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Considering Hiring Out-of-State Employees? Here’s What You Need to Know!

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Considering Hiring Out-of-State Employees? Here’s What You Need to Know!

By The Employer Group - Mar 10, 2023

Considering hiring out-of-state employees? There is plenty to consider before making an offer!

Hiring practices have evolved in the past three years, which has opened the door for employers to consider hiring out-of-state employees. Aside from having to register your business in a new state, there are multiple HR aspects to keep in mind.

Wage and Hour Laws

Remote employees are generally subject to the laws of the city and state where they are physically located and perform work.

If you are considering hiring a new out-of-state employee, keep in mind that there are specific state and local laws that govern minimum wage, pay frequency, meal and break periods, deductions from wages, final pay, etc. In some cases, the remote employee’s state may be more favorable, and you will have to comply with those laws immediately.

Benefit Requirements

If you are hiring a full-time out-of-state employee who is eligible for health insurance, you may need to reach out to your broker to coordinate out-of-state coverage. If the employee works too far from the established heath care network, you may need to make some changes. Your broker should be familiar with the benefits and regulations in each state where your employees are working.

There are multiple states that have mandatory paid leave requirements that you will need to abide by. For example, employees in Arizona who work for an employer with 15 or more employees can earn up to 40 hours of sick leave per year. Employees in California receive partial pay for up to eight weeks of time off work to take care of a seriously ill family member, bond with a new child or participate in a qualifying military event.

There are also some states that require PTO be paid out at the time of separation of employment as they consider PTO earned wages.


Adequate equipment ensures your new out-of-state employee can carry out their work from home. Develop a process for providing and receiving equipment – keep in mind that you may not be able to deduct from their paycheck if they do not return company equipment based on their home state without a signed authorization.

Managing out-of-state remote employees

Developing a remote work policy will ensure this new work relationship is successful. This policy should clearly outline what is expected of both parties, such as performance expectations, regular work schedule and availability, data security, and separation of employment. Keep in mind that time zones can impact availability.

Whether you choose to hire an out-of-state employee or not, it is important that as an employer, you stay in regular communication with your staff to monitor performance, workload, and health and safety. Yet, if you do decide to hire an out-of-state employee, The Employer Group can help you through it all!

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