HR Q&A – Whose Laws Should We Follow for Remote Employees?

Generally, the state law where the employee physically works is the primary jurisdiction. This affects employment laws, tax obligations, and benefits.  Pretty much everyone of us have remote employees one way or another these days. Question is, When hiring a remote employee, determining which state’s laws to follow can be complex, involving considerations of the employee’s location, the company’s headquarters, and federal regulations.

At APlus, we try to make it simple for our team and we hope these tips help you too:

Key Factors to Consider:

1. Employee’s Location:

   • Generally, the state law where the employee physically works is the primary jurisdiction. This affects employment laws, tax obligations, and benefits.
   • States have varying requirements for minimum wage, overtime, paid leave, and other employment rights.

2. Company’s Headquarters:

   • While the employee’s location dictates many legal obligations, the policies and practices of the company’s headquarters can also impact certain compliance areas, particularly when it comes to company-wide policies.

3. Relevant Federal Laws:

   • Federal laws, such as the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA), provide a baseline for labor standards, but state laws may offer additional protections.

Compliance Influences:

• Tax Obligations:

  • Employers must register for state unemployment insurance and withhold state income taxes in the state where the remote employee works.
  • Some states require businesses to pay additional taxes or fees.

• Employment Rights:

  • Follow the employment laws of the state where the employee resides, including wage and hour laws, discrimination protections, and workers’ compensation.

• Benefits Administration:

  • Benefits such as health insurance, retirement plans, and leave policies may vary by state. Ensure compliance with state-specific mandates, like paid sick leave laws.

Best Practices for Managing Remote Employees:

1. Develop a Clear Policy:

   • Create a remote work policy that outlines compliance with state laws and company expectations. Ensure it is consistent but adaptable to various state requirements.

2. Consult Legal Experts:

   • Engage with HR compliance specialists or legal counsel to navigate complex state laws and ensure adherence to all relevant regulations.

3. Regularly Review Compliance:

   • Conduct periodic audits of your compliance practices to ensure ongoing adherence to changing state and federal laws.

4. Utilize Technology:

   • Implement software solutions that help manage payroll, taxes, and compliance across different states efficiently.

5. Educate Managers and Employees:

   • Provide training on the specific rights and responsibilities of remote employees based on their state laws to foster an informed and compliant workforce.

This blog does not constitute formal HR or legal advice and does not address state or local law. Our HR Resource Center by Mineral offers further advice on this and  many other topics. For a small additional fee you can also speak to a live HR Specialist. Contact your friendly APlus Payroll CSS for further information (including login details) or login here. Wanting to know how we can help your Payroll process? Please contact us here. Advice is always free!