What Do We Need to Know to Hire a Remote Employee in Washington State?

Question from Bill, What Do We Need to Know to Hire a Remote Employee in Washington State?

Answer from AI:

Hiring your first full-time employee, especially one who will work remotely and travel often, involves several legal considerations. Below is a comprehensive list of steps and information you need to ensure compliance with federal and state laws.

1. Employment Laws and Regulations

When hiring an employee who will not reside in Washington state, you must comply with both federal and the employee’s state laws. Here are some key points:

• Fair Labor Standards Act (FLSA): This federal law sets minimum wage, overtime pay, recordkeeping, and youth employment standards. Ensure compliance with FLSA regulations.
• State Employment Laws: Each state has its own labor laws, including minimum wage, overtime, and employee rights. Research the specific laws of the state where your employee will reside.
• Travel and Work Hours: Ensure that travel time is compensated according to both federal and state laws.

2. Tax Considerations

You will need to handle taxes for both Washington state and the state where your employee resides.

1. Federal Taxes: Register for an Employer Identification Number (EIN) with the IRS. Withhold federal income tax, Social Security, and Medicare taxes.
2. State Taxes: Register with the state tax agency where your employee resides. You may need to withhold state income tax and pay state unemployment insurance.
3. Local Taxes: Some localities have additional tax requirements. Check with local tax authorities.

3. Employment Contracts and Agreements

Draft a comprehensive employment contract that includes:

• Job Description: Clearly outline the duties and responsibilities.
• Compensation: Specify salary, benefits, and any travel reimbursements.
• Work Hours: Define expected work hours and how travel time will be managed.
• Remote Work Policy: Include guidelines for remote work, communication expectations, and equipment provisions.

4. Employee Benefits

Ensure compliance with federal and state laws regarding employee benefits:

• Health Insurance: Under the Affordable Care Act (ACA), you may be required to provide health insurance if you have 50 or more employees.
• Retirement Plans: Consider offering retirement benefits such as a 401(k) plan.
• Paid Time Off (PTO): Comply with state laws regarding sick leave, vacation, and other PTO.

5. Workers’ Compensation and Insurance

You must provide workers’ compensation insurance for your employee, even if they work remotely. Check the requirements in both Washington state and the employee’s state of residence.

6. Compliance with Travel Regulations

Since your employee will travel often, ensure compliance with travel-related regulations:

• Travel Reimbursements: Follow IRS guidelines for travel expense reimbursements.
• Per Diem Rates: Use the General Services Administration (GSA) per diem rates for lodging, meals, and incidental expenses.

7. Recordkeeping and Reporting

Maintain accurate records and comply with reporting requirements:

• Employee Records: Keep records of employment contracts, tax forms, and time sheets.
• Reporting Requirements: File necessary reports with federal and state agencies, such as quarterly tax filings and annual W-2 forms.

8. Legal Advice and Resources

Given the complexity of hiring a remote employee, it is advisable to consult with a legal professional to ensure full compliance with all applicable laws. Here are some resources:

• Fair Labor Standards Act (FLSA)
• Employer Identification Number (EIN)
• GSA Per Diem Rates

Note: This information is intended to provide a general overview. For personalized advice, please consult with a legal professional.