Planning on hiring out of state employees in Maryland? If so, you’re not alone. Today, thanks to remote work, it’s easier than ever for companies to find and acquire talent from some of the biggest employment hubs in the country—including cities like Baltimore, Bethesda and Annapolis. But if you’re not following Maryland’s labor standards for hiring and employing residents, you run the risk of attention from state-level employment bureaus.
Hiring and employing talent in Maryland means understanding the state’s policies for everything from wages and taxes to where and how to register your organization as a qualified employer. It’s a complicated process because it can differ from state-to-state, but it’s nonetheless critical if you’re cultivating an economic nexus in Maryland.
Thankfully, SixFifty has a tool to simplify hiring out-of-state employees in Maryland. In fact, we make it easy to achieve and maintain compliance—whether you’re hiring new out-of-state workers or accommodating remote employees who are on-the-move.
Scenario 1: Employee works from home in another state
Say that you’re a company that operates in Oregon. Now that you’ve gone remote, one of your current employees wants to move to Maryland, to accommodate their partner’s new job. When that employee becomes a resident of Maryland, your organization will need to register as an employer with the state and make sure you’re in compliance with all state-level employment policies and mandates. It’s a complex process you’ll need to undertake for each new state your employees come to reside in.
Scenario 2: Hiring out-of-state employees in Maryland
If you’re thinking about prospecting new hires in Maryland, you’ll first need to establish an economic nexus within the state. That means registering as an employer and developing a clear understanding of the state’s labor policies. This needs to happen as soon as you identify talent within the state, to avoid any complications or drawn-out back-and-forth when it comes to showing yourself as a responsible employer. The sooner you achieve state-level compliance, the sooner you can hire out-of-state employees in Maryland.
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 Maryland—or accommodating employees moving to Maryland if there’s no established business nexus.
1. Maryland Employment Registration
Before you can hire out-of-state employees in Maryland, you’ll need to register as a qualified employer with the state. Not only does this require a registered agent, you’ll also need to register with the Maryland Department of Assessments and Taxation as a Foreign Corporation. Once approved, there’s a laundry list of compliance standards a business needs to get familiar with as they seek to onboard employees living in Maryland.
- Obtain a registered agent
- Register to do business in Maryland
- Report new hire to the Maryland Department of Labor
- Register for unemployment insurance
- Report unemployment insurance account to payroll provider
- Obtain workers’ compensation coverage or update the policy
2. Maryland Tax Registration
Income tax and sales tax are two major considerations businesses need to comply with as they seek to set up an economic nexus in Maine. Businesses need to ensure they’re withholding and reporting taxes with the state’s tax authorities in total compliance with local laws. It starts by registering for a permit with the Comptroller of Maryland.
- 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. Maryland Employment Policies
Maryland has very specific employment policies that businesses need to recognize and adhere to as they onboard and employ residents of the state. This includes updating the employee handbook to include provisions for things like bereavement, military service leave, rest and meal breaks, voting leave, paid sick leave and much more.
- Review employee handbook for compliance
- Update policies or add new leave policies as needed
4. Maryland Required Employment Policies (May 2023)
- Bereavement Leave (15 Employees)
- Civil Air Patrol and Emergency Response Leave (15 Employees)
- Court Proceedings Leave
- Domestic Violence Leave
- Jury Duty Leave
- Meal and Rest Breaks (minors only)
- Military Service Leave
- Organ and Bone Marrow Donor Leave (15 Employees)
- Outside Employment Policy
- Paid Sick Leave (15 Employees) (separate policy for Montgomery County)
- Paid Time Off
- Parental Leave (15-49 Employees)
- Voting Leave
- Witness Duty Leave
5. Maryland Employment Implications
Organizations hiring in Maryland need to ensure they’re in compliance with the state’s employment standards regarding contracts, wages and payment, employment insurance, health and safety regulations, and much more. As you seek to hire out-of-state employees in Maryland, pay close attention to the rules that govern the terms of their employment.
- Ensure non-compete provisions comply with Maryland law
- Confirm the employee is paid at least the minimum wage
- Review the applicable overtime laws
- Confirm the payroll practices meet the payment frequency standards in Maryland
- Consider whether insurance extends coverage to employees in Maryland
- Consider COVID-19 laws that affect the employee
6. Maryland Signage
While it’s unlikely that out-of-state employers will maintain a physical workplace in Maryland, it’s nevertheless important to provide remote employees access to workplace signage information. Maryland has signage laws that encompass a variety of labor topics, including fair wages and hours, unemployment insurance and benefits, child labor laws and much more.
- Post or distribute required signage
Simplify Multistate Compliance with SixFifty
The process of maintaining compliance can be complex and extremely nuanced for companies unfamiliar with Maryland employment laws and standards. It’s why SixFifty has compiled an extremely useful tool for businesses hiring out-of-state employees in Maryland. To simplify the process of hiring out-of-state employees in Maryland or supporting remote employees on-the-move, check out our 50 State Hiring Kit.