The decision to hire remote workers can transform your business. You’ll have access to a national (or even global) talent pool, save on overhead costs, and provide a valuable incentive to join your team: According to a 2022 Future Forum study, 80% of knowledge workers desire a flexible work location. Remote work can also increase employee satisfaction and productivity, improve work-life balance, and even support diversity and inclusion—employees who lack transportation, can’t afford to live near the office, or even need to pick up the kids every day at noon won’t necessarily be precluded from full participation.
In short, embracing a flexible remote work model can help you save money, attract and retain talent, and build a happy and productive team.
7 Things to think about before hiring remote employees
Hiring remote employees has many benefits—so why not jump right in? Although there are plenty of reasons to get excited, adopting a remote work model also carries certain legal, administrative, and management challenges. Consider the following questions before taking the plunge.
1. Do you have the administrative capacity to be a multi-state employer?
Hiring remote workers can increase your administrative workload. Consider your team’s capacity for tasks like running multi-state payroll, managing state and local business tax and compliance obligations, and overseeing remote hiring processes.
If your team is already running low on bandwidth (and really, who isn’t?) consider your options for adding support. Mosey’s compliance platform automates setup in all 50 states, provides tools to identify and manage ongoing compliance, alerts you when requirements change, and provides a unified source of truth. Mosey works with your payroll provider and tax vendor, making it a good fit for startups looking to hire their first out-of-state employees.
2. Will you register your business as a foreign entity?
If you hire an out-of-state remote worker, you’ll need to decide whether or not to register your business as a foreign entity in that state, a process known as foreign qualification. Foreign qualification is required of any business that is “transacting business” in that state; but what constitutes transacting business can be a gray area. This is something you can explore with a lawyer and/or tax professional.
You don’t need to foreign qualify to open payroll accounts, but that doesn’t mean you should put off choosing whether or not to qualify. Ultimately, the decision is a business one:
- If you pursue foreign qualification, you will likely incur tax and reporting obligations in all states where you qualify. You’ll also need to navigate the registration process, which often involves requesting a Certificate of Good Standing and obtaining a registered agent.
- If you choose not to pursue qualification in a state that later determines that your company is doing business there, that state can impose fines on your business and force you to cease operations until you pay up.
3. How will you navigate state-specific labor laws?
Your business will need to comply with labor laws in each state where you hire a remote worker. Consider how you’ll handle discrepancies—will you grant your team members leave time according to individual state regulations, or will you apply the most generous policy across the board? What about if one of your remote workers lives in a state that requires salary transparency?
It’s also critical to plan for how you’ll stay on top of multiple state-specific regulations. “New laws impose increasingly high penalties for remote companies that violate state-specific labor laws, and stricter enforcements are coming,” says Alex Kehayias, founder and CEO of Mosey, “But avoiding a penalty isn’t the only reason to comply with the law. State-specific labor laws protect employees, and many are designed to complement a state’s existing social infrastructure. For businesses, compliance isn’t just a legal responsibility—it’s the right thing to do.”
4. What is your remote work compensation policy?
Let’s say that you employ two equally talented and hard-working product developers: one in Plano, TX, and one in Palo Alto, CA. Will you pay them the same amount, or will you pay your California team member more to account for the city’s higher cost of living? What if one of them moves? Before hiring remote employees, decide if (and how) you’ll adjust pay scale based on location.
5. How will you build company culture?
It’s a myth that remote workplaces can’t have strong internal cultures—flexible work locations can build goodwill, and many modern workplace tools are designed to support communication and collaboration in remote jobs.
Whether your employees work from home or in the office, developing a strong company culture takes time and intention. Evaluate the current state of your company culture and determine whether you’ll be able to invest in building culture with remote workers—either through remote team-building activities or by holding quarterly or semiannual on-sites for either teams or the whole company. If you’ll employ both work-from-home employees and office workers, also consider how you’ll bridge the gap.
6. How will you onboard remote employees?
Onboarding is a critical time in the employer-employee relationship. New hires in a remote environment don’t have the opportunity to physically shadow another team member. If you don’t have a plan, they may feel disconnected and adrift. Develop an onboarding checklist and assign another employee to be their onboarding buddy. You can also consider flying an employee in for the onboarding process or timing your hiring processes so that onboarding coincides with in-person company gatherings.
7. Is remote work right for your team?
Not all employees are suited to remote work, and not all work functions translate to remote jobs. First, determine whether remote work, well, works for the role. Will employees need to physically hand products back and forth, or would digital sends suffice? Can they provide feedback via comments on a PDF or timestamps on a video, or would this add hours to an otherwise efficient collaborative process?
Once you’ve decided to fill an open position remotely, look for candidates with a high degree of independence, organization, and accountability. “Soft skills” like self-awareness, communication, and collaboration are important in any hire—remote or not—but they’re especially important for remote teammates, who need to build relationships and navigate any potential misunderstandings using video, chat, and email as a substitute for direct, in-person communication.
