The rise of remote work has transformed the modern workplace, offering businesses and employees unprecedented flexibility. However, hiring remote employees—whether they work within the U.S. or internationally—introduces a complex web of pay, tax, and employment laws that employers must navigate. From federal and state regulations to international tax obligations, businesses must ensure compliance to avoid legal and financial pitfalls. This comprehensive guide provides an in-depth exploration of the critical considerations for managing remote employees, including sick pay, family leave, tax credits, state-specific laws, and international regulations, while offering practical guidance and examples to help employers stay compliant.
Table of Contents
Understanding Remote Work and Legal Obligations
Remote work, often referred to as telework, allows employees to perform their duties from locations outside the employer’s physical office, such as their homes or other remote settings. The shift to remote work, accelerated by the COVID-19 pandemic, has led to new laws and regulations that address the unique challenges of managing a distributed workforce. Employers must consider federal, state, and local laws, as well as international regulations for employees working abroad. Non-compliance can result in penalties, back taxes, or legal disputes, making it critical to understand these obligations thoroughly.
The Impact of the Public Health Crisis on Remote Work
The COVID-19 pandemic prompted significant legislative changes to support businesses and employees, particularly those working remotely. Laws like the Families First Coronavirus Response Act (FFCRA), Consolidated Appropriations Act (CAA), and American Rescue Plan Act (ARPA) introduced provisions to address sick pay, family leave, and employee retention credits. These measures were designed to provide financial relief to employers and employees during the crisis, with specific benefits for remote workers.
Sick Pay and Family Leave Under FFCRA
The FFCRA, enacted in 2020, required employers with fewer than 500 employees to provide paid sick leave and expanded family leave for employees unable to work due to COVID-19-related reasons. For example, remote employees who were ill, quarantined, or caring for a child whose school or daycare was closed were eligible for:
- Up to 80 hours (10 days) of paid sick leave at their regular pay rate (or two-thirds for certain qualifying reasons).
- Up to 10 weeks of paid family leave at two-thirds of their regular pay for employees caring for a child due to school or daycare closures.
Employers could claim tax credits to offset the cost of these benefits. The credits were available for leaves taken between April 1, 2020, and September 30, 2021, with extensions provided by the CAA (January 1, 2021, to March 31, 2021) and ARPA (April 1, 2021, to September 30, 2021). Employers could claim these credits by deferring the employer portion of Social Security taxes on Form 941, the quarterly wage and tax report.
Employee Retention Credit (ERC)
The Employee Retention Credit (ERC) was another critical relief measure introduced under the CARES Act and extended by the CAA and ARPA. This credit incentivized businesses to retain employees, including remote workers, during the economic disruptions caused by the pandemic. Key details include:
- March 12, 2020, to December 31, 2020: Employers could claim a credit of 50% of qualified wages up to $10,000 per employee.
- January 1, 2021, to December 31, 2021: The credit increased to 70% of qualified wages up to $10,000 per employee per quarter.
Employers could access the credit by reducing payroll tax deposits or requesting an advance using Form 7200. For example, a small tech company with 10 remote employees who continued working during a government-mandated shutdown could claim significant credits to offset payroll costs, helping maintain financial stability.
| Credit Type | Effective Period | Credit Percentage | Maximum Wages per Employee |
|---|---|---|---|
| CARES Act ERC | March 12, 2020 – Dec 31, 2020 | 50% | $10,000 (annual) |
| CAA ERC | Jan 1, 2021 – Jun 30, 2021 | 70% | $10,000 (per quarter) |
| ARPA ERC | Jul 1, 2021 – Dec 31, 2021 | 70% | $10,000 (per quarter) |
Managing Remote Employees Within the U.S.
When remote employees work within the same state as the employer’s business location, compliance is relatively straightforward, as the same state laws for income taxes and employment taxes apply. However, complexities arise when employees work from different states or localities, requiring employers to address state-specific tax laws, minimum wage requirements, workers’ compensation, and other regulations.
State and Local Taxes for Remote Employees
Employers must determine the work location of each remote employee, as some may have relocated during the pandemic. This information is critical for compliance with state income taxes and local income taxes, which are imposed in 11 states by counties, cities, or other municipalities. For example, a remote employee working from Philadelphia, Pennsylvania, may be subject to the city’s wage tax, even if the employer is based in a different state.
