Before remote hiring, just plain regular hiring has always had its challenges. Writing the job ad, getting people to show up through the interview process, and actually finding the right people to staff your organization can be a huge job! That’s why in the wake of the COVID pandemic, employers have increasingly turned to hiring remote workers as a new solution to their hiring needs. While remote work offers tremendous flexibility for both a hiring team and an employee, knowing the complexities involved for an employer is essential. Landmines are all around when hiring, whether local or remote employees.
When I think about hiring remote employees, all kinds of dangers come to mind. Some biggies are income tax nexus, HR compliance nightmares, and special payroll items. With these items in mind, here are the five worst states to hire remote employees from because of all the red tape, hoops, landmines, snake-infested waters, or whatever analogy you can think of:
Hiring remote employees from CALIFORNIA
The Golden State of Compliance
California—known for its beautiful weather, surfing, 90s gangsta rap, and — a bureaucracy from HELL. It’s for that precise reason that California presents unique compliance requirements for remote hiring. The state has comprehensive labor laws and tax regulations that demand attention. Navigating their intricate tax rates and staying updated with evolving labor laws can be a task. We have had the opportunity to hire a couple of remote employees from California, and in both situations, the costs didn’t outweigh the benefits. The income tax alone, at close to 11%, is enough to make me want to run away. The HR Class requirements for employees, overtime rules, and potential for governmental over-reach caused me to put California as #1 on the hardest states to have remote employees from.
Hiring remote employees from NEW YORK
Embracing the Empire State’s Complexity
New York, the state that never sleeps, boasts a robust economy and a diverse workforce. Personally, I have also found it to be the home of a lot of obnoxious Yankee fans (that’s redundant, right?). However, it also brings its fair share of labor force complexity. With its myriad of tax brackets and local taxes, you’ll find yourself having to navigate state, city, and potentially a local borough taxes. On top of that, you’ll need to pay New York wages. Why do you think all those New Yorkers move to Florida to retire? It is not just the warm weather!
Hiring remote employees from PENNSYLVANIA
Unlocking the Keystone State’s Compliance Puzzle
Pennsylvania, renowned for Ben Franklin, Rocky, steel, and cheesesteaks, offers a different challenge than other states. The state’s local tax system and intricate income tax rules can make payroll management quite intriguing. Ok, I will speak freely: their local taxes suck! Most jurisdictions have small offices and “wonderful” customer service people who are always so happy to help. Can you hear the sarcasm? Sure, it’s the city of brotherly love until I’ve been on hold for 2+ hours!
Hiring remote employees from OHIO
The tax state
If Pennsylvania had a bad neighbor, it would be Ohio. If you’re looking for local taxes worse than Pennsylvania, Ohio may just be your guy. In addition to state and local jurisdictions, you have to take the school districts and counties into account. Although this may make perfect sense for those in the state, those of us not living in Ohio now have an immense amount of detail to sort through. There are so many choice to make when hiring a new employee and getting all of your accounts set up. It is easy to miss one, and the extra compliance is another decision to consider before saying yes to that new remote employee.
Hiring remote employees from NEW JERSEY
Intricate worker classification rules
New Jersey offers a vibrant business environment, but it comes with significant tax considerations. Navigating the garden state’s tax landscape can be a real challenge. High-income tax rates and intricate worker classification rules demand careful attention when hiring remote employees from New Jersey. Be sure to do you research on your employer responsibilities before sending that offer letter.
Is Hiring Remote Worth It?
While remote hiring from different states surely presents challenges, that doesn’t mean it’s not the right decision for your business. The key is to be informed and get all your details in order before you make the hire. Doing your due diligence will help you navigate the dangerous waters that may cause potential issues down the road. And who knows? That remote worker may be exactly who your company needs.
More Resources for Hiring Remote Workers
Thinking about hiring someone to work remotely? We’ve created several resources to make sure you’re prepared to do it smoothly. Check out the following:
- How to Setup Payroll Taxes with Remote Employees
- Increasing Engagement with Remote Employees
- What to Consider When Hiring Remote Employees
Do you have even MORE questions? We’re betting that we have the answers. Feel free to give us a call and chat about your needs, whether it’s hiring, payroll, or whatever is on your mind. We’re here to help.