By now, we’re pretty sure most people responsible for hiring have at least considered remote workers if being in the office isn’t absolutely necessary.
But what goes into that? When is it worth it? When is it a risk? Is it difficult to prepare your organization – that may or may not operate in all 50 states – to ensure you’re up to speed on relevant laws and regulations?
We’ve put together key things to consider and prepare for as you explore the idea of adding out-of-state employees to your team. While not exhaustive, this should get you thinking about the right things before you take the leap.
State Laws & Regs: A Top Priority
Every state has different employee laws and regulations, and it’s imperative you understand these, not only for the employee’s benefit but to protect your business from potential lawsuits.
For instance, in New York state you can’t discriminate based on hairstyle, something you may or may not know. These types of state-specific laws and regulations are abundant throughout the U.S., so do your homework.
Remember, in the U.S., federal law generally supersedes state law when there’s a conflict between the two. However, if there is no conflict, both state and federal laws can coexist and be enforced independently.
As if Taxes Weren’t Hard Enough
Not surprisingly, tax ramifications come with having workers in other states where you aren’t based.
At its simplest you need to set up your business in the respective state with the appropriate agencies and pay required taxes for each employee based there.
This, like most tax-related issues, can get complicated. We recommend if you work with a PEO such as Tandem HR, then turn to them for expert guidance. Otherwise, be sure to work with your organization’s legal and accounting teams to ensure compliance at every turn.
A License to Work
Another state-specific nuance to add to your checklist involves licensing.
Yes, we all know nurses, lawyers and such need to be credentialed and licensed to work in their respective states. But this need can extend to other industries and positions where you may not expect it. If you’re unsure, talk with an expert.
Update Your Handbook
For each state where you have employees, you need to make sure your handbook accounts for it and clearly lays out information relevant to those workers.
Everything from leaves, break times, final pay and benefits need to align with state laws and regulations and be presented in the handbook.
“We have employees in multiple states, so our handbook has an array of addendums that clarify specific topics relevant in each location,” said Renee Vongsa, Vice President of Human Resources at Tandem HR. “We want it to be easy for every employee to understand what matters to them without having to hunt for it.”
Benefits that benefit every state
This may be obvious but make sure your benefits package covers states where you plan to hire out-of-state employees. If not, this is something you’ll need to address and it could have significant impact on your business.
Whether it means you have to add a plan or consider a different one entirely, either has the chance to increase your costs. This applies not only for health and dental, but you should also review retirement plans and other offerings to ensure they align with each state’s laws.
Consider the size of your organization
For small businesses that operate in only one state, adding 1-2 out-of-state employees has the potential to drive numerous unexpected costs.
Things like benefits and leave requirements could have a financial impact that outweighs finding someone in a different state. California and Illinois, for instance, have incredibly complex and robust employment laws and effectively complying with them could be cost prohibitive.
“If you work with a PEO, they can help you navigate these challenges and guide you as you decide if it makes sense for your business,” Vongsa said. “You want to get the best people but you also want to make smart business decisions that don’t add unnecessary complexity and costs.”