How do you hire remote employees across states?
To hire remote employees across states, identify the state where each person will work, check that state's wage, tax and registration rules, complete Form I-9 within three business days of hire, and update your payroll setup. Federal rules apply everywhere, and the state's rules apply to people working there.
US rules as of 31 October 2026.
At a glance
- The worker's work location usually decides which state and local rules apply, not where your office is.
- Where state and federal minimum wage both apply, the employee gets the higher rate.
- Pay transparency, fair chance and leave laws differ by state and city.
- If you do not want to register in a new state, an employer of record can be the employer.
Checklist for the first hire in a new state
| Area | What to check | Where |
|---|---|---|
| Wage and hour | State minimum wage and overtime; the FLSA gives the higher of state or federal minimum | State labor department; DOL |
| Payroll tax | State income tax withholding and unemployment insurance registration | State revenue and workforce agencies |
| Business registration | Whether having an employee there requires registering to do business | Secretary of state |
| Workers' compensation | Coverage in the state | State workers' compensation agency |
| Job postings | Pay range rules; see pay transparency laws | State and city sites |
| Hiring practices | Fair chance rules; see ban the box | State and city sites |
| Leave and notices | Paid sick leave and required posters | State labor department |
| Form I-9 | Complete within three business days; USCIS describes a DHS-authorized remote alternative procedure for some employers | I-9 guide |
Remote policy items to write down
- Approved work locations and what to do before moving states.
- Hours, timekeeping for non-exempt staff, and overtime approval.
- Equipment, expense reimbursement and data security rules.
- Home office rules and incident reporting.
- Meeting windows across time zones.
Step by step: your first hire in a new state
- Confirm the employee's primary work location (home address or co-working site), in writing.
- Check that state's minimum wage and overtime rules with its labor department, and any city rules.
- Register for state income tax withholding and unemployment insurance if the state requires it.
- Ask the secretary of state whether employing someone there triggers business registration.
- Confirm workers' compensation coverage for that state.
- Update your handbook, required notices and posters for that state.
- Complete Form I-9 on time and keep it with your records.
- Add the employee to payroll with the correct state and local codes.
What the federal sources say
The Department of Labor's state minimum wage page explains that where a state has no minimum wage, employers covered by the Fair Labor Standards Act (FLSA) must pay the federal minimum wage of $7.25 per hour. Some states adopt the federal rate automatically when it is higher than their own, and the Department of Labor advises checking the state labor office for official information.
On overtime, the Department of Labor says covered employees who are not exempt must receive overtime pay at time and one-half their regular rate for hours over 40 in a workweek. A workweek is a fixed 168-hour period, and hours cannot be averaged across weeks. A remote worker who is non-exempt needs timekeeping like anyone else.
For Form I-9, USCIS says employers who examine documents remotely under a DHS-authorized alternative procedure, rather than by physical examination, must check the box in Section 2 to say so. Confirm on the USCIS site whether your company is eligible before you rely on it.
Common mistakes
- Hiring first and asking about state registration later.
- Using the headquarters state's rules for every employee.
- Skipping timekeeping for non-exempt remote staff.
- Treating a remote employee as a contractor to avoid state setup.
- Forgetting that an employee who moves states changes your payroll and notice setup, so ask staff to tell you before they move.
Run the hiring process remotely
Use a structured interview with the same questions for each candidate. Video interviews inside LiveRec help you keep the interview in one place; see interview availability.
FAQ
Do I need to register my company in the employee's state? It depends on the state. Ask the state's secretary of state and revenue department.
Which state's income tax do I withhold? Rules vary, including for employees who live in one state and work in another. Check with the state revenue agencies.
Can I treat a remote worker as a contractor? Only if they are genuinely independent. See contractor vs employee.
Do remote employees get overtime? Non-exempt employees do. The Department of Labor says covered, non-exempt employees must be paid time and one-half their regular rate for hours over 40 in a workweek.
Can Form I-9 be completed remotely? USCIS describes a DHS-authorized alternative procedure for some employers. Check USCIS to see whether your company qualifies.
Sources
- US Department of Labor, Wage and Hour Division, FLSA - https://www.dol.gov/agencies/whd/flsa (accessed 31 October 2026)
- USCIS, Form I-9 - https://www.uscis.gov/i-9 (accessed 31 October 2026)
- IRS, Independent Contractor (Self-Employed) or Employee - https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee (accessed 31 October 2026)
- US Department of Labor, state minimum wage laws: https://www.dol.gov/agencies/whd/minimum-wage/state (accessed 31 October 2026)
- US Department of Labor, overtime pay under the FLSA: https://www.dol.gov/agencies/whd/overtime (accessed 31 October 2026)
This is general information, not legal, tax or immigration advice. Rules change and your situation may differ. Consult a licensed attorney or qualified adviser.