USA compliance for remote workers

Governing law: Remote employees are generally governed by the law of the state where they physically perform work (wage-and-hour, paid leave, break rules, some privacy and reporting obligations), while federal laws (FLSA, Title VII, ADA, OSHA) apply nationally. Employer registration & nexus: Hiring even a single remote worker in another state commonly triggers employer registration obligations — state income tax withholding accounts, state unemployment insurance (SUI) accounts, and often workers’ compensation coverage. Nexus and registration thresholds vary by state; don’t assume small headcount or part-time presence is exempt. Payroll & withholding: Employers must generally withhold state income tax based on the employee’s work location; states differ on withholding triggers, reciprocity, and “convenience of the employer” rules. Use payroll systems that track employee state and split wages when employees work in multiple states. Workers’ compensation: Many states treat home offices as covered worksites; employers should confirm telecommuting coverage and update policies/insurance accordingly. State wage/hour and paid leave: States and localities can have higher minimum wages, daily overtime (e.g., CA), mandatory meal/rest breaks, and paid sick/family leave rules that apply to remote workers. Expense reimbursement (e.g., CA Labor Code §2802) may require employers to reimburse necessary business expenses. Posters, notices & reporting: Employers must provide required federal/state/local posters and may be required to deliver them electronically to remote employees in certain states. New-hire reporting and wage statements must follow employee-state rules. Classification & independent contractors: Misclassification risk is amplified for remote work across states with strict tests (e.g., ABC/ABC-like tests). Follow state-specific standards when classifying contractors vs employees. Practical controls and best practices (checklist): 1. Maintain authoritative, up-to-date record of each employee’s physical work location and time spent in each state. 2. Use a multi-state-capable payroll provider or Employer of Record (EOR) for hires spanning many states. 3. When hiring remote employees in new states, immediately register for state withholding, SUI, and workers’ comp as required. 4. Update employee handbook and remote-work policies for state-specific rules: expense reimbursement, timekeeping, leave, accommodations, and data/privacy rules. 5. Provide electronic access to required posters and state notices; obtain acknowledgments where required. 6. Train managers on off‑the‑clock work, timekeeping, and location-reporting procedures to avoid wage claims. 7. Run periodic audits for misclassification, payroll withholding, and SUI filings; consult counsel for complex cross-state cases.