Multi-state employment models have become increasingly common and popular in the last few years. Through new technologies, remote work is more accessible than ever before, leading it to become one of the greatest trends in business and HR in the last few years.
However, in order to reap the benefits of being a multi-state employer, you need to understand the challenges faced by multi-state businesses.
In this article, we'll explore some of the greatest challenges of multi-state employment, how to overcome them, as well as answer some basic yet important questions regarding multi-state employment.
As a result of COVID, the rise of remote work has increased exponentially, thereby necessitating the need for multi-state employment strategies. Yet there were unforeseen benefits that came with this.
Companies, regardless of size, were able to embrace and access a broader, nationwide talent pool. Many companies these days even have the majority of their workforce remote, and some have even gone fully remote. Overall, opening up your talent search to the entire nation, and entertaining the possibility of hiring remote workers out-of-state, has proven to be a great strategy for solving hiring challenges.
There are three core areas that can prove challenging for employers with employees in multiple states.
These include:
These challenges can be especially daunting for smaller businesses, who also stand the most to gain by expanding their business by adopting a multi-state employment model.
When it comes to compliance for multi-state employers, payroll and payroll tax filing always jumps to the front of the line, but there are other things to consider regarding compliance as well.
Understanding how to process payroll, and how to file payroll taxes in one state let alone multiple can be difficult for many organizations. Every state is different, and some states even have even more specific laws for particular localities. For instance, Oklahoma has two types of payroll taxes, and New York has 15.
Businesses need to make sure that they have the proper support and experience in place to handle multi-state compliance and out-of-state payroll tax laws and requirements. Improper compliance can land your business in trouble and may bring about large monetary fines.
Employers should look for a payroll provider with experience in payroll processing and tax filing in all 50 states, as well as look for modern payroll software that can help manage the process.
For instance, GNSA's PeoplePro Payroll Solution comes with a powerful tax rules engine that is continuously updated with tax rates down to the latitude and longitude of an employee’s location. These types of solutions will know what federal, state, and local taxes apply to that employee based on their exact address.
Filing payroll taxes and processing payroll is the key responsibility of any provider, and if yours is making mistakes, this is a key reason for switching payroll companies.
The list of compliance challenges regarding multi-state employment is long. From things such as varying employee leave laws, and other employee rights, forcing you to manage multiple employee handbooks and policies based on location, to things such as registering your business and employee new hire reporting, companies can become quickly overwhelmed.
Knowing when, where, and if you need to register your business in a new state is something that many organizations and employers are not readily aware of, which is why it's important to have a solution and / or support that will help keep track of these things for you.
Then of course, simply knowing what licenses and registrations are required in each state you operate in can prove difficult. Miss one small requirement and your business could land in trouble.
New hire reporting is also something that can prove difficult for employers with employees in multiple states. For instance, generally, employers based in Oregon can report all new hires to the state of Oregon, but each state is different.
One of the toughest parts of having remote employees is keeping them engaged and connected to the rest of your organization. In general, it's tough to stay engaged and connected with someone you don't see face to face often, if ever, in any situation.
In fact, keeping remote employees engaged can be an impossible task without a proper plan or strategy in place to do so. While there are many out-of-the-box ideas to do so, such as virtual happy hours or town hall meetings, an easy way to help keep your remote workforce connected is through modern human capital management technology (HCM).
Modern HCM technology and solutions can do wonders for your remote workforce in terms of engagement and connectivity.
Various types of solutions and tools can have various effects, including:
One challenge that may also come as a surprise for multi-state employers is finding employee benefits plans and offerings for all your employees. Plans that are available in multiple or all states may be hard to find, and finding a competitive one can be tougher.
Finding help from a company with an industry-leading employee benefits solution and a well-connected insurance network is key.
Benefits solutions can help make ongoing administration easy, and enrollment even easier, so that any new, required benefits offerings for your out-of-state employees aren’t a stress on your business or your responsibilities.
A well-connected insurance provider network will also be able to help you find competitive benefits plans and offerings that are available to businesses nationwide, allowing businesses to hire remote employees in any state without creating new challenges each time a new state is added to your list of operations.
Below are some common questions regarding multi-state employment:
You are required to register your business in a new state as soon as an employee is hired out of state, OR once a company crosses a certain threshold of revenue (based on the nexus for each state).
The first thing you should do is file your business registration for that state and obtain the applicable payroll tax accounts, workers' compensation policy, and review or create a new version of your employee handbook to ensure compliance with any state or local requirements (i.e. state sick leave, paid leave, minimum wage, etc.)
Not necessarily. However, because there are now new state and local requirements that you must comply with, you WILL NEED additional employee handbook policies that are specific to each state you operate in.
A good practice is to keep a separate handbook version for each state that you operate in, each with the required policies and information for that state.
Yes. However, you only need additional physical labor law posters if you have worksites in different states. If you only have remote employees in other states, you only need to send them digital versions of the required labor law posters for their state.
Most labor law poster services have added digital labor law poster services for this exact reason.
Your employees are always covered by federal labor laws. As for state and local laws, it is important to review all laws and understand who is covered by each, as it can vary. Employees may be covered by some laws of the state in which the company resides, as well as the state in which they live and work.
There are two primary reasons to hire out-of-state employees / switch to a multi-state employment model. The first, is to expand and grow your organization and its "footprint". The second is to expand your talent pool to help solve hiring challenges presented by only sourcing local talent.
Once you determine it's time to expand, or are having hiring challenges it may be time to switch to a multi-state employment model. However, before doing so it is important to have the resources and tools in place to support remote employees.
The best payroll companies for multi-state businesses are those that can support and handle the above challenges, ensuring a smooth transition to a multi-state model, or helping to make your current model more efficient and impactful.
To date, GNSA has worked with companies and processed payroll in 50 states, and has helped businesses with tax registrations in 40 states.
To learn more about how GNSA can help support your multi-state business, contact us today.