1. Tax and payroll headaches could impact the employer and employee, where the employer incurs unexpected local and state taxes while the employee might need to pay income tax in both states. Unfortunately, there is no one-size-fits-all approach as the laws differ state by state. 2. Expected hours of operation should also be considered. As a West Coast-based employer, will all employees be expected to maintain the same hours of availability regardless of time zone? 3. Some states laws differ on paid family leave and sick time, and not all states recognize the same holidays. These situations should be factored into remote work policies. 4. Workers compensation and unemployment insurance are two other significant considerations. Usually the employer is required to obtain both types of insurance from the state in which the employee works. 5. Pay is perhaps the most critical consideration. Employers must determine fair pay for out-of- state employees and balance that with skill sets, experience, and expertise. And organizations need to prepare for employee wage conversations. Employers cannot prohibit workers from discussing pay and compensation. So be prepared to hold difficult conversations if there are significant discrepancies based on out-of-state salary rates.
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