Hiring Employees in Other States--- Key Items to Know

During the first weeks of COVID, close to 45% of large and small employers moved to remote work. As time passed, employers realized that working at home may be a viable option, as well as a popular recruiting and retention tool. The ability to work at home also allows a business to recruit on a wider geographic basis. However, before hiring an employee in a State where other employees are not currently working, businesses need to take in account the following:

• Tax Withholding – State and local income taxes are based primarily on where the employee performs the services, which is a physical location such as an office or employee’s home, or secondarily, where the employee lives. Therefore, a new account  will need to be set up to submit State taxes if no other employees are working in that State. Currently, nine states do not have State income taxes, but check with the State to determine if local or other taxes are required.
• Worker’s Compensation –Verify Worker’s Compensation coverage is based on where employees are working and add the new location to the policy.
• Unemployment Insurance –Registration is required with the State to set up an account.
• Benefits – If benefits have a medical, dental or vision network, check to see if coverage is available for the location employee lives.
• State Laws – With more States passing Paid Family Leave, Salary disclosure and Disability laws, stay on top of each State’s laws and ensure compliance.