State Income Tax and Nexus
The concept of nexus determines whether a business is subject to a state’s tax jurisdiction. Nexus is established when a business has a physical presence in a state, which can include employees working remotely. For instance, if a California-based company employs a remote worker in New York, the company may need to register with New York’s tax authorities and withhold state income taxes from the employee’s paycheck. Some states have reciprocity agreements, allowing employees who live in one state but work in another to avoid double taxation. For example, an employee living in New Jersey but working remotely for a Pennsylvania-based company may only pay taxes to New Jersey under their reciprocity agreement.
Thresholds for Tax Compliance
Certain states have thresholds that determine when a remote employee triggers tax obligations. For example, New York requires employers to withhold state income taxes if an employee works in the state for more than 14 days in a year. Employers must track these thresholds carefully to ensure compliance. A payroll service can simplify this process, especially for businesses with employees in multiple states.
| State | Tax Threshold | Reciprocity Agreements |
|---|---|---|
| New York | 14 days in-state work | NJ, CT, PA, others |
| California | No specific day threshold; nexus-based | None |
| Pennsylvania | No specific day threshold | NJ, MD, VA, others |
Minimum Wage Requirements
The federal minimum wage is $7.25 per hour (as of 2025, unchanged since 2009), but many states have higher minimum wages. Employers must pay the higher of the federal or state rate. For example, California’s minimum wage is $16.00 per hour (as of 2025 for most employers), while Washington, D.C., requires $17.50 per hour. A remote employee in Seattle must be paid at least Washington’s state minimum wage, even if the employer is based in a state with a lower rate.
Workers’ Compensation Insurance
All states mandate workers’ compensation insurance to cover workplace injuries or illnesses, including for remote employees. Requirements vary by state:
- California allows employers to purchase private insurance, state insurance, or self-insure.
- Ohio requires employers to participate in the state’s workers’ compensation fund.
- Texas is unique in that workers’ compensation is optional, though most employers opt to carry it.
For example, a remote employee in Colorado who sustains a repetitive strain injury from prolonged computer use may be eligible for workers’ compensation benefits, and the employer must ensure coverage is in place.
Disability Insurance
Some states require participation in disability insurance programs to provide benefits for non-work-related short-term disabilities. For instance:
- California, New Jersey, and Rhode Island fund their programs through employee payroll deductions, requiring employers to register and withhold these deductions.
- New York and New Jersey mandate that employers provide disability benefits, which can be covered through private insurance, state funds, or self-insurance.
A remote employee in California who takes maternity leave may receive benefits through the state’s Employment Development Department (EDD), funded by payroll deductions.
Unemployment Insurance
Unemployment insurance is funded through federal and state taxes, with most employers paying both Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA) taxes. Each state has its own rules for eligibility and tax rates. For example, a remote employee laid off in Texas would apply for benefits through the Texas Workforce Commission, while the employer pays SUTA taxes based on the employee’s work location.
Other State and Local Regulations
Remote employees may also be subject to:
- Zoning laws: Some localities require a home occupation permit for employees working from home.
- Pay frequency laws: States like New York and California mandate specific pay schedules (e.g., bi-weekly or semi-monthly).
- Paid rest periods: Nine states, including Colorado and Illinois, require minimum paid rest periods for employees.
- Overtime rules: While federal law requires 1.5 times regular pay for hours worked over 40 per week, states like California mandate overtime for hours exceeding 8 per day.
For example, a remote employee in California working 10-hour days may qualify for daily overtime, even if their weekly hours do not exceed 40.
Managing Remote Employees Abroad
Hiring employees who work internationally introduces additional complexities, as employers must comply with both U.S. and foreign laws. Key considerations include federal income taxes, Social Security and Medicare taxes, foreign tax obligations, and totalization agreements.
Federal Income Taxes for International Remote Employees
Employers must withhold U.S. federal income taxes from the wages of employees working abroad unless a foreign country’s laws require withholding of foreign income taxes. Some employees may qualify for the Foreign Earned Income Exclusion (FEIE), which allows them to exclude a portion of their income (up to $126,500 in 2025, adjusted for inflation) from U.S. taxes if they meet specific residency or physical presence tests. For example, a U.S.-based company employing a remote worker in Spain must withhold U.S. taxes unless Spain’s tax laws take precedence.
