Thanks to modern technology, remote work is more popular than ever. Employers can now choose from a much larger pool of candidates by hiring out of state employees in Tennessee and by retaining employees who need to move out of state.
Prior to the COVID-19 pandemic, employers were hesitant to hire out-of-state employees. Complex multistate employment law issues can arise anytime you work with someone in another state. Employers who fail to research and comply with each new state’s laws may find themselves subject to fines and penalties from the Department of Labor. On the other hand, researching laws and updating policies can be time-consuming and expensive.
SixFifty has solutions. Our multistate employer tools were developed to make the hiring process quick, easy and cost-effective. Instead of researching each state’s laws, you can automatically generate the documents you need.
Here’s what hiring an employee in Tennessee might look like.
Scenario 1: Employee works from home in another state
Before remote work was possible, employees moving to another state usually had to seek new employment. Now, employees are free to move for whatever reason: moving closer to family, seeking better housing, following a partner’s employment and more. However, it’s important that employers are aware that the new state’s laws govern the out-of-state employee. That is, even if you’re headquartered in Arkansas, Tennessee’s employment laws will protect any employees living there.
Scenario 2: Hiring out-of-state employees in Tennessee
Alternatively, your company might wish to conduct a broad, multistate candidate search. This allows employers to choose from a much wider talent pool. When you hire a candidate in Tennessee, again, you’ll need to ensure that your company’s policies are compliant with Tennessee law. It’s your responsibility to meet all state registration, tax, insurance and other obligations. This can become complicated, especially if you’re hiring in several states at the same time.
Multistate Employer Registration Factors to Consider
Whichever scenario applies to your company, the obligation remains the same: research, apply and comply with all state-specific employment laws. Otherwise, your company could be exposed to penalties and fines. Because state-specific laws can vary, this can be an onerous task.
SixFifty has identified five key areas of focus when hiring out of state. From registering to do business in the state to the signage you’re required to post, our multistate employment tools are designed to make the process easier.
1. Tennessee Employment Registration
The first step is to establish an economic nexus in Tennessee. To do this, you must register your business with the state, then report your new employee to the Department of Labor within 20 days. You will also need to obtain or update your unemployment insurance and workers’ compensation policies.
- Obtain a registered agent
- Register to do business in Tennessee
- Report new hire to the Department of Labor
- Register for unemployment insurance
- Report unemployment insurance account to payroll provider
- Obtain workers’ compensation coverage or update the policy
2. Tennessee Tax Registration
Second, you must fulfill your tax obligations. As a new Tennessee employer, you now have tax obligations to the state—even though you’re headquartered elsewhere. Employers must register for an income tax withholding account, fill out and file the employee withholding form and register for a sales tax license.
- Register for income tax withholding account
- Register for a sales tax license or permit
3. Tennessee Employment Policies
Tennessee has five mandatory, state-specific employment policies that should be covered in your employee handbook. Aside from a meal and rest break policy, the rest cover various types of leave. Note that the pregnancy leave policy only applies to companies with 100 or more employees. Add or update your existing policies to comply with this standard.
- Review employee handbook for compliance
- Update policies or add new leave policies as needed
4. Tennessee Employment Implications
Hiring in Tennessee comes with certain employment implications. Next, employers must confirm that they pay the state minimum wage ($7.25) and payroll frequency. You should also ensure that your non-compete, overtime, insurance and any COVID-19 policies are all compliant with Tennessee law, and make adjustments as necessary.
- Ensure non-compete provisions comply with Tennessee 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 Tennessee
- Consider whether insurance extends coverage to employees in Tennessee
- Consider COVID-19 laws that affect the employee
5. Tennessee Signage
Finally, Tennessee requires employers to post or distribute five different types of signage in the workplace. While the state has not weighed in on how to do so for exclusively remote workers, federal standards suggest that posting the signage on a website, in an easily accessible web folder or on company intranet will satisfy this requirement.
- 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 Tennessee employment laws and standards. It’s why SixFifty has compiled an extremely useful tool for businesses hiring out-of-state employees in Tennessee. To simplify the process of hiring out-of-state employees in Tennessee or supporting remote employees on-the-move, check out our 50 State Hiring Kit.
Written by Meili Bell
Meili Bell is the Content Manager at SixFifty. She spends her workdays writing, editing, project managing and reading about the intersection of law and technology. Meili comes to SixFifty from Gifted Music School, a nonprofit music school for the most dedicated young musicians in the region, where she was program director of the school’s flagship program for the last ten...
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