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Out-Of-State Employees Working In California – What Employers Need to Know

Out-Of-State Employees Working In California - What Employers Need to Know

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How to hire out-of-state employees who are remote?

Hiring an out-of-state employee who will be working 100% remotely can be tricky.  However, hiring an out-of-state employee can help you reach a wider talent pool and expand your business presence in other regions. Here are some easy steps on how to hire out-of-state employees who will be working remotely. Similar to hiring in-state employees, you’ll want to follow the necessary hiring process with hiring out-of-state employees. These steps can be starting with selecting the candidate, making a job offer with an offer letter to the candidate and once they’ve accepted the position, starting the onboarding process. The onboarding process will entail the necessary new hire documents per the state they are working in, including reviewing the necessary handbook policies that apply to the state they are working in.


Are employers required to withhold out-of-state taxes?

Employers are required to withhold out-of-state taxes for the states in which their employees have established residency. Hiring out-of-state employees who are working remotely does in fact create new tax implications for businesses. In the planning process, businesses will want to make sure they register with the appropriate state agencies and acquire the necessary tax IDs in each state as the state taxes may be very different working outside of California.  Different regions may require businesses to register with various agencies and it’s pertinent to research each state where employees will be working from. Each state also sets its own tax rates and requirements, which will need to be reflected with the company’s payroll. In general, businesses are required to withhold income tax in the states where employees work. This means that if a business operates in California, but has hired employees in other states, the business will be required to withhold out-of-state taxes for these employees.


Do California labor laws apply to out-of-state employees?

California labor laws may apply to out-of-state employees. However, each state has its own regulations when it comes to labor laws, which businesses will want to pay attention to if they have employees working out of state from California. California labor laws are found to be some of the most stringent labor laws in the country. Out-of-state employees may not be bound by California labor laws if they are strictly working in another state.  It’s recommended that businesses review the labor laws in each state that employees are working in and establish company policies that reflect the state labor laws that they’ll be required to comply with.

When planning to hire out of state, what tools do you need?

There are many recommended tools when planning to hire out-of-state employees who are working outside of CA. Remote work comes with unique challenges for businesses. These tools can range from the proper home office setup, which may include Internet access, mobile hotspots, remote desktop software, team chat applications, screen sharing capability, video conferencing applications, automation tools, etc. As the need for remote work out of California has grown, many businesses have discovered and started implementing some of these tools and resources to be as productive as possible while working remotely out of state from the state the business operates in.  

If you would like to utilize Bizhaven’s services or more information on hiring out of state employees, contact us at [email protected]

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