What If Remote Employees Want to Leave Your State?

What if your remote employee leaves the state?

5 Things to Consider, from an HR and Staffing Perspective

As witnessed during the pandemic, a stable wifi connection is all it takes to make working remotely fully possible. This realization by companies and their employees has led to many non-traditional work styles, from the hybrid work model to employees deciding to work from an entirely different state. Whether searching for better housing opportunities or simply desiring a lifestyle change, workers increasingly ask their employers for permission to move to another state while remaining on the payroll. 

However, working from another state is easier said than done. Employment policies and procedures valid in one state may not apply to a different state. The burden falls on the employer to ensure employees follow the new state’s laws. When deciding whether or not to let an employee move to another state full-time, it is essential for employers,specifically their HR departments, to consider the implications of operating under multiple states’ rules. Below are a few major areas commonly affected by maintaining an out-of-state employee. 

Local Labor Laws

While federal laws ensure workers are guaranteed certain rights, each state is allowed to create its own additional labor laws. These laws almost always favor the employee—higher minimum wage, more protective overtime rules, required meal and rest breaks. Simply put, this means that employers must abide by the local labor laws of their employees, regardless of what state they are headquartered in. The benefits required by the employee’s new state are now applicable, which can cause problems when creating standard company guidelines. Employers may need to deal with payroll discrepancies and issues that come with different minimum wages. 

Leave of Absence Laws

Not to be confused with paid time off (PTO) and vacation time, a leave of absence offers employees time off work when experiencing extraordinary circumstances. Maternity leave, caring for an ill family member, serious health conditions, or military leave are all cases in which employees may be entitled to leave by federal or state law. The laws typically vary from state to state, which makes it difficult for employers to offer standard protocols for each employee in the company. It is important to consider the extra work it will take to create separate employee procedures for situations such as leave of absence.

Business Tax on Out-of-State Employees  

Another crucial consideration when allowing an employee to work remotely from another state is payroll taxes. If a company’s employee works permanently from a different state, that employee needs to be formally registered within that state for tax purposes. States want to ensure they receive their fair share of taxes from that employer. Paying taxes in multiple states is a disadvantage for employers and employees who share this responsibility, so it must be carefully considered. Ideally, businesses inform their employees of all state tax regulations and mandates, but employees working in multiple states complicates the process. 

Insurance Policies Differ State-by-State

Health insurance can quickly become the biggest HR headache when accommodating remote workers. Not only can location have a major effect on cost, coverage, and application of health insurance benefits, but because many insurance companies operate on a local level, it is nearly impossible to keep every employee on the same group plan when multiple states are involved. Employees may receive credits towards their self-pay health insurance, but this can cause problems when hiring or retaining employees who choose to move to another state. Employers must remember that providing a health care plan to a single employee in another state can be costly. In reality, employers will find it more cost-effective to fill a vacancy within the company than agree to allow an employee to work from another state.  

Workers Compensation Insurance

Most states require employers to register workers for compensation insurance within the state where the employee is performing work. Failure to do so unnecessarily exposes the employer to liability and penalties resulting from noncompliance with the states’ workers’ compensation laws. From the moment a worker begins work in another state, they are subject to different laws. This added legal risk is an important factor to consider before hiring an employee who has the potential to move out of state. Additionally, keeping up with paperwork and laws in two or more states can be challenging and not every company has the bandwidth or financial means to file such insurance policies. 

Navigate Remote Employee Procedures with CNS

The new “work-from-anywhere” model is popular. However for employers, it often comes with the added difficulty of managing employees in multiple locations. A staffing agency such as CNS can help manage the complexity by guiding your company through the unique protocols required to comply with each state’s laws. 

Because staffing is our sole focus, we stay abreast of employment and wage laws and changes and use that to support our clients. We understand that employees are your most valuable asset and strive for only scenarios that are a win for all involved. We see ourselves as more than a staffing company—we see ourselves as our clients’ complete HR provider.

CNS is an outsourced human resource provider that offers various HR department services for organizations in all industries that need temp, temp to hire, and direct hire positions. As a leader in staffing and employer relationships, we work quickly to find the best solutions. Contact us online or call 303-430-1441 to fill your staffing needs today.

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