Hiring Out-of-State Employees? Ask Yourself These 5 Questions First 

You’ve vetted a candidate for knowledge, skills and abilities, and you’re thinking about making an offer — but they live in a state that is not where you are headquartered. Stop! While everyone seems to be hiring remote workers these days, if you don’t do your homework ahead of time, you could be ignoring some high-ticket implications.  

 

Ask yourself the following five questions before you make the move to hire someone outside your state: 

  1. Is the candidate in a state with challenging labor laws, such as California or New York? Is that state more restrictive than your state?  

  2. Are you registered to do business in that state? Do you need to be set up as a registered foreign entity for payroll taxes, unemployment insurance or disability insurance? 

  3. Does the city in which they will be working require a business license even for at-home workers? 

  4. What address do you want to use for your business in that state? You’ll need to be notified of annual renewals and licensing requirements, and maybe even court orders and subpoenas. 

  5. Is it an at-will or a right-to-work state? At-will employment means you can quit or be fired for almost any reason. In a right-to-work state, you can work for a unionized employer without joining the union. 

 

Have you considered time-zone issues and “core work hours”? What if an employee moves without telling you — then what? And did you know workers comp insurance in the state in which the employee works must be bound on day one of them starting? What about your health insurance coverage? Having employees scattered across the country may cause hiccups with your group eligibility. States have considerable authority over the regulation of health insurance, and a multistate workforce can be challenging in this area. 

 

OK, that’s a lot more than five questions. But being thoughtful and thorough will help you avoid negative impacts and tax implications for your business. 

 

Any — or all — of this sound overwhelming or confusing? Contact me. 

Leann Proud