BPHR’s Director Lisa Salcido, SPHR, SHRM-SCP provides answers to your pressing HR questions.
Question: We hired a remote employee who lives in another state. Do we need to comply with the employment laws where the employee lives, or where our headquarters is located?
Answer: Employment based laws come from federal, state, and local jurisdictions. Figuring out which ones are applicable to your workforce can be confusing for multi-state employers or companies that hire out-of-state telecommuters.
Labor laws are typically applied according to the state in which the employee physically works, not where your company is located or based. For example, if your company is based in New Jersey and you hire an employee to work from their home in Texas, employment laws for the state of Texas would apply. The business does not need to have a physical location in Texas, nor does it matter if the Texas worker receives direction from the New Jersey location.
Even when staff is temporarily working in another state, the laws of the state where the work is being performed would govern. If a Texas resident was in New Jersey for business, then New Jersey’s labor laws would apply, such as the Earned Sick leave. According to that statute, an out-of-state employee who routinely works in New Jersey, would be eligible for the paid sick benefit.
If your company has employees working across state lines, some employment requirements to be aware of are wage and overtime, non-discrimination/harassment, payroll taxes and final paycheck, unemployment, workers compensation and disability insurance.
Keep in mind there are exceptions and determining precedence between overlapping federal and multi-state laws can be a challenge. When in doubt, follow the law in the jurisdiction with protections most favorable to the employee. Organizations with workers in multiple states should have a separate employee handbook for each state, or an appendix by state in a combined handbook
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DISCLAIMER: The material presented on this page is for informational purposes only and does not constitute legal advice or legal opinion.