Working remotely has become the new normal for many professionals in response to COVID-19, and many companies are starting to consider extending remote work conditions long-term. For those that have already begun the shift to a more permanent remote work situation, the associated compliance requirements can be challenging, to say the least.
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Are you managing employees that have relocated to other areas? Perhaps you’re hiring new employees from areas outside the vicinity of the office. Staying compliant can be tough in both of these scenarios, especially considering the fact that different states have different requirements for employers. There’s a lot to keep track of, so we’ve put together a brief overview of some of the rules to keep in mind when hiring in a new state.
Staying Compliant When Hiring in a New State
It’s important to know that the legal requirements for conducting business vary on a state-by-state basis. Employers of remote employees must always be mindful of the state and local laws where their remote employees work and/or reside and determine which employment laws apply to their remote employees.
Employers need to determine which state and local employment laws may apply to their remote employees, in addition to applicable federal laws. Whether an employer is subject to a particular state or local law often depends on how many employees the employer has within that state or locality. Start by registering with each applicable state’s Department of Labor and become familiar with their employment requirements.
It’s important to know that the legal requirements for conducting business vary on a state-by-state basis.
While we’d like to break down each state's employment requirements, there’s just too much to cover. However, there are several key items you’ll want to review for compliance in any state. Although this is not an exhaustive list, the topics outlined below should help to get you started.
Different states (and some localities) have different payroll tax requirements. This means you'll need to stay on top of applicable state and local filing deadlines, tax rates, and tax changes, in addition to federal laws. Consider finding a company that can help you manage processing payroll. For example, Justworks, which is a Professional Employer Organization (PEO), is authorized to operate in all 50 states and D.C., and can help companies with respect to payroll.
Wage & Hour Requirements
The Fair Labor Standards Act, or FLSA, is a federal law that regulates minimum wage, overtime, equal pay, recordkeeping, and child labor. The FLSA generally requires employers to pay employees at least the minimum wage for all hours worked and overtime pay at a rate of 1.5 times the employee’s regular rate of pay for hours worked over 40 in a workweek.
Different states (and some localities) have different payroll tax requirements.
Be sure to check state wage and hour laws for additional requirements, particularly around record-keeping, overtime, minimum wage, exemptions, pay frequency, and pay statements.
Many federal, state, and local labor laws require employers to display posters in the workplace outlining the employee’s rights. Of course, this can be a little tough for remote employees who don’t come into the workplace each day. Depending on the applicable posting requirement, it may be appropriate to provide postings electronically or to mail them hard copies that they can post at their remote worksite. Again, it’s key to check all applicable laws to ensure compliance with posting requirements.
Does your new hire have valid work authorization? As an employer, you’ll need to complete Forms I-9, a federally-mandated form that verifies employment eligibility. Employers are required to use Form I-9 to verify the identity and employment authorization of each new employee hired after November 6, 1986 to work in the U.S. for wages or other remuneration. Justworks helps streamline the I-9 process for our customers, allowing them to complete electronic I-9s in the Justworks platform.
According to U.S. Citizenship and Immigration Services, “Form I-9 is the core of E-Verify.” E-Verify compares Form I-9 information to government records online, in order to confirm an employee is authorized to work in the US.
Completing Form I-9 is legally required for all employers, whereas participation in E-Verify is voluntary for most employers.
Completing Form I-9 is legally required for all employers, whereas participation in E-Verify is voluntary for most employers. Federal contractors and their subcontractors with qualifying contracts that contain the Federal Acquisition Regulation (FAR) E-Verify clause are required to use E-Verify.
In addition, some states have E-Verify requirements. For example, states like Arizona and Mississippi require all employers to use E-Verify, and states like Colorado, Missouri, Nebraska, and Oklahoma require all public contractors to use E-Verify. Employers should also be familiar with any state laws governing electronic signatures where the remote employee resides, or where the employer operates, that may apply.
Did you know that your workers’ comp policy should also include your remote employees? Just because they’re not working in the office itself doesn’t necessarily mean they don’t need to be factored into the workers’ comp policy. They may be eligible to receive workers' comp benefits for injuries or occupational illnesses that occur at home — if the injury or illness arises out of and in the course of employment.
We've built a guide with tips on hiring remote employees and staying compliant while doing so. Download our ebook on How to Hire Remotely.
How Justworks Can Help
While the above isn’t a comprehensive list of all the legal requirements you need to consider, it should give you an idea of some of the things you’ll need to account for when hiring employees in a new state (or across several states). Make sure to thoroughly research what rules apply for the states your employees are in to ensure your business remains compliant.
If you’re interested in streamlining the process for meeting new hire requirements, Justworks can help. We assist employers with meeting many of the employment-related compliance obligations, including payroll and related tax filings and obtaining workers’ comp and state unemployment insurance. Not only that, but we also stay on top of changing regulations to understand any impacts on our customers. Our all-in-one platform simplifies the payroll process and other backend functions, too, which means more time for you to spend on growing your team and your business.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.