Since the COVID-19 pandemic, remote work has become an undeniable reality for much of the U.S. For over a year, millions of offices stood empty. Zoom and videoconferencing replaced in-person meetings. Even interviews became remote.
The world of remote employment is the new frontier for many companies who previously maintained in-person workplaces – with pros and cons.
As a business owner, remote work means you have access to a much wider pool of candidates in different states, across the country, or even around the world. You could save thousands or millions of dollars in overhead costs by downsizing or getting rid of your office space. Your employees may even be more productive from home, especially without a commute.
According to a recent survey of venture firms:
Challenges and Essential Tips for Remote Hiring
Going remote may be simple if all of your employees are local to the same state as your business. Employment laws become more complicated when you have remote employees working from other states or even outside of the country.
State and Local Discrimination, Sick Time, and Employee Rights Laws
Once your workforce goes remote, chances are high that you will find talent across state lines. The U.S. has federal employment and tax laws that apply to all states. Each state also has its own employment and tax laws in addition to federal law.
If you want to hire a remote worker in another state, you must navigate multiple levels of law. That means treating workers in line with both federal and multiple state laws. Some laws between states may even contradict each other. Which state law applies then?
These are issues best left to a business lawyer who knows the law inside and out. Making the wrong call can leave you saddled with fines or tax penalties down the line. A business attorney can help you avoid making costly mistakes when hiring out-of-state remote workers.
Remote workers can bring up legal issues with wages, hours, leave, and benefits such as:
Paying Workers’ Compensation or Unemployment in Other States
Hiring workers in other states means opening up your business to workers’ compensation and unemployment complications. Generally, you must get workers’ compensation insurance in the state where your employee works. The workers’ compensation coverage you have in one state may not necessarily apply to your employees in other states.
You must also make sure you have the right unemployment insurance. The policies you already have may not translate across state lines, leaving you vulnerable to liability.
Foreign Filings for International Remote Employees
Hiring a worker from another country opens up another legal can of worms entirely. Remote work across international borders could mean exposing your company to a foreign company’s tax system. In addition, you open yourself up to U.S. international tax reporting requirements.
Going about an international hire the wrong way can leave you with penalties of up to $10,000 for missed filings, not to mention any additional penalties from the IRS or foreign tax agencies.
When faced with this situation, you may benefit from hiring an international worker as a contractor instead of an employee. This depends on how the company classifies employees versus contractors. You may also withhold taxes based on the relevant country’s standard rate, which may be reduced based on any income tax treaties in place.
While the process sounds complicated, an experienced and knowledgeable business lawyer can help you hire the talent you need for your company’s success, wherever they may be. Call Holmes Business Law now at 215-482-0285 to get started.
Sarah E. Holmes is a Philadelphia business attorney and strategist that helps start ups and established businesses looking to expand, protect their assets and increase their profits in an approachable, down-to-earth way. When you're looking for a business lawyer in Philadelphia, the Main Line or New Jersey, we can help.
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