State Income Taxes
Some states require employees working abroad to pay state income taxes unless they can prove non-resident status. For instance, Colorado requires proof of non-residency, such as a lease or utility bills in the foreign country, to exempt an employee from state taxes. Employers must withhold state taxes for employees who retain residency in states with income taxes.
Social Security and Medicare Taxes
Wages paid to remote employees working abroad are generally subject to Social Security and Medicare taxes if the employer is U.S.-based and not a foreign affiliate. However, the U.S. has totalization agreements with over 30 countries, including Canada, France, and Germany, to prevent double taxation on social security. For example, a U.S. employee working remotely in France may only pay into France’s social security system, with contributions credited toward U.S. Social Security benefits.
| Country | Totalization Agreement | Impact |
|---|---|---|
| Canada | Yes | Avoids double social security taxation |
| France | Yes | Coordinates benefits between U.S. and France |
| Brazil | No | May require dual social security contributions |
Foreign Employment Laws
Employers must also comply with the labor laws of the country where the remote employee works. For example:
- Germany mandates a minimum of 24 vacation days per year and strict working-hour limits.
- Australia requires employers to contribute to employees’ superannuation (retirement) funds.
- United Kingdom enforces the Working Time Regulations, limiting weekly work hours to 48 unless the employee opts out.
A U.S. company employing a remote worker in the UK must ensure compliance with UK laws, such as providing statutory sick pay and adhering to maternity leave regulations.
Remote Employees vs. Independent Contractors
Misclassifying a worker as an independent contractor instead of a remote employee can lead to significant penalties, including liability for unpaid employment taxes, penalties, and interest. The IRS uses a three-factor test to determine worker status:
- Behavioral control: Does the employer control how and when the work is performed?
- Financial control: Does the worker have unreimbursed business expenses or the ability to work for others?
- Relationship type: Is there a written contract, and does the worker receive employee benefits?
For example, a graphic designer working remotely with set hours and company-provided equipment is likely an employee, while a freelancer who sets their own schedule and uses their own tools may be an independent contractor. Employers should consult the IRS guidelines or a tax professional to ensure proper classification.
Practical Steps for Employers
To manage remote employees effectively, employers should take the following steps:
- Document Work Locations: Require employees to report their primary work location and update it if they relocate.
- Engage a Payroll Service: Use a professional service to handle multi-state and international payroll and tax compliance.
- Consult Tax Professionals: Work with accountants or employment attorneys familiar with the states and countries where employees work.
- Stay Updated on Laws: Monitor changes in federal, state, and international regulations, as laws evolve rapidly.
- Implement Compliance Software: Use tools like Gusto or BambooHR to streamline payroll, tax withholding, and benefits administration.
Additional Considerations for 2025 and Beyond
As remote work continues to grow, new trends and regulations are emerging:
- Hybrid Work Models: Many companies are adopting hybrid models, requiring compliance with laws for both in-office and remote employees.
- Data Privacy: Remote employees may handle sensitive data, requiring compliance with laws like the General Data Protection Regulation (GDPR) in Europe or the California Consumer Privacy Act (CCPA).
- Mental Health Support: Some states are introducing requirements for employers to provide mental health resources for remote workers, recognizing the isolation risks of telework.
For example, a tech company with employees in California and Germany must ensure GDPR compliance for data handled by the German employee and provide mental health resources under California’s evolving labor laws.
Conclusion
Hiring remote employees offers businesses flexibility and access to global talent but requires careful navigation of pay, tax, and work laws. From FFCRA and ERC provisions to state-specific minimum wage and workers’ compensation requirements, employers must stay vigilant to remain compliant. International remote workers add further complexity, with obligations like foreign tax withholding and totalization agreements. By documenting work locations, leveraging professional services, and staying informed about evolving regulations, businesses can successfully manage their remote workforce while avoiding costly penalties. As remote work becomes a permanent fixture in the global economy, proactive compliance will be key to thriving in this dynamic landscape.
Disclaimer
The information provided in “Navigating Pay, Tax, and Work Laws for Remote Employees: A Comprehensive Guide for Employers” is intended for general informational purposes only and does not constitute legal, tax, or financial advice. Laws and regulations regarding remote work, payroll, taxes, and employment vary by jurisdiction and are subject to change. Employers should consult with qualified legal, tax, or human resources professionals licensed in the relevant jurisdictions to ensure compliance with all applicable federal, state, and international laws. The authors and publishers of this website Manishchanda.net are not responsible for any errors, omissions, or consequences arising from the use of this information.
