Hybrid work is here to stay, and with it comes a question many employers never had to ask before: what happens when an employee who comes into the office a few days a week lives in another state? For employers in the Maryland, Virginia, and D.C. region, where commuting across state lines is routine, this is a common situation.
Where the Work Happens Matters
As a general rule, employment laws follow the employee’s physical work location, not the location of the company’s headquarters. However, a hybrid employee who works from home in one state and in your office in another may be protected by the laws of both states. This means your policies, payroll setup, and compliance checklist may need to account for more than one jurisdiction for a single employee.
Wage and Hour Compliance
Minimum wage, overtime rules, pay frequency, final paycheck deadlines, and expense reimbursement requirements all differ from state to state. When state laws conflict, employers generally must follow whichever law is more protective of the employee for the work performed there. A pay practice that is perfectly lawful at your office may not comply for the days an employee works from home.
Leave, Benefits, and Notices
Many states and localities have their own paid sick leave laws, family and medical leave programs, and paid leave insurance contributions. Remote and hybrid employees may be entitled to these benefits based on where they work. Employers should also confirm they are providing any required workplace notices to remote employees, which is often done electronically.
Payroll and Tax Withholding
State income tax withholding is often the first issue employers face. Depending on where the employee lives and works, you may need to register with another state’s tax authority and withhold taxes there. Some neighboring jurisdictions, including Maryland, Virginia, and D.C., have reciprocity arrangements that can simplify withholding, but the details and required employee forms vary. A handful of states also apply a “convenience of the employer” rule that can tax remote work as if it were performed in the employer’s state. State unemployment insurance has its own separate rules for deciding which single state should receive contributions for an employee who works in more than one. Please speak with a tax attorney with any questions about withholdings for your hybrid or remote employees.
Practical Steps for Employers
We recommend employers take a few proactive steps:
- Keep an up-to-date record of where every employee actually works, including home addresses.
- Require employees to request approval before relocating or working long-term from a new location.
- Review handbooks and policies to include state-specific addenda where needed.
- Coordinate with your payroll provider whenever an employee’s work location changes.
How We Can Help
Multi-state compliance can be complicated, and the rules continue to evolve. Our attorneys regularly help employers evaluate their obligations and update policies. If you have hybrid or remote employees in other states, call our office at 301-441-1400 to schedule an appointment with one of Thatcher Zavaro & Mani’s attorneys. www.thatcherlaw.com
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