Hiring telehealth providers across multiple states opens new markets, speeds patient access, and drives revenue growth. But every new state also adds a layer of legal risk.
A single missed registration or delayed tax account can hold up onboarding for weeks. For telehealth companies, that doesn’t just mean administrative headaches—it means providers sitting idle, patients waiting longer for care, and revenue stuck in limbo.
Getting this right doesn’t mean checking boxes after the fact. Compliance needs to be baked into your hiring strategy from the start.
Key Takeaways
- Telehealth hiring compliance is multi-layered. States expect proper business registration, tax setup, and state-specific policies before providers can start work.
- Approval delays for foreign qualification, unemployment insurance, and workers’ comp can stall onboarding for weeks and directly impact revenue.
- Misclassification is a high-risk area for telehealth. W‑2 status is often triggered by schedules, patient assignments, or company-provided equipment.
- Compliance isn’t one-and-done. Relocations, remote work policies, and state-specific leave rules require ongoing attention as teams grow.
What Hiring Compliance Includes
Hiring across state lines isn’t just a paperwork exercise. Each state wants proof that you’re operating legally, paying into its tax system, and giving employees the protections they’re entitled to under local labor laws. Skip a step, and the consequences show up fast, with providers stuck waiting to onboard, fines for operating without proper registration, or back taxes that surface months later.
For telehealth companies, the challenge ramps up quickly. Most states treat a remote provider the same as someone working in a physical clinic, which means you have to play by their rules the moment you hire. A single therapist in California or full-time nurse practitioner in New York can trigger a cascade of compliance requirements, even if your entire business is virtual.
Those requirements fall into three main areas. States want you:
Recognized as a legal business. In many states, hiring one employee is enough to require foreign qualification—formal registration to operate there. Some go further. Consistently delivering virtual care can count as “doing business,” even if you have no other presence in the state. Ignore this, and you risk fines or being blocked from operating until you register.
Registered for taxes and insurance. Once you have employees, you’re responsible for payroll tax accounts and workers’ compensation coverage in their state. These approvals can take weeks, and many states won’t let you run payroll until they’re complete. It’s not unusual for a provider to sign on, only to sit idle because HR is still waiting for tax account confirmation.
Following local labor laws. Some states require written policies or employee handbooks before anyone starts work. These have to reflect state-specific rules on sick leave, time-tracking, and overtime. If they don’t, you’re opening yourself up to wage-and-hour complaints.
Telehealth growth depends on getting these pieces right. Each missed registration, unapproved account, or incomplete policy is both a legal problem and time your new providers aren’t seeing patients.
4 Steps to Get Compliant Before Hiring
Compliance delays often don’t show up until it’s too late, after offers are signed and start dates are set. By then, even a minor oversight can delay onboarding by weeks. Getting these pieces in place before you make an offer is the only way to keep providers moving quickly from acceptance to seeing patients.
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1. Registering in a New State Before Extending Offers
Not every hire triggers full foreign qualification, but you need to know where the line is.
Most states require foreign qualification once you employ a full-time worker or consistently deliver services to patients there. Telehealth crosses that threshold sooner than most industries because regulators often view virtual care as “doing business.”
Even if you’re already registered, some states and municipalities require a separate business license once you employ staff. Telehealth companies sometimes miss this because they’re not opening physical offices, but regulators don’t make that distinction.
A common mistake is that companies wait until after hiring to determine whether a full registration or a business license is required. By the time they file, the employee is already on payroll, leaving them exposed to penalties and late registration fees.
To avoid such miscues, many companies now rely on automated platforms to track varying state requirements, ensuring that registrations and licenses are filed on time and reducing the risk of manual oversight.
2. Confirming Classification Before Contracts Are Signed
Telehealth companies are under increasing scrutiny for employee misclassification. W‑2 vs. 1099 status determines how you pay taxes, provide benefits, and protect yourself from back-pay claims.
Red flags for W‑2 classification include setting provider schedules, assigning patients, supplying telehealth equipment, or monitoring daily performance. Contractor status is typically limited to providers who set their own hours, bring their own patient base, and work independently of your scheduling system.
Sorting this out after contracts are signed often means tearing up agreements, re-running background checks, and delaying onboarding.
3. Setting Up Required Tax & Insurance Accounts Early
This is where many telehealth hires stall. Unemployment insurance (UI) and workers’ compensation (WC) approvals can take three to six weeks, and many states won’t let you issue payroll until these accounts are active. Some states with processing backlogs can take up to 14 weeks.
In some states, you also need to apply for a state tax ID number before opening UI or WC accounts, a detail that can add days or weeks to onboarding if you don’t plan for it.