Acknowledgements
The development of the article “Navigating Pay, Tax, and Work Laws for Remote Employees: A Comprehensive Guide for Employers” was made possible through the extensive resources and insights provided by numerous reputable organizations and government agencies. Their comprehensive guides, legal updates, and practical tools were instrumental in ensuring the accuracy and depth of the information presented. I deeply express my gratitude to the following sources for their valuable contributions:
- Internal Revenue Service (IRS): For detailed guidance on federal tax obligations, including income tax withholding and the Foreign Earned Income Exclusion.
- U.S. Department of Labor (DOL): For information on federal minimum wage, overtime regulations, and state-specific labor laws.
- U.S. Small Business Administration (SBA): For resources on small business relief programs, including the Employee Retention Credit.
- National Federation of Independent Business (NFIB): For state-by-state comparisons of workers’ compensation requirements.
- Society for Human Resource Management (SHRM): For insights on remote work policies and compliance with employment laws.
- Payroll.org: For guidance on payroll tax compliance for remote employees.
- Tax Foundation: For explanations of state tax nexus and reciprocity agreements.
- California Employment Development Department (EDD): For details on California’s disability insurance and payroll deduction requirements.
- New York State Department of Labor: For information on New York’s disability benefits and tax thresholds.
- U.S. Social Security Administration (SSA): For details on totalization agreements and Social Security tax obligations for international employees.
- Gusto: For practical tools and insights on managing multi-state payroll.
- BambooHR: For resources on HR compliance for remote workforces.
- Cornell Law School Legal Information Institute: For legal definitions and references to federal employment laws.
- Bloomberg Tax: For in-depth analysis of state and federal tax implications for remote workers.
- NOLO: For accessible explanations of employment and tax laws for small businesses.
Frequently Asked Questions (FAQs)
FAQ 1: What are the key federal laws affecting pay for remote employees in the U.S. during the COVID-19 pandemic?
The COVID-19 pandemic prompted several federal laws to support remote employees and their employers, particularly through provisions for paid sick leave, family leave, and tax credits. The Families First Coronavirus Response Act (FFCRA), enacted in 2020, required employers with fewer than 500 employees to provide paid sick leave of up to 80 hours (10 days) for employees unable to work due to COVID-19-related reasons, such as illness or quarantine.
Additionally, employees caring for a child due to school or daycare closures were eligible for up to 10 weeks of paid family leave at two-thirds their regular pay. These benefits were supported by tax credits to offset costs, claimable through Form 941 by deferring the employer’s portion of Social Security taxes. The credits applied to leaves taken between April 1, 2020, and September 30, 2021, as extended by the Consolidated Appropriations Act (CAA) and American Rescue Plan Act (ARPA).
Another critical measure was the Employee Retention Credit (ERC), introduced under the CARES Act and extended through 2021. This credit allowed employers to claim 50% of qualified wages (up to $10,000 per employee) in 2020 and 70% of qualified wages (up to $10,000 per employee per quarter) in 2021 for retaining employees, including remote workers, during economic disruptions. Employers could access these credits by reducing payroll tax deposits or requesting an advance via Form 7200.
For example, a small marketing firm with 15 remote employees who continued working during a lockdown could claim significant ERC funds to maintain payroll, easing financial strain. These laws ensured that businesses could support their remote workforce while mitigating financial challenges during the crisis.
FAQ 2: How do state income tax laws apply to remote employees working in different U.S. states?
State income tax obligations for remote employees depend on the employee’s work location and the concept of nexus, which determines a state’s authority to tax a business. If a business has employees working remotely in a state other than its primary location, it may establish nexus, requiring compliance with that state’s tax laws.
For instance, a company based in Texas with a remote employee in New York may need to register with New York’s tax authorities and withhold New York state income taxes from the employee’s paycheck. Some states have reciprocity agreements, allowing employees who live in one state but work for an employer in another to pay taxes only to their state of residence. For example, a New Jersey resident working remotely for a Pennsylvania-based company may only owe taxes to New Jersey due to their reciprocity agreement.
