In our piece on choosing between remote, hybrid, and in-office, we mentioned that the US has no federal right-to-disconnect law. That’s just one piece of a bigger picture: once you have people working outside your home state, several other compliance questions show up that don’t get much attention until they cause a problem.

What Actually Changes When Someone Works Remotely

The moment an employee works from a different state than the one your business is registered in, that state’s rules apply to them — not your home state’s. That’s true even if it’s a single remote hire, and even if nobody’s checking.

The Compliance Areas That Usually Catch Employers Off Guard

A handful of obligations tend to surface only after a remote hire has been on the books for a while.

  • State income tax withholding: you generally withhold and remit tax based on where the employee physically works, not where your business is headquartered.
  • State unemployment insurance: most states require you to register and pay into their unemployment fund for anyone working from there.
  • Workers’ compensation: coverage requirements and costs vary by state, and your existing policy may not automatically extend to a new one.
  • Wage and hour rules: minimum wage, overtime, and required breaks follow the employee’s state, which can be stricter than your own.

According to SHRM’s reporting on multi-state remote work, many companies only discover a gap in state tax compliance once a remote hire files a personal return or a state audit flags it — well after the exposure has built up.

What Belongs in a Written Remote Work Policy

None of this has to live only in your head or a verbal understanding — the policy should spell it out.

  • Where someone can work from: which states or locations are approved, and what happens if that changes.
  • Hours and availability: what’s expected in terms of overlap with the team, especially across time zones.
  • After-hours expectations: since there’s no law setting this floor for you, your policy is what sets it.
  • Equipment and expenses: who provides what, and who covers setup or maintenance costs.

What to Do With This in Your Business

If you already have people working remotely in other states, check whether your payroll, insurance, and policies actually reflect where they work — not just where your business is based. This is general information, not a substitute for advice from an accountant or employment attorney about your specific situation.