It has been said that “the future of work is remote.” You may have seen it in your office and among fellow industry employers. Email, video conferencing, online access, and cell phones are changing the nature of office work. With advents in technology – remote work, flex work, telecommute work, or whatever-you-want-to-call-it work – working outside of the traditional workspace continues to trend in 2019.
With such workplace changes comes the responsibility of ensuring that you report and cover your employees appropriately for unemployment. Below are scenarios that we’ve seen among our 501(c) Agencies Trust members that you may need to plan for if your employees work in another place, in whole or in part.
Employees can file for unemployment in any state they choose
Did you know that an unemployment claim can be filed in any state, such as a person’s state of residence rather than the state where they worked? The caveat is that, regardless of which state the claim is filed in, the claim will be governed by the unemployment regulations of the state in which they worked (the state in which the wages were reported). You might receive an out of state or “interstate claim” if someone files for unemployment in a state that is different from the state where they worked for you.
For example, a Trust member in Rhode Island might have employees who travel in from Massachusetts or Connecticut and later file for unemployment in either of those states. In those cases, the employees would be filing interstate claims. The employees can certainly do that, but the rules governing the claim will be Rhode Island’s. As long as we have a signed letter of authorization (LOA) already filed with Rhode Island, we can handle any interstate claim. If you have a state unemployment account number and are reporting wages to a state that the Trust is not aware of, then we would need to notify us, so we can get an LOA on file with the additional state(s) in order for the Trust to handle claims from that state(s).
The takeaway is that if you are an employer with employees who commute into your state, and you receive a claim from another state, Please send that claim with separation information to your state’s claims consultant.
Adding a new office in another state
At some point your organization may consider expanding to an additional location in another state to help you serve a wider range of the community.
When you add an office in another state, you may need to register as an employer in that state, and your employees working there may be subject to that state’s payroll, taxes, and unemployment rules rather than the rules of your home office. Before you establish the new office, you’ll want to determine how many employees will be working in that state. You’ll also want to confirm that the new location will be reported under your federal employer identification number (FEIN).
Every state has its own rules about what number of employees makes you an “employer” in that state and whether those employees are subject to unemployment coverage. If the employees are subject to unemployment in the new state, you’ll want to speak with your Trust member services representative to discuss whether it is more beneficial for you to pay state unemployment insurance tax in that state, or to add that state to your existing Trust membership.
Employee resides in one state and works in another vs. partial remote work from another state
In some geographical areas, it’s common to have an employee who lives in one state but works in another nearby state (e.g. the Tri-state area, Washington and Oregon, Illinois, and the surrounding D.C. area). Each state has its own rules about what deems you an “employer” in that state, and therefore whether you have responsibility for unemployment in the state where the employee remotely works.
Usually an employer must report wages in the state where the employee conducts their work. If an employee works entirely in one state (such as where your office is located), it tends to be clear-cut that your state governs the employee for payroll, taxes, and unemployment. But as remote work across state lines increases, the line starts to blur about which state’s rules govern aspects of your employee.
In another example, a Trust member’s employee worked part of the week from the Oregon office and worked the rest of the week from home in Washington. Again, each state has its own rules about taxes and unemployment coverage. Therefore, if you can prepare for your team’s changes in advance, you’ll circumvent having to make the change down the line and retroactively fixing all of your past wage reporting or tax coverages. The following actions were recommended to this Trust member.
Actions you can take
In the multi-state case mentioned above, and generally speaking, your best proactive steps are to:
- Contact your 501(c) Agencies Trust representative:
- To discuss whether additional steps need to be taken with your existing Trust membership, such as adding a new state to your membership.
- To send us the filed payroll report copy showing gross wages for only the state(s) covered by your Trust membership in order for us to compute your Trust participation costs correctly for the services we provide.
- Contact the HR Services Hotline to discuss any Human Resource questions or issues stemming from your organizational changes.
- Contact your State’s employer tax department and/or business registration office to ensure you comply with all state requirements and to confirm that your employees are being covered and reported correctly. Your state’s tax and labor office contact information is usually available online.
- Contact your payroll provider, if you have one, to find out about your wage reporting requirements and implications.