Certain states impose thresholds for tax obligations. New York, for example, requires employers to withhold taxes if an employee works in the state for more than 14 days annually. Local taxes also complicate matters, as 11 states impose local income taxes by counties or cities, such as Philadelphia’s wage tax. Employers must document each employee’s work location, as some may have relocated during the pandemic. For instance, a remote employee who moved from Chicago to a suburb with a different municipal tax rate could affect the employer’s withholding obligations. Using a payroll service can simplify compliance, especially for businesses with employees in multiple states, ensuring accurate tax calculations and filings.
FAQ 3: What are the minimum wage requirements for remote employees in the U.S.?
The federal minimum wage is $7.25 per hour (unchanged as of 2025), but employers must adhere to the higher of the federal or state minimum wage for remote employees. Many states have set higher minimum wages to reflect local economic conditions. For example, California requires a minimum wage of $16.00 per hour (as of 2025), while Washington, D.C., mandates $17.50 per hour. A remote employee in Seattle must be paid at least Washington’s state minimum wage, even if the employer is based in a state with a lower rate, such as Texas.
Employers must also consider industry-specific minimum wages in some states. For instance, California has higher minimum wages for certain sectors, like fast food ($20.00 per hour in 2025). Additionally, some cities impose their own minimum wages, such as Seattle’s $19.97 per hour for small employers. For example, a tech company based in Florida employing a remote software developer in San Francisco must pay at least San Francisco’s minimum wage for that employee. Employers can consult the U.S. Department of Labor’s website for a comprehensive list of state minimum wage laws to ensure compliance and avoid penalties for underpayment.
FAQ 4: How do workers’ compensation laws apply to remote employees in the U.S.?
Workers’ compensation insurance is mandatory in all U.S. states to cover workplace injuries or illnesses, including for remote employees. Each state has its own regulations, with some allowing employers to purchase private insurance, participate in state funds, or self-insure. For example, California permits employers to choose between private insurance, state insurance, or self-insurance, while Ohio requires participation in the state’s workers’ compensation fund. Texas is an exception, as workers’ compensation is optional, though most employers opt to carry it to avoid liability risks.
For remote employees, workers’ compensation applies to injuries sustained while performing work duties, such as a repetitive strain injury from prolonged computer use at home. For instance, a remote customer service representative in Colorado who develops carpal tunnel syndrome may be eligible for benefits, and the employer must ensure coverage is in place. Employers should verify that their workers’ compensation policy covers remote work locations and comply with state-specific requirements, such as reporting injuries to the appropriate state agency. Failure to provide coverage can result in fines or legal action, making it critical to maintain compliant insurance policies.
FAQ 5: What are the disability insurance requirements for remote employees in certain states?
Some states mandate disability insurance programs to provide benefits for non-work-related short-term disabilities, which apply to remote employees. States like California, New Jersey, and Rhode Island fund these programs through employee payroll deductions, requiring employers to register and withhold contributions. For example, a remote employee in California on maternity leave may receive benefits through the state’s Employment Development Department (EDD), funded by deductions from their paycheck. In contrast, New York and New Jersey require employers to provide disability benefits, which can be covered through private insurance, state funds, or self-insurance.
For instance, a remote marketing specialist in New York recovering from surgery may be eligible for short-term disability benefits, and the employer must ensure coverage is in place, either through a private insurer or the state’s disability fund. Employers must understand the specific requirements of each state where their remote employees work, including contribution rates and eligibility criteria. Non-compliance can lead to penalties or withheld benefits for employees, so using a payroll service to manage deductions and compliance is often recommended for multi-state employers.
FAQ 6: How do unemployment insurance taxes work for remote employees in the U.S.?
Unemployment insurance is funded through Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA) taxes, which apply to remote employees based on their work location. Most employers pay both federal and state unemployment taxes, with rates and eligibility varying by state. For example, a remote employee laid off in Texas would apply for benefits through the Texas Workforce Commission, and the employer would pay SUTA taxes to Texas based on that employee’s wages. Each state has its own tax rates, typically ranging from 0.1% to 5.4% of taxable wages, depending on the employer’s claim history.
Employers must register with the state agency administering unemployment taxes in each state where remote employees work, which may differ from the agency handling benefits. For instance, a software company in Florida with a remote employee in Oregon must pay SUTA taxes to Oregon’s Employment Department. Accurate record-keeping of employee work locations is essential to ensure proper tax reporting. Employers can reduce compliance risks by using payroll software to track and file unemployment taxes across multiple states.
FAQ 7: What are the tax obligations for remote employees working internationally?
