How To Create a Work From Home Policy for Multi-State Compliance

Remote work is here to stay whether your team is fully remote or uses a hybrid model. And, as businesses expand their talent pool across state lines, keeping up with compliance has become essential.

For small businesses tackling the challenges of multi-state payroll and HR requirements, creating a comprehensive work-from-home (WFH) policy is a best practice and a necessity.

To help your business avoid costly missteps, we’ve outlined key areas to address in your WFH policy to ensure compliance while supporting your remote team.

Why Is Multi-State Compliance Important?

When your employees work from multiple states, your obligations as an employer expand. Each state has its own rules covering payroll taxes, worker protections, and other employment requirements. Missing even one of these obligations could lead to fines, penalties, or disrupted payroll processes.

Knowing where your employees live and work is the foundation of multi-state compliance. Why? State-specific requirements, such as income tax withholding or paid leave, directly impact both your employees and your business.

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1. Start With Clear Reporting Practices

Your WFH policy should clearly outline where and when employees are expected to be working. If you allow for relocation, the policy should also include how employees can update their address. Misreporting where employees work can lead to incorrect tax filings or missed registrations with state agencies.

Encourage proactive reporting: A quarterly email reminder or an easy-to-use HR portal can help employees confirm or update their addresses.
Be transparent about the impact: Let employees know that accurate location reporting ensures they avoid issues like delayed tax refunds or incorrect benefit deductions.

Regular communication not only keeps your business compliant but also reassures employees that these policies are in place for their benefit.

2. Register Where It Matters

Once you know where your employees work, it’s time to address state-specific registration requirements.

For many states, this involves:

Setting up payroll tax accounts.
Ensuring proper worker classification for unemployment insurance.
Registering for any applicable paid family and medical leave programs.
Obtaining a workers’ compensation policy.

This process can feel overwhelming if your business is new to multi-state employment. Each state has its own set of deadlines, forms, and requirements. Tools like Mosey can be used to simplify this process by automating state and local tax registration, reducing administrative overhead, and ensuring accuracy.

3. Address Payroll and Tax Compliance

There’s no question that payroll compliance is one of the trickiest areas for multi-state employers. Some states require income tax withholding based on where an employee works, while others rely on the employee’s place of residence. There is an added complexity at the local level in jurisdictions where local taxes apply.

Your WFH policy should clarify the following:

Employees are responsible for reporting any moves across state lines.
The business will update tax withholdings as needed to reflect new locations.
Payroll adjustments may be necessary if registration in a new state is required.

By setting expectations upfront, you’ll prevent headaches for both employees and HR teams.

4. Minimum Wage and Overtime Laws

Wage laws aren’t uniform across the U.S., and managing them for a remote workforce means your business must keep a close eye on state-specific requirements. While federal law sets the foundation, many states have adopted higher minimum wages and different overtime rules, creating a patchwork of obligations for employers.

For example, some states use a daily overtime calculation. In these states, employees who work over a set number of hours in one day earn overtime, regardless of their total weekly hours.

Others follow the federal standard, requiring overtime pay only after 40 hours in a workweek. Understanding and documenting how your business applies these calculations is critical for compliance.

Minimum wage laws are equally varied. States like California and Washington have minimum wages that far exceed the federal rate, while others tie their minimum wage to inflation, changing it annually.

Your WFH policy should outline how your business ensures that every remote employee earns at least the legal minimum in their state, regardless of where your headquarters is. Also, some cities have their own wage requirements that may surpass state laws — for example, Seattle and San Francisco enforce city-specific minimum wages higher than their state standards.

If your business employs people in these areas, those local rules must also be part of your compliance framework. To stay compliant, your WFH policy should:

Clarify how wage laws are tracked and applied to employees in different locations
Address how your business calculates and pays overtime based on state or local regulations
Specify how adjustments will be made when wage rates change, whether due to inflation or new legislation

Taking the time to implement these measures ensures your employees are paid fairly and your business operates within the law. Not only does this avoid potential fines or disputes, but it also fosters trust with your remote team by demonstrating a commitment to meeting their needs.

5. Protect Your Business With Updated Worker Classifications

Incorrectly classifying employees as independent contractors or exempt from overtime can lead to penalties. States like California have stricter definitions of employee classifications than federal law.

