If there was one good thing to come out of the COVID-19 pandemic, it’s that employers across the nation finally shifted their focus to remote work. Remote work isn’t just convenient for employees: it also allows employers to hire the best talent for the job, whether they live in Alaska or Arkansas. The pool of potential candidates is much larger, so businesses offering remote positions have the luxury of choice but also need to pay attention to multistate compliance for remote employees.

Granted, hiring remote workers comes with certain challenges. When you’re hiring out-of-state employees, you can’t assume that your current policies and procedures comply with the employee’s own state employment laws.

Multistate compliance can be challenging—but it doesn’t have to be. SixFifty has solutions that can keep the cost of hiring remote workers down, while making it faster and easier to source new hires in all 50 states.

What is multi-state compliance?

Even if you’re a California business, when you have employees in other states, you must take care to comply with their employment laws. Multistate compliance happens when a company is compliant with employment law in each state in which they hire workers. They must register with each state and submit any applicable licenses, certificates and tax forms.

Multistate compliance tends to come up in areas such as:

  • Discrimination laws: While there are certain federal anti-discrimination and sexual harassment laws that apply across the board, many states have their own specifically tailored versions—and additional laws, which may add more protections for workers.
  • Benefit requirements: From certain types of leave to unemployment insurance, healthcare and more, most states have certain benefits requirements to which you must adhere.
  • Payroll processing: Recordkeeping, taxation and withholding rules are different in many states. It’s crucial that you tailor your policies for each state.
  • Wage and hour laws: Depending on where you reside, you might be surprised to hear that some states don’t set laws regarding meal breaks and overtime. Others only set rules for minors. It’s your responsibility to know where each state stands, and adjust your policies accordingly.

If this sounds like a lot of research and hassle, you can see why employers have hesitated to hire remotely. Fortunately, there’s a way to cut down on the cost, expense and time it takes to hire outside your state.

What you need to know about compliance

The most important thing to know about multi-state compliance is that there are stiff penalties for noncompliance. If you fail to comply with another state’s employment laws, you could be liable for penalties, lost wages, noneconomic damages and attorney fees. It’s always cheaper—and easier—to get into compliance before an out-of-state employee is hired.

However, multistate compliance isn’t just for new hires. For instance, if your employee moves from California (where your business is located) to Utah, to work remotely, you’ll still need to register with the state tax agency and adjust your policies to comply with Utah state law. This is true even if you only have one employee in each state.

Another factor employers must consider is how many employees work in any given state. Depending on the number of employees, employers may be obligated to comply with additional regulations and laws. Several states offer additional benefits or protections when an employer has more than 10 or 15 people working in that location.

Finally, keep in mind that certain cities or counties may have hyperlocal employment laws. For example, Cook County (Chicago), Seattle and San Francisco all have additional protections compared to what’s required in the rest of their respective states.

How to navigate multi-state compliance

Navigating multi-state compliance is easy when you work with SixFifty. Here are some of our best tips:

  • Keep track of employee locations: Your payroll software can make this task simple. Keep a running list of where each employee lives, including state, county and city. This helps determine which local and state laws will apply to your remote workers.
  • Research local laws in each state: Next, you’ll need to research the applicable employment laws for each location. (Spoiler alert: SixFifty makes this fast, affordable and easy!)
  • Determine where the differences lie: Keep track of how each new state compares, and make adjustments in your employee handbook, payroll processing, policies and more.
  • Let SixFifty do the heavy lifting: The previous two points involve a lot of work. You could rack up thousands in billable hours, or saddle your legal department with a lot of extra work. Instead, use SixFifty’s employment solutions. Our proprietary legal technology pairs automation with real employment law expertise, so you can automatically generate compliant employment documents in every state.

Our employment law tools make it quick, simple and cost-effective to hire workers in any state. Plus, since we update our customizable documents on a monthly basis, you won’t get caught by surprise when state laws change.

Multi-state compliance is easy when you work with SixFifty. Schedule a demo today!


Meili Bell

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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