Employers with remote employees working abroad face complex tax obligations, including U.S. federal income taxes, Social Security and Medicare taxes, and potential foreign tax requirements. Unless a foreign country’s laws mandate withholding of foreign income taxes, employers must withhold U.S. federal income taxes from the employee’s wages. Some employees may qualify for the Foreign Earned Income Exclusion (FEIE), allowing them to exclude up to $126,500 (in 2025, adjusted for inflation) from U.S. taxes if they meet residency or physical presence tests. For example, a U.S.-based company with a remote employee in Spain must withhold U.S. taxes unless Spain’s tax laws take precedence.
Social Security and Medicare taxes apply to wages paid to employees abroad if the employer is U.S.-based and not a foreign affiliate. However, the U.S. has totalization agreements with over 30 countries, such as Canada and France, to prevent double taxation. For instance, a remote employee in Germany may contribute only to Germany’s social security system, with contributions credited toward U.S. benefits. Additionally, some U.S. states require state income taxes for employees abroad unless they prove non-resident status, such as in Colorado. Employers should consult tax professionals to navigate these obligations and ensure compliance with both U.S. and foreign tax laws.
FAQ 8: How can employers distinguish between remote employees and independent contractors?
Correctly classifying workers as remote employees or independent contractors is critical to avoid penalties for unpaid employment taxes. The IRS uses a three-factor test to determine worker status:
- Behavioral control: Does the employer dictate how, when, and where the work is performed? Employees typically have set hours and receive specific instructions.
- Financial control: Does the worker have unreimbursed expenses or work for multiple clients? Independent contractors often bear their own costs and have multiple clients.
- Relationship type: Is there a written contract, and does the worker receive benefits like health insurance? Employees typically receive benefits, while contractors do not.
For example, a remote graphic designer with fixed hours and company-provided software is likely an employee, while a freelancer using their own tools and working for multiple clients may be an independent contractor. Misclassification can lead to liability for back taxes, penalties, and interest. For instance, a tech startup that incorrectly classifies a remote developer as a contractor may face IRS audits and fines. Employers should review IRS guidelines and consult a tax professional to ensure accurate classification and compliance with tax and labor laws.
FAQ 9: What other state and local laws should employers consider for remote employees?
Beyond taxes and wages, remote employees are subject to various state and local laws, including zoning regulations, pay frequency rules, paid rest periods, and overtime requirements. Some localities require a home occupation permit for employees working from home, particularly if their work involves client visits or signage. For example, a remote employee in a residential area of Denver may need a zoning variance to operate a home office legally.
Several states mandate specific pay schedules, such as bi-weekly or semi-monthly, with California requiring at least semi-monthly payments. Nine states, including Colorado and Illinois, require minimum paid rest periods for adult employees, typically 10–15 minutes per 4 hours worked. Overtime laws also vary, with federal law mandating 1.5 times regular pay for hours over 40 per week, while states like California require overtime for hours exceeding 8 per day. For instance, a remote employee in California working 10-hour days may accrue daily overtime, even if weekly hours are below 40. Employers should consult state workforce agencies to ensure compliance with these diverse regulations.
FAQ 10: What practical steps can employers take to ensure compliance with remote work laws?
Ensuring compliance with pay, tax, and work laws for remote employees requires proactive measures to navigate complex regulations. Here are key steps employers can take:
- Document Work Locations: Require employees to report and update their primary work locations to ensure accurate tax and labor law compliance. For example, a remote employee relocating from New York to Florida may change the employer’s tax obligations.
- Use Payroll Services: Engage platforms like Gusto or BambooHR to manage multi-state and international payroll, tax withholding, and benefits administration. These tools can automate compliance with state-specific tax rates and deductions.
- Consult Professionals: Work with tax professionals or employment attorneys licensed in the states or countries where employees work to address nexus, tax, and labor law requirements.
- Monitor Legal Updates: Stay informed about changes in federal, state, and international laws, as regulations evolve rapidly. For instance, new state laws in 2025 may mandate mental health resources for remote workers.
- Implement Compliance Software: Use HR software to track employee classifications, hours, and benefits, reducing the risk of errors in tax filings or wage payments.
For example, a small e-commerce business with remote employees in California, New York, and the UK could use a payroll service to handle state income tax withholding, Social Security contributions, and UK statutory sick pay compliance. By adopting these steps, employers can mitigate risks, avoid penalties, and maintain a compliant remote workforce.
