Employee Moves

“I have two employees who want to move out-of-state to live while working remotely for me. What things should I consider?”

Your HR Survival Tip

The movement of employees really became a movement during the pandemic. Employees only look at the work they do to determine whether they can be remote… and remote means anywhere to them. However, as an employer, you have to look at the bigger picture to determine which employees can be remote, if any.

Whether hiring someone from out-of-state or just having an employee move outside of your area, you have legal responsibilities.

  • You must register as an employer in that state so you are paying into their unemployment pool and so payroll taxes are being sent to the correct state. This is free but can take a few weeks, depending on the state.

  • Once you receive your state identification number for that new state, you need to set it up in your payroll system so payroll taxes are submitted correctly for you and the employee.

  • You need to make sure your workers’ compensation insurance will cover the employee in that state. Some carriers have limitations on where they provide coverage.

  • You need to confirm the state or local employment laws to ensure you are following them. Employment laws are based on the state where the employee lives/works, not where your business is located.

  • You will need to obtain the appropriate new hire and termination forms and posters for that state and locale.

  • Your group health insurance’s HMO may not be available elsewhere, which means you could be paying PPO premiums.

  • Employee Handbooks need to be adapted to include differences between state and local policies. For example, California has a generous pregnancy disability law that other states don’t have and only about 14 states offer a state disability program to help employees supplement their time off.

  • Understand U.S. banks will not send payroll money to a foreign bank so your employee must have a U.S. residence and bank.

While it can be nice to hire from all over the U.S. and not have to worry about an office, failure to set up your business to accommodate each state’s or locality’s requirements will result in extra costs and problems. Don’t hire from outside California or your local area until you have checked the requirements and timing needed to do it right.

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