If your potential candidates have experience with remote work, consider interview questions such as “What do you find most challenging about remote work?” and “How have you handled these challenges?” If your new hire will be working remotely for the first time, consider asking “What tools or processes do you use to manage tasks?” or “When and how do you seek help on a project?”
Creating a remote work policy
You probably already have a company handbook. Your remote work policy will expand that handbook to clarify your expectations and set parameters for remote team members. Here are a few suggestions from Mosey founder and CEO Alex Kehayias’s Stripe Atlas Guide to Starting a Remote Company.
Establish approved time zones
Social media manager in Mali? Austrian accountant? Gathering your team around a global water cooler sounds fun (and it can be), but managing multiple time zones can also be a headache: Asking employees to meet at 5 AM and 9 PM in their local time zones can quickly lead to burnout. To ease collaboration, Kehayias suggests establishing an approved set of time zones, ideally allowing for no more than a three-hour time difference between the farthest-flung members of your team.
Schedule quarterly on-sites
Remote work doesn’t need to entirely replace face-to-face interaction. Schedule quarterly on-site meetings with your team members and prioritize activities that don’t translate well to remote settings, like large-group brainstorming sessions and team dinners.
Kehayias suggests aiming for three days of collaboration per quarter. Any less and you won’t have time to break the ice, get down to business activities, and build your company culture; any more and you’ll risk exhausted employees and diminishing returns.
Write everything down
To support consistent operations, facilitate communication and collaboration, and keep meeting time to a minimum, establish a culture of writing things down and communicate this expectation to remote employees upfront.
A few ways to accomplish this are the following:
- Keep meeting notes. Designate a note-taker for every meeting, rotating this responsibility among team members. Have your note-taker share notes in a central location where all attendees can access them.
- Use briefs. Start major projects with a written brief and gather feedback in comments, scheduling a meeting only when a decision requires further discussion.
- Document policies and processes. Instead of answering the same questions over and over, keep up-to-date process and policy documents, and constantly link and refer to them. To determine your documentation needs, apply this test: If you need to say or do anything more than once, take the time to write it down.
- Embrace the memo. If you need to update your team, draft and distribute an email memo instead of calling a meeting. You’ll save everybody time, and your employees will be able to reference key details at a later date.
Prioritize relationship-building activities
You’re busy, and your team members are too—but personal relationships support long-term workplace satisfaction and can help improve communication and collaboration among employees. To help remote team members connect, build relationship-building activities into your schedule. If your team is small, start each all-hands with a brief icebreaker like “Describe your dream sandwich” or “What’s your go-to karaoke song?” Let every employee answer, and rotate responsibility for coming up with the question. If your team is larger, use this strategy with smaller teams.
You can also coach your managers to balance the need for productivity with the need for remote employees to experience the kind of casual, relationship-building interactions that office workers take for granted: While you shouldn’t spend fifteen minutes at the top of every meeting catching up, allowing two to five minutes of chatter about the weather, the weekend, the kids, or the big game can help remote workers build connection and recharge with a quick mental break.
Staying compliant when you have remote employees
Hiring remote workers in multiple states will significantly increase your compliance obligations—you’ll need to stay on top of filing deadlines, taxes, and labor laws in every location where you retain staff. But you don’t have to handle it all solo. Consider adding the following to your compliance toolbox.
Professional employment organizations (PEOs)
A PEO is a professional services provider that functions as employer-of-record for its client company’s workforce. Essentially, your PEO employs your workers for you, and you lease them back from the PEO while retaining operations and management responsibilities. A PEO can run payroll for your business, provide employee benefits, and hire out-of-state workers—though their capabilities may be limited in some states.
PEOs typically charge according to one of two models: flat fee per employee per year or percentage of total annual payroll. This can make partnering with a PEO an expensive option, and most companies will outgrow their PEO as they hire more employees and exceed the maximum threshold. This is why companies often choose to exit their PEO. PEOs also don’t provide a bulletproof liability shield: In most cases, business owners remain liable for tax filing errors or compliance violations.
Some businesses retain compliance consultants or attorneys for help navigating state-specific compliance regulations. Typically, a consultant’s role is advisory in nature—they can tell you whether or not your leave policy violates a specific state’s guidelines and help you draft a new one, but they can’t administer the policy on your behalf. Consultants can also be expensive: In 2021, the average rate for US attorneys clocked in at $300 per hour.
Mosey is a complete system for state compliance to help you stay on top of multi-state employment and tax requirements. The platform eliminates the expensive fees of working with lawyers and accountants. It can also fill in the gaps that your payroll provider and even a PEO may leave when it comes to compliance. Mosey automates opening new tax accounts when hiring remote employees in a new state, allows you to fulfill your HR requirements with just a few clicks, and connects to your payroll for even more detailed alerts.
Want to learn more about Mosey? Schedule a demo—our team is excited to meet you.