Want to work remotely? Be mindful of the state you live in

By Amanda Kavanagh
25 March 2024 | 15 Shares

Source: Shutterstock

Four years ago, remote working was a necessity for all roles that could feasibly be done from home.

As the majority of employees had worked in-office, this meant they also lived within a commutable distance from the office, and usually resided in the same state.

However, following this forced period of WFH, and amid reports of high-productivity and discussions around redefining the future of working, many of these remote workers moved out of cities and states, and into more affordable towns and rural areas.

Others did not relocate, but remained happy working from home, and now four years later they continue to resist return-to-office (RTO) mandates.

However, those seeking new remote roles are currently hitting a location block; roles may be remote but they are only remote within a particular state, or states.

While RTO mandates make employees wary, these state-specific offers are usually not because that employer has plans to pivot to in-office or hybrid working. There are a number of influences on this decision.

Legal landscape

Everything from employment laws to regulations change state to state. And if an employer has employees in a particular place, they have a responsibility to adhere to those laws, and must stay abreast of ever-changing protections and benefits there, such as sick leave and flexible scheduling.


Source: Shutterstock

Think of the risk and people power required to adhere to the laws of multiple different jurisdictions. This is why many employers only hire within a small set of states, even if the roles are performed remotely.

Pay transparency laws also vary state to state. Some don’t have them at all, while in others transparency is only applicable to employers with over 50 employees.

Remote working pay transparency makes things all the more complicated. Again, it varies by location. California is one of the most strict states on employers: if a single employee works in the state, salaries must be disclosed for remote jobs. Some employers avoid pay transparency by not hiring in states where it is mandatory.

Tax implications

Tied closely with law is tax. Again, regulations vary widely depending on where you reside.

Generally speaking, employers have to withhold income tax in the state or states where employees are employed, no matter where the business is based.

But some neighboring states have reciprocal agreements, and other states require employees to withhold income in both states: where the company is and where the employee works.

Other states don’t withhold any income tax at all, or have different considerations for remote employees. It’s a total minefield, but one that is narrowed if an employer only hires in specific states.

The onus is on remote workers to understand the tax implications of remote working in the state they live in, so they can make informed financial decisions, and avoid unexpected tax liabilities.

Business licenses

For every state a company operates in, they require a business license.

This can be costly, when you factor in the paperwork and fees, plus they must provide a registered agent and an address.

Even with just one employee in a state, a company could be liable to pay a number of taxes there. As brilliant as you are, you might be too costly a hire.

For all these reasons, you’ll need to read the fine print if you want to work remotely at any given company.

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