by Employer Pass, on Aug 17, 2026, 7:15:00 AM
While expanding talent pools to include remote workers in other states can greatly benefit a business, doing so isn’t as simple as it may seem. When hiring remote employees in other states, there are certain steps and tasks an employer must complete in order to ensure compliance.
Here is everything employers need to know about compliance for hiring remote employees in other states.
Compliance for Hiring Remote Employees in Other States
When hiring remote employees in other states, there are several key compliance requirements or steps that employers must ensure are met. These include:
- Complete General Business Registrations
- Complete State Tax Registrations
- Obtain Workers’ Compensation Coverage
- Update Payroll Software
- Complete New Hire Reporting
- Review Local Labor Laws
- Satisfy New Poster Requirements
Complete General Business Registrations
In most cases, hiring a remote employee in a different state is considered establishing a “physical presence” in that state. As such, employers must register businesses with the right agencies and pay the appropriate taxes.
First, businesses will need a “registered agent,” which then receives official papers and legal documents on behalf of the company for that state. Generally, the agent must be located in the new state.
Some states may also require employers to file for a foreign qualification in that state. This notifies the state that a business is active there.
While the exact process may differ from state to state, generally, businesses must file a Certificate of Authority to qualify as a foreign entity. In many cases, a Certificate of Good Standing from the state of formation may also be required.
Complete State Tax Registrations
In addition to general business registration, employers will also need to complete state tax registrations for the state where the remote employee resides / works. State tax registrations are required in order to collect, report, and pay taxes, specifically for withholding and unemployment insurance.
While each state has a different registration process, employers will generally want to keep the following information handy when registering:
- Legal Address / Mailing Address
- Start date for the business
- Contact information, titles, and Social Security Number(s) or SSNs for business officers
- A Federal Employer ID Number (FEIN)
Whether or not registration is available online or must be done through the mail varies from state to state. A state tax registration service that can help with the registration process, ensuring that everything is handled correctly by experts.
Obtain Workers’ Compensation Coverage
When hiring a remote employee in a new state, employers are generally required to obtain workers’ compensation insurance in that state.
In many cases, an employer’s existing workers’ compensation policy may not automatically cover employees working in a different state. Employers often need to notify an insurance carrier when hiring an out-of-state remote worker so the policy can be updated to include coverage in the employee’s state.
Some states require employers to specifically list the state on the policy, while others may require a separate policy altogether if the employer has employees working there.
In addition to obtaining coverage, employers may also need to register with the state’s workers’ compensation agency or comply with state-specific notice and reporting requirements. However, because workers’ compensation laws are governed at the state level, requirements can vary significantly depending on where the employee works.
Update Payroll Software
Once registered and the required insurance is obtained, employers must be prepared to process payroll in the new state.
Payroll software must be configured to properly withhold state and local income taxes, calculate unemployment insurance taxes, and apply any state-specific payroll deductions or contributions. In some states, employers may also need to account for programs such as paid family leave, disability insurance, or local payroll taxes.
Ensuring that payroll is configured is critical because payroll laws and tax rates vary from state to state. If not properly configured, employers could withhold incorrect taxes, miss required filings, or fail to comply with wage and hour laws in the employee’s state, which could lead to financial and possibly legal penalties.
Businesses may want to consider finding a third-party payroll provider with experience in multi-state tax laws, which can help ensure payroll is set up correctly.
Complete New Hire Reporting
Businesses are required to complete new hire reporting for the state where the employee will be working within 20 days or less of being hired. This includes remote employees working in a different state than where the business is located.
Employers generally have two options for doing so:
- Report new hire information to the state where he or she works (see new hire reporting by state requirements)
- Select / designate one state to report all new hires (Multistate Employer Registration)
Multistate Employer Registration
Employers with employees in at least two states have the option to report all new hires to one state. However, in order to report new hires to a single designated state, employers must complete the Multistate Employer Registration with the U.S. Department of Health and Human Services.
Employers also have two options to register as a multi-state employer:
- Register online using the Office of Child Support Enforcement (OCSE) Child Support Portal
- Use the Multistate Employer Registration Form for New Hire Reporting and email it to msedb@acf.hhs.gov.
Review Local Labor Laws
Employers should understand that employees are generally covered by the applicable state laws for the state in which he or she works / resides. So, when hiring a remote employee in a new state, it is critical to ensure that employers understand the state and local laws.
Employers may want to even consider creating a secondary version of any employee handbooks, tailored to the state of the remote employee.
Types of state or local laws can include:
- Minimum Wage Rates
- Overtime Rules
- Leave Laws (such as sick leave)
- Pay Transparency Laws
- Pay Frequency Laws
- Employee Break Laws
- Poster Requirements
Satisfy New Poster Requirements
Employers must be aware that labor law posters are still required for remote employees. Employers are still required to provide remote employees with access to applicable labor law notices, even if employees rarely or never work onsite.
When hiring a remote employee in a new state, employers need to ensure that the posting requirements for his or her state are met. Plus, employers need to ensure that the general requirements for digital labor law posters are satisfied.
The US Department of Labor (DOL) emphasizes that electronic postings must be just as accessible as physical posters would be in a traditional workplace. Employers should ensure remote employees can access notices without needing special permission or making a request to HR.
Acceptable solutions may include:
- Company intranet pages
- Employee self-service portals
- Shared network drives
- Internal HR or compliance websites
Employers should note that there are remote labor law poster services that exist, which can make posting requirements an easy, much more hands-off process.
Services for Hiring Remote Employees
With all the extra requirements necessary for hiring remote employees in a new state, businesses may have trouble weighing the positives against the negatives.
Luckily, Employer Pass has already found some services that can help make the process easier, including:
- State Tax and Business Registration Service
- Outsourced Payroll Services (Find a Payroll Provider)
- Labor Law Poster Service for Remote Employees
We’ve also collected some other resources to help make hiring easier:
Contact us today with questions about these services or requirements, or for help getting connected with a provider that can help.
