Hiring Out-of-State Employees
Employers with rapidly growing businesses are expanding their talent searches beyond state borders to find the skills, experience, and knowledge they are seeking.
Expanding is a sign of stability and certainly exciting; however, there are employment-related compliance obligations at the State and Federal level that employers need to consider before hiring out-of-state employees.
Recruiting and Hiring Laws by State
When hiring out-of-state employees, pre-employment questions must be carefully reviewed before initiating the interview process. State laws vary based on certain topics including but not limited to salary history, disability, medical, and genetic information inquiries.
Considerations must also be made for laws regarding background checks and drug screenings.
Ban-the-box laws, a criminal background check law prohibiting employers from inquiring about criminal history, have been adopted by several states and cities across the country.
State-Based Taxation and Wage Regulations
Wage laws and tax requirements differ by state, and employers are required to register with each state to conform to the unemployment and state tax requirements. Upon hire, it is important to conform to wage, hour, and overtime laws, based on the state where the employee resides.
Many states impose income tax on earnings, requiring employers to comply with regional payroll tax requirements including the state’s own W4 form. Additionally, employers must stay on top of the state’s latest wage laws, income withholding requirements, wage and tax reporting requirements, and business registration requirements.
State Employee Benefit Requirements
Employer-provided insurance options may vary depending on which health insurance coverage companies offer in each state. Employers must comply with the state’s individual health coverage mandates and reporting requirements when hiring out-of-state employees.
Additionally, some states have required time off benefits including sick time and various paid and unpaid leave offerings as well as state employer and employee paid leaves such as disability, family medical, and pregnancy.
Policies and Agreements for Out-of-State Employees
Policies and agreements are imperative to protecting employers and businesses, as they outline clear procedures and expectations. These agreements also define appropriate behavior and actions in certain circumstances. Policies and agreements to consider when hiring out-of-state employees include:
- Work Location Change Request: To notify the employer in advance of changes in residency.
- Remote Work Policy: To clearly identify performance expectations, remote work arrangements, and expectations to return company property once employment ends.
- Workers’ Compensation: Compensation laws may differ depending on location.
- Electronic Communication and Information Systems Policy: To protect a company’s data such as personnel information, proprietary information, intellectual property, and trade secrets.
- Meal and Rest Breaks Policy: The requirements may vary by state.
- Medical Leave Policy: Several states provide different family and medical leave options.
Make sure you understand the policy requirements for each state you have employees working to avoid legal issues.
POST-EMPLOYMENT CONSIDERATIONS
Upon separation of employment, the timeline of final paycheck requirements varies by state. Some states require immediate payout of wages and accrued but unused paid time off (PTO), and/or vacation accrual.
Additional considerations must be made for WARN and mini WARN notification (when a mass layoff or closing of a plant takes place) and COBRA notification, as employers may need to comply with state and federal mandates.
Get the Guidance You Need for Effective Out-of-State Hiring
Understanding the state laws is essential to creating an effective out-of-state employment process. If you are expanding your workforce out-of-state and would like additional information, our HR Team can guide you through this process and help to maintain compliance with State and Federal regulations.
Discover how HR Service, Inc. can help you navigate these regulations. You can also contact us at: (855) 447-3375 x 1. Solutions@HRServiceInc.com.
Prepared by Sara Jacobs
Human Resources Business Partner