The Pros And Cons Of Hiring Multistate Employees
The advent of working from home is here to stay, and employers looking for the employees they need are availing themselves to the multistate talent pool more than ever. Examine some of the barriers associated with hiring multistate employees, and learn about a solution. Many positions, including technical, professional and customer service roles, can even be filled at a lower cost by hiring in multiple states where competitive wages and associated employment costs are lower.
Primary Concerns Of Hiring Multistate
Hiring across state lines comes with some basic concerns, including the unemployment tax filing due by state. Employers often must establish new account numbers in each state, and the “new business” tax rate will likely apply in new state of operation. Employers should be aware the start-up rate is usually among the highest.
Multistate workers’ compensation coverage will need to be effective timely on the first day of employment for the new hire. Is the current insurance carrier licensed to provide coverage in every state? Will the multistate operations include any states that sell the employees’ compensation coverage directly from the state, meaning they are a monopolistic state for providing workers’ compensation?
Will the multistate operations include hourly employees? If so, time and attendance, minimum wage requirements, and other rules may apply specifically to the state.
Professional business regulation, including licensure, is frequently handled state by state further complicating multistate operations. Employers should have a system for the ascertaining the status of certification and/or education of professional staff. On-going monitoring of continuing education requirements also need to be in place. Sales employees driving vehicles across multistate territories may have additional insurance requirements.
State specific income taxes may be applicable to the wage and salary earned by multistate employees in their home state. Each represents a new set of rules to follow, beginning day one of payroll accrual. Some cities and municipalities have employer taxes to be filed as well.
Employee benefits can be challenging to provide with multistate employee groups. Even if the incumbent carrier is national in scope, the plans currently offered in one state (i.e., HMO or NHP options) may not exist in the new state.
Professional Employer Organizations (PEOs) Help Navigate The Process Of Hiring Multistate Employees
Multistate employers can rely on a Professional Employer Organizations (PEO) to provide a co-employment relationship enabling the company to transfer many of the employer responsibilities that distract from operations. Independent business owners gain economy of scale advantages with other business owners contracted with the PEO, yet remain autonomous in their core operations. The selection of employees, hiring decisions, compensation strategies, and terminations are all made by the business owner with professional expertise from the PEO. Far different than simply a payroll provider, the PEO is the recognized co-employer when it comes to paying payroll out of its own accounts; payroll tax withholding and administration; workers’ compensation; employee benefits including health insurance; and, 401(k) retirement plans.
If your company is looking to hire out of state employees, call us at (877) 426-6320 for a free consultation or contact us on our website here. We can help you avoid many of the challenges that come from hiring out of state.
Samantha Bond Richman is an independent insurance agency owner and specializes in representing companies seeking professional employer organization (PEO) based solutions.