Multi-State Remote Work Compliance: What You Need to Know

Remote Work is Here to Stay, but the Challenges Can Pile Up Quickly

After navigating the pandemic for more than a year, a number of organizations are beginning to develop and implement return-to-work plans — many of which initially targeted this coming summer as the date when employees would be able to re-enter offices nationwide. While many companies and even cities are ending existing remote work programs or are considering hybrid work arrangements, just as many are pushing out their return-to-work timelines. 

Regardless of where your business stands, it’s clear that remote work is here to stay. Because of that, it’s essential to develop an appropriate plan that considers the many challenges and details of this work arrangement — and one that’s aligned with your overall strategic plan as well.

Countless firms have conducted research on the impact of remote work, and the findings typically tell the same story. According to the Society for Human Resource Management (SHRM), more than half of U.S. workers would choose to permanently work from home or remotely full-time if given the option. The Work Trend Index survey showed that more than 70% of workers want flexible work options — such as hybrid work — to remain available.

While there are many advantages and disadvantages to remote work that must be considered in terms of team connectedness and productivity, there are also a number of HR and administrative complexities that have to be navigated to ensure your employees and business itself are protected. And when you have employees working across multiple states, these complexities only increase. While federal mandates must be observed, states themselves are able to set many of their own hiring, termination, payroll, tax, and benefits requirements.

Below, we’ll explore several aspects of remote work compliance that your business should consider in order to avoid fines, meet state and federal guidelines, and deliver a positive employee experience.

At Cognos HR, we’re committed to helping our clients identify remote work compliance requirements throughout their footprint and address them with ease as part of our Professional Employer Organization (PEO) services — while also assuming much of the risk on their behalf. Learn about our PEO services here.

3 Remote Work Compliance Considerations

1. Understanding What You Need to Do as an Employer

When the pandemic first began causing disruption in late Q1 2020, countless companies shifted rapidly to allow employees to work from home. Over time, those employees may have relocated, or you may have experienced firsthand the advantages of considering candidates in other states for open positions. Whether your team was entirely local or already had a distributed workforce, it’s essential to take a look at where you are today and make adjustments if needed. One of the first steps is to register as an employer in the states where your employees are working and in any states where it’s likely that you’ll be hiring.

This is important because failing to register as an employer in those states (by thinking you only need to be registered where your main office is or where physical locations are) could lead to significant, unforeseen fines in a variety of areas. Depending on the states where your employees are working, you may need to pay various taxes, such as state unemployment tax, municipal taxes, and potentially even school district taxes. There may also be specific Workers’ Compensation registration steps you need to take to ensure you’re properly set up.

And even if you do all of the above, remember that states can change their standards and requirements — and often do with little notice. This leaves you with minimal time to research the changes, develop new policies, implement the required changes, and communicate them with your team. This challenge — multiplied by 50 — is constantly evolving and something business leaders and HR professionals must pay attention to.

Clearly, navigating state-specific requirements is complex. For small and even midsize HR teams, identifying local taxation and Workers’ Compensation requirements in different states and cities requires significant administrative time in researching them, ensuring your HR systems are set up to process those requirements automatically, and communicating specifics to employees. At Cognos HR, our team handles this entire process for you. Thanks to our HR information management, reporting, and other technology tools, we can seamlessly identify state-specific requirements for your distributed workforce.

2. Ensuring Policies Support Remote Work Compliance Requirements

For the HR department, your policies, handbooks, and other assets are the foundation for your entire program. They must provide all the details employees need to answer questions, understand how the organization operates, and so on. If you have employees in multiple states, these elements should also be updated to ensure they meet remote work compliance.

For example, not all states allow the same hiring and termination practices. California has well-known and widely proliferating examples on both ends. Its Labor Code section 432.3, also known as the salary history ban, prohibits employers from relying on a candidate’s salary history when considering their compensation (unless it was voluntarily disclosed without prompting) as well as seeking that candidate’s salary history. On the termination side, employees must be paid their wages immediately at the time of discharge. 

This is just one example of many. What’s important to understand here is that these laws must be known in advance of hiring or terminating an employee that lives and works in a different state. If not, it’s plausible that the employee could file a wrongful termination lawsuit. 

Additionally, Form I-9 (Employment Eligibility Verification) along with a W-4 must be completed for new hires. Traditionally, any new hire was required to meet in-person with an authorized individual to have their I-9 documents verified. While COVID has created some flexibility around this, it’s important that documented and compliant steps are taken to verify I-9 documents accurately because your business, its leaders, and even hiring managers are still liable for it.

Last but not least, other aspects of hiring and termination may be different per state. You may not be permitted to conduct background checks or credit checks on certain positions (although this is position-specific) in different states. Paid time off and leave regulations may also differ. In these areas, if you don’t have in-house expertise, it’s recommended to work with a proven partner that understands state-specific requirements and can work with you on developing policies and procedures that support remote work compliance.

3. Understanding Pay and Benefits: Options and Their Impact

When it comes to benefits, there are two important considerations: 1) making sure you’re meeting state-specific requirements, 2) ensuring your benefits package is attractive and useful to candidates in different states, and 3) ensuring leave requirements in each state where you have employees working are met.

In terms of meeting requirements, one of the most obvious is compensation — particularly for hourly employees. Minimum wage requirements differ by state as well as employees’ eligibility for exempt status. While there are Federal requirements here, some states have specific stipulations. For example, California’s overtime laws require that overtime applies daily instead of the employee first having to work so many hours before kicking in.

And when it comes to making sure your benefits are appealing to new candidates, the most immediate is whether your existing benefits package is set up for employees in different locations. For example, your existing health insurance carrier may not serve all states, you may need to work with your broker to identify a carrier with nationwide coverage. 

It’s also important to note that PTO, sick days, maternity/paternity leave, and other forms of leave differ by state. Time for these accrues differently in some states, and even in some cities. If you have employees working in multiple states, it will be absolutely essential that you understand and factor these differences into your overall program and remote work compliance strategy.

At Cognos HR, our benefits consulting services handle all aspects of this important HR area — from identifying the most financially advantageous plans to handling enrollment and daily administration. Our team also understands and can rapidly access community- and state-specific leave policies, so whenever you have new hires in separate states, we’ll be ready to support you.

Work with a Proven Partner for Remote Work Compliance

Remote hiring opens your organization up to a broader pool of talent and also attracts candidates that are looking for organizations that offer greater flexibility. But, it also comes with risks — especially as your team grows across state lines. At Cognos HR, we believe the last thing your HR team needs is to be overwhelmed with researching, navigating, and implementing remote work compliance tasks when it can all be handled efficiently and effectively for you.

Managing the numerous areas of HR and employee benefits programs is what we do best, and our team members are experts in this field. Utilizing a combination of HR technology, talent assessment tools, HR and benefits consulting, and complete outsourced HR services, we provide everything your business needs to move forward with confidence in this unique and challenging time while maximizing the most important part of your business: your people.

Ready for peace of mind and complete support? Connect with us today.