Remote work allows employees to work in your business from anywhere. But what happens when an existing on-site or remote employee wants to move out of state? The good news if they came into the office at least part of the time, they’ll still be able to do their work from afar. The bad news is that you, as the employer need to make arrangements to handle your new out-of-state employment arrangement. This blog will help you understand what to do if you are not using an Employer of Record.
5 Steps to Take Now if Your Employee Moves Away
When employees cross state lines to work, things can get complicated fast. If the employee isn’t a contractor, you are responsible for paying taxes in their new state of residency. Tax implications require you to understand the nuances between states and, in some cases, from town to town. But that’s just the beginning of the process. Here are five steps to take if an employee moves out of your state:
1. Set up payroll tax accounts.
The state where the employee resides collects income taxes, unemployment, and more.
2. Review the laws of the new state as they pertain to labor and tax laws.
You must still follow federal rules. However, each state has rules, too. Not only should you follow them, but it’s time to also update your HR manual with rules that are different from your state. You can do this in an addendum, but don’t forget to share it with the employee.
3. Look up the state requirements for new hire paperwork.
Again, each state is different. You may need to update your new hire forms and pay attention to how long these forms need to be kept.
4. Don’t forget about employment law posters.
Assuming you don’t have an office in that state, you probably need to give the employee any of the required employment law posters that the state requires.
5. Reach out to your workers’ comp and health insurance providers.
Workers’ comp varies by state, too, so you’ll have to wrap your head around any new rules you must learn. Talk to your health insurance provider about how this move will affect the employee’s insurance.
Because labor and tax laws vary so much by state, having an employee move away can create massive complexities in everything from payroll to time off, workers’ compensation, and more. Regional employers that have only had to deal with having employees in one state can quickly run afoul of compliance rules simply because they don’t know any better. Some states have variances in:
- Meal and rest break requirements
- Tax withholding
- Vacation policies
- Non-compete agreements
- Even how employers conduct interviews (some states don’t allow you to ask a candidate’s current salary)
- Some states have income tax—some do not
Here’s the irony in this legal snarl; sometimes states contradict each other, or the states have laws different from the feds.
Can I use an EOR instead?
Some find that the complexity of multi-state employment is too risky and confusing. Many organizations are instead hiring out of state employees through Employer of Record (EOR) providers like FoxHire. These companies employ workers on behalf of clients, and handle all the payroll, taxes, compliance, and reporting function. This enables client companies to save time on confusing and complex HR tasks, while also mitigating their risks. If you need to find a solution to an employee that has moved out of state, you can book a demo with FoxHire’s team to see how we can help!