Early-stage companies often utilize PEOs or EORs to hire more quickly across multiple states. However, these solutions can have drawbacks when scaling rapidly or expanding their workforce footprint. Our advice is to read Mosey’s Ultimate PEO Transition Guide for a more in-depth look at PEOs.
4. Updating State-Specific Policies Before Onboarding
Handbooks and policies can feel like an afterthought, but several states consider them a wage-and-hour compliance requirement from Day 1.
Policies must reflect state-specific rules regarding sick leave, overtime, and time tracking, particularly for remote telehealth staff. Some states also require you to register and withhold contributions for paid family or medical leave before an employee’s first paycheck, so policies and payroll setup need to align from the start.
Note: If providers relocate, you may need to register in their new state before they can continue seeing patients there—another reason to keep policies and registrations updated as staff changes locations.
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Common Hiring Delays and Risks in Telehealth
Even well-prepared HR teams hit compliance roadblocks. For telehealth companies, every delay has a direct business cost. Each week a provider isn’t onboarded means fewer patients seen, lost revenue, and added strain on existing staff.
State Approval Wait Times
The most common bottleneck is waiting for state approvals. Foreign qualification, unemployment insurance (UI), and workers’ compensation (WC) accounts can take anywhere from two to six weeks to process, especially in states with manual review systems, such as New York or California.
Some states require sequential approvals, some states have withholding, UI, WC, and paid family and medical leave accounts you need to register for separately. HR teams often underestimate the importance of this extra step, only to find that it adds days or weeks to the onboarding process.
Applications can also be rejected for missing or inconsistent business information, forcing you to restart the process entirely. That’s a preventable delay, but one that catches many companies off guard.
And delays aren’t just a first-hire issue. If a provider relocates to another state, they may need to register there before continuing to see patients, which restarts the approval clock mid-employment.
Note that manual tracking often makes delays worse. Missed steps or repeated approvals are common when HR teams juggle multi-state applications manually. Compliance management systems with automation can reduce these bottlenecks by flagging incomplete registrations and preventing penalties and errors.
Delayed Onboarding Impacts Revenue
The operational ripple effect of compliance delays is significant. A new clinician who can’t legally start means:
- Missed appointment slots and delayed patient care
- Lost insurance billing opportunities, which often can’t be backdated
- Increased burnout risk for existing staff who take on extra caseloads
Avoid the temptation to let providers “get started” informally while waiting for approvals. Some states treat work performed before full registration as operating illegally, which can result in fines and even void workers’ compensation or malpractice coverage.
Misclassification Penalties
Misclassification remains one of the most expensive mistakes in telehealth hiring. If a 1099 contractor is later deemed a W‑2 employee, you may owe:
- Back taxes and unemployment insurance contributions
- Retroactive overtime and missed benefits payments
- State penalties for each misclassified worker
The financial hit doesn’t always come immediately. States often uncover misclassification months later during audits, but penalties apply retroactively, sometimes going back to the provider’s first day of work.
Reputational and Operational Risks
Compliance missteps can hurt the bottom line and erode trust. Patients notice when appointments are delayed due to staffing gaps, and referral partners may hesitate to send patients to a telehealth company that seems understaffed or disorganized. For fast-growing telehealth companies, those perception issues can stall growth just as much as regulatory penalties.
Remote Telehealth Hiring: A Few Extra Considerations
Once you’ve handled the core compliance steps, remote work adds long-term challenges worth planning for, because they tend to catch companies off guard.
The biggest is how aggressively some states enforce nexus for remote healthcare workers. Hiring one therapist in Washington or New Jersey can trigger foreign qualification far sooner than most virtual-first companies expect. Staying ahead of these triggers can save you from emergency registrations later.
Compliance doesn’t end once someone’s hired, either. Workers’ compensation and leave requirements follow the employee, not your headquarters. If a clinician moves to a new state, you may need to register there and open new tax accounts before they can continue seeing patients—a disruption that can put appointments and revenue on hold.
Finally, review policies as your remote team grows. State wage-and-hour laws often require very specific time-tracking and overtime language, even for salaried telehealth staff. Missing details in your handbook can lead to fines, even if paychecks are correct.
Build Compliance Into Your Hiring Strategy with Mosey
Scaling telehealth across state lines is as much a compliance challenge as it is a hiring one. Every new state adds registrations, tax accounts, and policy updates—and a single missed step can delay onboarding, stall revenue, and put your company at risk for penalties.
Mosey simplifies multi-state hiring and employment by handling registrations, tax accounts, and ongoing compliance in one streamlined platform, all so you can expand your telehealth team without getting stuck in red tape.
See how easy multi-state compliance can be. Book a free demo today.
