- Did you know that North Carolina has a parental school leave requirement?
- Did you know that Georgia requires employers to pay employees while serving jury duty?
- Did you know that Massachusetts has a Paid Family and Medical Leave (PFML) for any size employer that provides up to 26 weeks of paid, job-protected leave?
- Did you know that New York employers can not make hiring decisions based on a positive cannabis drug test?
- Did you know that a terminated employee in Tennessee must receive a completed State Separation Form from their employer within 24 hours of separation?
- Did you know that Michigan has an extensive anti-discrimination law which includes height and weight?
- Did you know that California, South Carolina, and Maine are just 3 of the many states which have a paid organ and bone marrow donation leave requirement?
In today’s tight labor market, it may be important for you to know labor laws from multiple states. Many companies are embracing the lessons learned from the pandemic by actively recruiting from outside of their geographic area. The goal is to find top talent, regardless of where they may reside. By recruiting outside of the company’s geographic footprint, a wider net can be cast.
In addition, many people moved during the pandemic when forced to quarantine and they may want to continue working as a remote employee. This flexibility can improve retention and is an enticing incentive in recruitment.
However, it is important that each company assess what works best for them. A workforce in multiple states adds layers of complexity and additional liabilities. Do not hire blindly. Before hiring in an additional state, do your homework and proceed cautiously.
Areas to review when hiring in a new state:
Registration and Licensing
Before a new employee begins work, make sure that you have the proper registrations and licensing required by the state. Apply for the State Tax ID and Unemployment number.
Different states have different wage and hour requirements. It is important to make sure you know the rules for each state regarding minimum wage rules, overtime requirements, pay schedules, child labor laws, rest breaks and meal periods, and more. Using a Certified Professional Employer Organization (PEO), like Propel HR, will help employers of all sizes expand to new states.
Generally, taxes are withheld for the state where the employee performs the work. For example, if an employee lives in North Carolina, but crosses the state line each day and works in South Carolina, then you must withhold taxes for South Carolina. Yet, some states have reciprocity agreements which allows its residents to pay tax based on where they live, instead of where they work. For example, Kentucky and Indiana have a reciprocity agreement. An employee who lives in Kentucky, but works in Indiana, only pays state and local taxes for Kentucky, their home state. And some states do not even have a state withholding tax. If you have remote workers, it is crucial that you know where the employee is working and tax correctly.
Workers’ Compensation and Disability
Each state has different rates and requirements for Workers' Comp coverage. In addition, five states and Puerto Rico have state mandated short-term disability programs. Funding is through employee wage deductions and/or employer contributions, depending on the state. Before hiring in a different state, secure the necessary coverages.
If you currently offer employee health plans, confirm that coverage can extend into additional states. Using a Certified PEO with a Master Health Plan adds ease and security to the complex benefits process.
OSHA and Risk Management
The federal Occupational Safety and Health Act (OSHA) requires employers to provide a safe working environment. 21 states and Puerto Rico have established their own State Plans for workplace safety and health programs. When hiring in a new state, become familiar with these regulations. Even if an employee is working from their home, the employer is still obligated to provide a safe workplace.
Ask the remote employee to submit of photo of their workspace and provide necessary tools if necessary. An ergonomic chair is a minor expense compared to a workplace injury.
From required posters to e-verify to handbook stipulations, every state has its own unique governance. Plus, new regulations are constantly added. Failure to adhere to each state’s conditions can result in significant penalties. Work with legal counsel, your HR department, or consider partnering with a PEO to make sure that your business is compliant.
Hiring from a larger talent pool can be a game changer for your business. The positives can far outweigh the negatives as you are able to hire the best from anywhere. However, use caution and common sense. By partner with experts to successfully employ in additional states, your company will be able to hire the best talent available to Propel your business forward.
Propel HR President Lee Yarborough was recently elected Chair of the National Association of Professional Employer Organizations (NAPEO) Board of Directors.
About Propel HR. Propel HR is an IRS-certified PEO that has been a leading provider of human resources and payroll solutions for 25 years. Propel partners with small to midsized businesses to manage payroll, employee benefits, compliance and risks, and other HR functions in a way that maximizes efficiency and reduces costs.