Your WFH policy should outline:

How roles are evaluated for proper classification
The process for reviewing exemptions, such as salary thresholds

Clear guidelines in this area protect your business from legal risks and show employees that you’re committed to fair and transparent practices. This proactive approach fosters trust, which is essential for maintaining a strong and engaged remote workforce.

By addressing classification head-on, your WFH policy sets the tone for compliance and accountability. From here, you can build out additional safeguards to support a compliant and supportive remote work environment.

6. Include Local Employment Protections

Some states or cities have unique laws protecting workers, including pay transparency requirements or additional anti-discrimination rules. For example, New York City mandates salary ranges in job postings, while California prohibits asking about salary history.

Your policy should acknowledge these protections and clarify how the company complies. This not only keeps your business legally sound but also reinforces your commitment to fair and equitable treatment.

7. Plan for Paid Leave and Final Paychecks

State laws governing paid leave vary significantly. Some require paid sick leave, while others mandate broader family leave programs. Additionally, final paycheck requirements differ by state, including how quickly employees must be paid after termination.

Your WFH policy should address how the company administers paid leave in compliance with state laws and the steps HR will take to ensure timely final paychecks for departing employees.

Compliance is never static. States regularly update employment laws, and new regulations can impact your obligations as an employer. For example, salary transparency laws have been gaining traction, with more states expected to follow suit.

To stay ahead, assign a team or tool to monitor changes and notify your business of updates. A system like Mosey can help by detecting new compliance requirements as your workforce grows or shifts.

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Let Mosey Help You Launch a Multi-State-Compliant Handbook in Minutes

Each state has its own rules for payroll, HR policies, and employee handbooks, and keeping up with all of it can be overwhelming. That’s where Mosey comes in. With a business compliance platform designed to take the guesswork out of corporate compliance, Mosey helps you stay ahead and focus on growing your business.

Streamline Payroll Compliance

Payroll compliance is one of the most common roadblocks for businesses with remote employees. Every state — and sometimes individual localities — has its own rules for taxes, unemployment insurance, and registrations. With Mosey, you can register for the right set of payroll accounts in all 50 states, so every employee is accounted for.

Automating registration updates is easier than ever, so you can make sure payroll stays accurate as new hires or changes occur. Monitor your compliance needs as employees move or new laws take effect.

Employee Handbooks Tailored to Your Workforce

Keeping required policies up-to-date is critical for compliance, especially if your workforce spans multiple states. With Employee Handbooks by Mosey, you can create a compliant, lawyer-approved handbook in every state you have employees in minutes.

Guided Setup: Built-in, location-specific policies are generated based on where your employees work.
Custom Policies: Add custom sections to fit the needs of your people and tailor it to your culture and offerings.
Automatic Updates: When laws change, so does your handbook. Get notified when updates are needed and apply policy changes.

With one-click updates, you can easily apply policy changes, notify employees, and collect signatures all in one place. Mosey’s employee portal also gives team members easy access to their handbook whenever they need it.

Keep Everything Organized in One Platform

Mosey centralizes your compliance tasks in one easy-to-use system. All your state and local agency mail is delivered digitally, so nothing gets missed. Login credentials for tax accounts and state portals are stored securely and accessible across the different teams that need them.

Ongoing compliance monitoring alerts you to new requirements, keeping you ahead of any changes. So, instead of juggling multiple systems and deadlines, you’ll have a single place to manage everything.

Adapt and Scale With Confidence

As your business grows, so do your compliance needs. Mosey’s platform scales with you, identifying new requirements as you hire in different locations or as thresholds trigger additional obligations. Whether you’re managing a handful of remote employees or a growing workforce across the country, Mosey ensures you’re always prepared.

The Bottom Line

Compliance doesn’t have to feel overwhelming. Mosey simplifies the process, making payroll registration, employee handbooks, and ongoing compliance management straightforward and reliable. By taking care of the details, Mosey frees up your team to focus on building a successful, scalable business.

Ready to make compliance easier? Schedule a consultation today and discover how Mosey can help your business stay compliant without headaches.

The Platform for State and Local Compliance