With a new wave of remote workers comes new problems for Human Resources. One of those problems might affect your company’s tax compliance – and you might not even know it. The issue? Employees moving from state to state while working, which could affect your payroll taxes.

Working “vacations,” extended stays with out-of-state family, and even complete moves have become more and more common over the past year. With the ongoing pandemic testing the limits of just how much time a remote worker can spend in their own space — especially for those living in small urban apartments — the attitude of “have laptop, will travel” is becoming pervasive amongst remote workers. Without a commute tying them down, many workers are simply taking their jobs on the road.

Potential Issues with Out of State Workers

It all comes down to taxes: is a company set up to pay taxes in a state or municipality? And are they paying those taxes? Some states rely on income taxes for more than 10% of their tax collections, according to TaxFoundation.org, a think tank specializing in tax policy. And nearly four thousand municipalities levy income taxes. Other local income taxes can be levied by taxing jurisdictions such as counties and school districts.

To know if your company is paying an employee in one of these tax jurisdictions, your records have to be precise — every single time one of your nomadic employees hits the road, or one of your pent-up apartment workers buys a house in a new town.

Getting in Compliance

Determining where your employees work for the purposes of taxes can get confusing. For unemployment tax, the U.S. Department of Labor provides a “Localization of Work” guide, complete with examples and questions to ask which help determine where taxes are owed. For some tax obligations, a state might be offering temporary Covid-19 relief to remote workers.

Besides taxes, you also have local labor law to consider. Employees are protected by state laws regarding employment policies, such as sick leave, family leave, or overtime. There are also those state labor law posting requirements to consider. If you’re already mailing, emailing, or posting your state’s required labor law posters on your company website, you’ll want to add the applicable ones for the states where your remote workers are now living.

Updating Your Remote Work Policy

Your company’s remote work policy may need updated to reflect the new mobility many Americans are enjoying as they transition from offices. At the very least, employees must realize they need to contact HR when they’re working from a new state or city — even temporarily. Updating your employee’s records regularly, and using a tracker to maintain records on their addresses, is essential to keeping in good tax compliance.

Keeping in compliance makes a strong Human Resources platform an essential part of your business. Are you looking for a platform which offers multiple communication tools, logs emails and other comms, and interacts with your payroll and benefits for seamless operations? Discover WBD’s customized, purpose-built benefits administration tools for yourself. Click here to learn more, or email us to learn how we can keep your company’s HR department running smoothly, even in these complicated times.

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