The recent shift to remote work has been advantageous for workers across the country. Employees are finally able to work for companies in other states, while employers benefit from hiring from a much larger pool. While technology makes it easy to stay connected, hiring out of state employees in Colorado can be complicated.
If you don’t already have an economic nexus in Colorado, hiring employees in the state will require more time and effort than hiring in your home state. SixFifty has developed multistate employer tools, which simplify the process and keep costs down. It’s never been easier to register your business, establish an economic nexus and comply with each state’s unique employment laws.
Staying compliant in our new remote workplace is key: employers who fail to comply with each state’s laws may be subject to significant fines and fees. Luckily, there’s an easier way to accomplish these goals.
Scenario 1: Employee works from home in another state
When your prized employees move to another state, remote work makes it possible for them to continue working for the company. Employees might move to be closer to family, support their partner’s new employment, or to escape rising costs of living in other areas.
If your employee moves from your home state to Colorado—and you don’t already have an established economic nexus—you’ll need to register with the state to stay compliant.
Scenario 2: Hiring out-of-state employees in Colorado
Alternatively, you may choose to hire new employees living in Colorado. If you don’t already have an economic nexus in the state, you’ll need to register as a Colorado employer. For example, even though your employee lives in Colorado and your business is in South Dakota, Colorado employment laws govern the employee’s work.
Multistate Employer Registration Factors to Consider
In both of the above scenarios, employers need to pursue multistate compliance or risk being held accountable by the Department of Labor for failing to comply with state-specific employment standards. Compliance differs across all 50 states. To simplify the process, SixFifty has narrowed down multistate employer registration considerations to five core areas of focus.
Here’s what it looks like for companies hiring out-of-state-employees in Colorado—or accommodating employees moving to Colorado if there’s no established business nexus.
1. Colorado Employment Registration
The first step to compliance is registering your business with the state. Colorado requires that all “foreign entities” register with the Secretary of State (and any other applicable agencies, depending on the type of business). Additionally, you’ll need to report new hires and obtain insurance and workers’ compensation coverage.
- Obtain a registered agent
- Register to do business in Colorado
- Report new hire to the Colorado State Directory of New Hires
- Register for unemployment insurance
- Report unemployment insurance account to payroll provider
- Obtain workers’ compensation coverage or update the policy
2. Colorado Tax Registration
Next, employers must take care of their tax obligations. Colorado requires employers to obtain a wage withholding account number, complete state income tax forms and register for a sales tax license. Generally, the sales tax licenses last for two years each and must be renewed as directed.
- Register for income tax withholding account
- Obtain the completed state income tax withholding form from the employee
- Register for a sales tax license or permit
3. Colorado Required Employment Policies (April 2023)
Colorado has eleven state-specific employment policies which must be included in the employee handbook. These include provisions for meal and rest breaks, and certain types of leave, including jury duty, voting, military and paid sick leave. SixFifty’s employee handbook tool automatically generates compliant policies for each state.
- Civil Air Patrol and Volunteer Service in Disaster Leave
- Domestic Violence Leave (50 Employees)
- FMLA (50 Employees)
- Jury Duty Leave
- Lactation Accommodation Policy
- Meal and Rest Breaks
- Military Service Leave
- Paid Sick Leave
- Voting Leave
- Witness Duty Leave
- Colorado SecureSavings
4. Colorado Employment Implications
Colorado’s employment laws may affect the way you pay your employees: minimum wage, payroll and overtime laws might be different from your home state’s policies. Employers also need to ensure that their non-compete, COVID-19 and insurance policies are compliant too, and make adjustments as necessary.
- Ensure that non-compete provisions comply with Colorado law
- Confirm that the employee is paid at least the minimum wage
- Review the applicable overtime laws
- Confirm that the payroll practices meet the payment frequency standards in Colorado
- Consider whether insurance extends coverage to employees in Colorado
- Consider COVID-19 laws that affect the employee
5. Colorado Signage
Finally, Colorado requires certain signage to be posted at the workplace. However, the state has not clarified how to “post” signs for remote workers. Following the U.S. Department of Labor’s requirements for online posting—uploading in an easily accessible folder for employees—should ensure that you remain in compliance.
- Post or distribute required signage
Simplify Multistate Compliance with SixFifty
The process of maintaining compliance can be complex and nuanced for companies unfamiliar with Colorado employment laws and standards. It’s why SixFifty has compiled an extremely useful tool for businesses hiring out-of-state employees in Colorado. To simplify the process of hiring out-of-state employees in Colorado or supporting remote employees on-the-move, check out our 50 State Hiring Kit.