Managing implications of remote employees working in multiple states

Remote work has been all the rage in recent years. Initially, employees were working from home because offices were closed by government mandate. While working from home, employees were usually working in the same town or neighboring suburb as their normal office space. As remote work has become a more permanent part of the white-collar experience, more employees have started to relocate far away from their offices. This is especially true for employees who can perform most or all of their work remotely.

It's now not uncommon for employees to work full-time from home in a state that’s different from the site of their office. However, this phenomenon can have significant and unexpected consequences for employers. Typically, the laws of the state where an employee is working—not the laws of the state where the employer is headquartered—apply to the employment relationship.

Wage and hour pitfalls

The federal minimum wage is $7.25 per hour, but more than half of the states have enacted higher minimum wages. In fact, some minimum wages are more than $20.00 per hour.

Overtime rules also vary slightly from state to state. Hourly employees are typically owed overtime when they work more than 40 hours in a week. Most states follow the Fair Labor Standards Act’s (FLSA) exemption rules when determining whether a salaried employee is exempt from the overtime requirement.