire against a 1099 contractor. The question is the same for both: does this role need an employee, or does it need someone who delivers work?
US payroll is light on mandated benefits but heavy on administration. Running it means registering as an employer, withholding federal and state income tax, depositing taxes on a semi-weekly or monthly schedule, filing Form 941 every quarter and issuing a W-2 by January 31. Every state the person works from adds its own layer.
On paper, the employer's share looks small. On an $8,000 monthly salary you add about $612 in FICA, for a total of roughly $8,612 a month before anything else.
An independent contractor (1099) invoices you for work, handles their own taxes and sits outside your payroll. Companies paying contractors in the United States through Ontop pay a median of $2,620 a month (the middle half earn between $1,000 and $5,500), across 101 active contracts in September 2026. That is Ontop's own book, not a market survey, and the wide range reflects how varied US roles are. Use the contractor cost calculator by country to compare your own numbers.
Ontop acts as contractor of record. You sign a compliant contract (yours or an Ontop template), get support on classification, and pay from one platform. Your contractor gets paid into the Ontop Global Account in USD. No US entity, no state registrations, from $49 per contractor per month.
The IRS looks at who controls how, when and where the work gets done. If you set fixed hours, require exclusivity, supervise the method and treat the person like the rest of your staff, that is an employee, and a 1099 label will not change it. Hire a W-2 employee in that case. Ontop does not offer employer of record and never becomes the legal employer. For project-based, outcome-driven work, read how the EOR alternative for contractors works.
Employee or contractor
If the work is project-based or you need to move fast, a contractor gets you the same talent with a fraction of the paperwork.
Employee
~USD 8,612 total
/month
For a gross salary of
USD 8,000 gross/month
Setup
Local entity or employer of record, plus tax and social security registration
Employer contributions
~6.2% Social Security + 1.45% Medicare = 7.65% (plus FUTA 0.6%)
Mandatory extras
Annual Performance Bonus
Monthly admin
Bi-weekly payroll - federal/state tax deposit - quarterly 941 - annual W-2 by Jan 31
Contractor with Ontop
No local entity
$49
/contractor/month
The agreed rate, plus Ontop from $49 per contractor per month.
Sign a contract, yours or an Ontop template. No local registration on your side.
No employer contributions: the contractor handles their own taxes and social security.
One payment per invoice, in one payroll run.
Paid into their Ontop Global Account in USD.
See the full side-by-side comparison
+
A contractor's rate usually covers their own taxes, so compare total cost, not just gross pay. Run your numbers in the contractor vs employee calculator.
Hiring here: the full breakdown
+
Payroll guide
Employer costs come on top of gross pay. Use these figures to budget a hire and to compare it with a contractor rate.
Total monthly cost
~USD 8,612 total
Example gross salary
USD 8,000 gross/month
~USD 5,900 net (est.)
Net pay to the employee
Tax and employee contributions
Withheld from gross pay
~USD 612 FICA
Employer contributions on that salary
Employer contributions
~6.2% Social Security + 1.45% Medicare = 7.65% (plus FUTA 0.6%)
Employee contributions
6.2% Social Security + 1.45% Medicare + federal/state income tax
Total cost above gross
~7.65% above gross (FICA)
Figures are estimates for planning. Rates change with each budget and can vary by sector, so confirm them before you make an offer.
What people earn here, from the legal floor to the main cities, plus the extra pay most employers budget for.
National average
~USD 5,417
Per month
New York City
USD 7,000 - 20,000
~40%
San Francisco
USD 8,000 - 22,000
~45%
Monthly gross. National average salary per year:
~USD 65,000
Minimum wage
$7.25/hour (unchanged since 2009) ≈ $1,257/month
Paid:
Hourly
Extra pay
Annual Performance Bonus
Discretionary, variable pay common
December/March
Collective agreements can set sector minimums above the national one. Check whether one applies to the role before you set the salary. Next step: estimate the full cost of an employee.
Who collects what, how often, and what happens when a payment is late.
