Dealing with Out-of-State Employees

On May 12, 2022

In the latest installment of New Jersey Business Magazine’s Ask the Experts column, an HR professional working with the New Jersey Business & Industry Association responds to a business owner’s inquiries:

What should I do if an employee moves to a different state and will be working from there?

There are several things you need to do if an employee moves out of state:

If you don’t already have other employees there, you’ll need to set up payroll tax accounts in the new state. The state in which the employee physically works is the state used for state income tax withholding, unemployment tax contributions, and the like.

Update your employee handbook with any new state laws that apply. This is typically done with a state-specific addendum. Provide the updated handbook to the employee.

Review that state’s new hire paperwork requirements. Update forms if necessary.

Provide employees with any required employment law posters for that state.

Notify your workers’ compensation carrier and your health insurance carrier, if applicable.

Do we pay the minimum wage of the state where our headquarters is located or the state in which the employee works?

Employees should be paid the minimum wage for the state in which they work, whether this is a satellite office or their own home. Beyond that, it’s important to be aware that some cities and counties have even higher minimum wages than the state in which they are located. In general, with most employment laws, you should adhere to the law that is most beneficial to the employee.

We have a lot of remote employees working all over the country. How do we comply with labor law poster requirements in these cases?

The simplest and safest answer is to mail hard copies of any applicable workplace posters to the remote employees and let them do what they like with the posters at their home office. Since you have employees in multiple states, you should send each employee the required federal posters, plus any applicable to the state in which they work.

Is there anything special we should know before terminating a remote employee?

If the employee works in a different state, you’ll need to follow that state’s laws regarding termination procedures, paperwork and final paychecks. Look these up on the platform ahead of time. You don’t want to miss any deadlines.

Coordinate with IT so they are prepared to remotely revoke the employee’s access to company systems immediately upon termination.

Have a clear process in place for the employee to return any company-owned equipment and plan to pay for shipping. Go over the process at the termination meeting.

Don’t make deductions from the final paycheck because the employee hasn’t returned company property or has returned things damaged unless you’re sure it’s legal in the state where they work and that you’ve complied with any related requirements.

As with most terminations, be sure to have documentation of behavior and performance issues, conversations you had, disciplinary actions you took, and warnings to the employee about the consequences if they failed to improve.

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