Zero-hours and casual work in the United States
Reviewed by Mellow Editorial Team, HR & payroll content team
Zero-hours contracts, as a formal legal category, do not exist in the United States. What other countries call "zero-hours" work is handled in the US through a mix of at-will employment, part-time schedules, on-call arrangements, and — most commonly — independent contractor relationships. Each carries different legal obligations for employers.
What "zero-hours" looks like in US practice
In the UK and Ireland, a zero-hours contract is a named employment status. In the US, there is no equivalent label or statutory framework. Instead, employers achieve the same flexibility through:
- On-call or casual employees — workers who are employed but only scheduled when needed. They are legally employees: payroll taxes apply, and minimum wage laws govern any hours actually worked.
- Part-time variable-hour employees — formally on payroll with no guaranteed hours, but scheduled week to week based on demand.
- Independent contractors — engaged per project or shift, paid via 1099-NEC rather than W-2. No payroll tax withholding, no employer FICA match, no benefits obligations — but only if classification is correct.
The practical effect can look identical: a worker with no guaranteed hours waiting to be called. The legal consequences, however, differ substantially depending on classification.
Employee vs. contractor: the classification question
Misclassifying a worker is one of the costlier mistakes an employer can make. If someone is economically dependent on your business, works exclusively for you, or operates under your direction and control, the IRS and Department of Labor are likely to treat them as an employee regardless of what your contract says.
For true employees — even casual ones with unpredictable hours — you must:
- Withhold federal income tax using the information on their Form W-4
- Withhold and match FICA taxes: Social Security at 6.2% (up to the annual wage base) and Medicare at 1.45%, with no cap
- File Form 941 quarterly and issue a Form W-2 by January 31
- Comply with federal and state minimum wage laws for every hour worked
- Follow applicable federal and state overtime rules under the Fair Labor Standards Act (FLSA)
For independent contractors, you report payments of $600 or more annually on Form 1099-NEC, also due by January 31. The contractor pays their own self-employment taxes. You do not withhold anything.
On-call time and reporting-time pay
One area where casual arrangements get complicated is on-call time. Under the FLSA, time an employee spends "waiting to be engaged" may or may not be compensable — it depends on how restricted the employee's freedom is while on call. If they must stay on-site or respond within minutes, that waiting time is likely compensable. If they are genuinely free to use the time as they choose, it generally is not.
Several states go further. California, New York, New Jersey, and others have "reporting time pay" or "predictive scheduling" laws. These can require employers to pay a minimum number of hours if a worker shows up for a shift that is cut short, or to give advance notice of schedule changes. If you run a retail, food service, or hospitality business in one of these states, review local rules carefully before relying on a fully flexible, last-minute scheduling model.
At-will employment and flexible scheduling
Because employment in the US is generally at-will, neither employer nor employee is obligated to guarantee ongoing work. An employer can reduce hours, change schedules, or stop scheduling a worker altogether without notice — subject to anti-discrimination laws and any written agreements.
This makes the US labor market structurally more flexible than many comparable economies, but it also means workers carry significant income risk. Some employers choose to address this by setting a minimum guaranteed hours threshold even for casual staff, which can improve retention and reduce the legal gray areas around on-call pay.
State law adds significant variation
There is no federal paid leave mandate, and no federal law requiring a minimum number of guaranteed hours. But state and local rules vary widely. A few things worth checking in your state:
- Predictive or fair scheduling laws — Seattle, Chicago, New York City, and the state of Oregon have enacted rules requiring advance scheduling notice for hourly workers in certain industries.
- Paid sick leave — many states and cities require it even for part-time workers who cross a minimum hours threshold.
- Benefits eligibility thresholds — some state benefit programs trigger at relatively low average weekly hours, which can affect how you structure variable schedules.
- Non-compete enforceability — if you use contractor agreements with restrictive covenants, note that California prohibits most non-compete clauses.
If you manage workers across multiple states — a common situation for companies using how Mellow runs payroll across six countries remote or distributed workforces — each state's rules apply independently to workers located there.
Practical guidance for employers
Keep documentation of how and why you classify each worker. If someone starts as a casual contractor but gradually shifts to working regular hours for one company, the classification risk grows. Review actual working patterns periodically, not just the original agreement. When in doubt on classification, IRS Form SS-8 allows you to request a formal determination — though it takes time and creates a paper trail, it is preferable to a back-tax liability discovered during an audit.
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