Income tax brackets
10% / 12% / 22% / 24% / 32% / 35% / 37% (federal) + state income tax
Tax year:
Calendar year (Jan 1 - Dec 31)
Filing calendar
Quarterly (Form 941) or semi-weekly deposit
Social security payments
April 15 (individual Form 1040)
Income tax
By January 31
Employee tax certificate
Form W-2 (Annual Wage Statement)
April 15
Annual return
Federal Form 1040
Late payment penalties
Late 941: 2-15% depending on days late; late FUTA: same; late W-2: USD 50-280/form
Who collects what
Internal Revenue Service (IRS)
Federal income tax and FICA
Department of Labor (DOL)
FLSA wage and hour enforcement
State Departments of Labor
State income tax and wage laws
The time off and paid leave every employee is entitled to by law. Budget for it when you compare an employee with a contractor.
Annual leave
Paid Time Off (PTO) / Vacation
No federal minimum (states set minimums: CA 10 days, NY 40 hrs PTO)
Public holidays
~11 federal holidays (observed); states may add
Sick leave
Sick Leave
Federal: no mandate; many states: 40-80 hrs/year paid
Maternity leave
12 weeks FMLA (unpaid federal); some states pay: CA 60-70%, NY 67%
FMLA unpaid; state programs vary
The contracts you can use, and what ending an employment relationship costs.
Permanent
At-Will Employment (no formal name)
Fixed term
Fixed-Term Employment Contract
Independent contractor
Independent Contractor (1099)
Collective agreements
Collective Bargaining Agreement (CBA)
Ending employment
WARN Act Notice / Severance
How it is calculated
Not federally mandated; per employment agreement
Calling someone a contractor does not make them one. If the role works like employment in practice, local authorities can reclassify it, with back contributions and penalties.
The errors that most often trigger back payments and penalties here, and what to do instead.
Worker Misclassification (Employee vs 1099 Contractor)
Risk Level: HIGH
The IRS, DOL, and state agencies apply different but overlapping tests (ABC test, economic reality test, common law test) to classify workers. Misclassifying an employee as a 1099 contractor triggers back FICA, federal and state income tax withholding, unemployment insurance, and benefits liability. The IRS Voluntary Classification Settlement Program exists but requires proactive self-disclosure.
State-Specific Payroll Tax and Leave Law Non-Compliance
Risk Level: HIGH
The US has 50 states with independent wage, leave, and payroll tax laws. California, New York, Washington, and Colorado have among the most demanding requirements - including state SDI, paid family leave, local city minimum wages, and salary history bans. A single federal compliance approach fails across multi-state workforces.
1 of 6
Next topicOntop is the Global Workforce Engine for contractor teams: contracts, compliance documents and payments in 150+ countries.
150+
countries
$49
per contractor per month
1 run
to pay your whole team
USD
Global Account for every contractor
FAQ
+
Ontop works with contractors, not employees. As Contractor of Record, Ontop handles contracts, compliance documents and payments for contractors in 150+ countries. To employ someone, you need a local entity or an employer of record. Ontop doesn't act as your employer of record.
+
Employers pay contributions on top of gross salary. The cost table on this page shows the rates that apply here and a worked monthly example. A contractor with Ontop costs the agreed rate plus Ontop from $49 per contractor per month.
+
Many countries require an extra month or an annual bonus for employees. The salaries section on this page shows the one that applies here and when it is usually paid. Contractors are paid what you agree in the contract.
+
Employers withhold income tax and the employee's social security share every pay run, then pay them to the local authorities. The taxes section on this page lists the brackets, rates and filing deadlines that apply here.
+
Yes. The contractor vs employee calculator compares the full cost of an employee, employer contributions included, with a contractor rate plus Ontop's monthly fee.
+
When the work is project-based, you need to start fast or you don't have a local entity. If the person will work fixed hours, under your direction and only for you, local law may treat them as an employee, so hire them as one.
+
Misclassifying employees as contractors, missing tax and social security deadlines, and ignoring collective agreements that set higher wage floors. The mistakes section on this page covers the ones that come up most often here.
Compare employer costs, taxes and contractor rules in nearby countries:
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.
Ready to hire? See Ontop pricing or learn how to build a global team without an employer of record.