Considerations of Multi-State Employers

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a map of license plates in the shape of the USA demonstrating the HR considerations of a multi-state employer

By Bill Swan, SHRM-SCP, Principal Consultant

Multi-state employers are growing in number. In 2019, prior to the COVID pandemic, 7.9% of Seattle workers usually worked from home, more than the national average of 6% of all workers.  During the pandemic the figures increased nearly sixfold, understandably, as people were working from home and keeping social distance.  As the pandemic waned, many workers returned to office settings. Here we are now in 2023, on a national basis, 16% of workers are working remotely as many employers have kept remote work at record highs.

Some benefits of multi-state employers –

Many employees took advantage of a company’s willingness to allow positions to be performed remotely. People had opportunity to move, sometimes great distances, to enjoy whatever attracted them to other locations.  Businesses also benefited from hiring employees from locations beyond the immediate radius of the home office.  Less office space reduces operating expenses of company-provided physical space.  Hiring pools grew with opportunity as applicants could be attracted from larger geographies, often with the possibility of lowering payroll expense, especially if hiring from outside metropolitan areas.  Remote work also enabled work opportunities for people with disabilities to work from home, and people with special needs or other family-life challenges to find employment. For example, many parents of school-age children can work hours in the day when their kids are at school.  However, hiring from new areas creates new responsibilities for the employer.

Multi-state employer considerations –

A multi-state employer requires being aware of state laws, including localized laws of their home state and those where each employee works from.  For instance, if headquarters is based in Washington and employees are working from Washington, Idaho, Montana and Texas, the employer needs to keep up on all four states.  If some employees are working in Seattle, Washington, then the employer also needs to be familiar with local Seattle laws.  Some of these areas may have more stringent laws than others or be more employer- or employee- friendly. 

A multi-state employer needs to first make sure they are properly registered with the state where work is being performed. 

Some examples of other areas that must be considered are:

  • Wage and hour laws – impacting minimum wage and overtime calculations.
  • Payroll – such as taxes, withholding and records keeping. Some states require weekly payroll with exceptions, others bi-weekly or monthly. 
  • Benefits – such as unemployment insurance, sick and paid time off calculations and rights to earned, unused balances.
  • Anti-discrimination laws – some states have added protections such as gender identity, sexual orientation, gender expression, and natural hairstyles.

There is much to consider when an employer has workers from more than just the state they are headquartered.  Updated employee handbooks and manager training are good beginnings but constantly keeping up becomes a necessity.

Here at FIT HR, we have many clients who have become multi-state employers.  We can assist your organization navigate through the process and keep up on laws that can affect your business.