Payroll is complicated even when everyone is sitting under one roof. Throw in a few remote employees working from different states or add a couple of seasonal hires, and suddenly payroll feels like a puzzle with no solution.
If you’ve ever caught yourself thinking, “Are we even doing this right?”, you’re far from alone. Keeping up with payroll, taxes, and all the different rules for a spread-out team can get complicated fast. Miss a small detail, and it can cost you money, time, and stress.
So, let’s clear up what shifts when you pay staff in other states, manage part-timers or bring on short-term help.
How does payroll change when your employee works remotely?
As soon as someone starts working for you from a state that’s not your own, the payroll rulebook changes. Payroll isn’t just writing checks. It’s playing by the rules wherever your employees are actually working, not just where your main office is.
What changes, exactly?
- State income tax withholding: You have to withhold and send in taxes based on where your employee works, not just where your company’s based
- State unemployment (SUI): You’ll need to register and pay into each state’s unemployment system where your staff are working (no skipping this step)
- Workers’ comp: You need coverage for the state your employee is in, not just your business’s home state
Have you heard the term nexus tossed around? It’s the technical term for having enough business presence in a state to owe taxes there. Hiring an out-of-state person can trigger new tax responsibilities, like state income tax or state corporate tax.
What should you actually do?
- Register ahead of time with each relevant state’s labor and tax departments before you run payroll
- Update your systems to make sure you’re withholding the correct taxes and handling benefits properly by location. Be sure to notify your payroll provider so they can provide the proper filings.
- Look up local and state labor laws. Some places have their own rules for minimum wage, paid leave, or even the way pay stubs have to look.
- Withdraw from the state and close the account if you no longer have an employee in that state
When you’re unsure, don’t wing it. Give a payroll expert, HR consultant, or the state agency a call. A little prevention is way less painful than fixing a payroll mess after the fact.
What if my staff are seasonal or part-time?
Staffing up seasonally or part-time is great for flexibility, but it also means more rules to watch out for. Here’s where things get tricky (and potentially costly if you’re not careful):
- Worker classification: It can be tempting to call someone a contractor or “seasonal” to make things easier, but don’t take shortcuts. Make sure you’re following the legal definitions for employees vs. contractors and exempt vs. non-exempt. Mix this up, and you could be facing fines or backpay.
- Minimum wage: You always need to pay whichever rate is highest (federal, state, or local) even for temps or part-timers
- Overtime rules: Usually, part-time and seasonal employees must get overtime for more than 40 hours per week, unless they’re lawfully exempt
- Shift & scheduling laws: Some states have “show-up” pay (a form of compensation that ensures employees are paid for a minimum amount of time when they report to work as scheduled, even if they are sent home early or not given a full work shift), minimum shift lengths, or requirements for advance notice for schedules. Miss this, and you could owe extra pay.
- Benefits eligibility:
- Healthcare: Under the ACA, anyone working 30+ hours a week (yes, even seasonally) could trigger health insurance requirements
- Sick and family leave: Some states extend these to even your short-term or part-time folks
- Retirement plans: Sometimes part-time or seasonal staff end up qualifying after a certain number of hours
Don’t assume “seasonal” or “part-time” means you can skip the rules. The details matter.
Can a payroll service provider make this easier?
Yes, if you choose wisely.
There are modern payroll platforms built to handle exactly this mess: employees all over the map, shifting rules, and the occasional garnishment order. Gusto, for example, is an all-in-one online platform designed for small to medium-sized businesses to manage their payroll, benefits, and HR needs.
Here’s what good payroll software can do:
- Automatically update tax rates and labor laws based on your employees’ locations.
- Manage benefits so employees have a seamless experience.
- Streamline multi-state payroll (goodbye, complicated Excel spreadsheets).
- Track and handle garnishments so you don’t have to chase paperwork yourself.
Read more about payroll and accounting software to determine which is right for you.
How to spot the right system:
- It’s designed for remote, multi-state, and flexible teams
- It offers compliance tools, not just calculation features
- It plugs nicely into your existing accounting or HR tools, so nothing falls through the cracks
- It can handle all state and federal tax filings
How do I keep up with payroll?
The truth is, payroll compliance isn’t something you can set once and ignore. But with a bit of upfront effort, you can avoid headaches down the road:
- Keep up with changes: Laws, rates, and requirements shift, so set aside time to check for updates regularly
- Invest in employee training: Make sure your payroll and HR folks are keeping pace with the latest rules
- Call in experts when things get complicated:
- HR consultants for big expansions or new hires in new states
- Employment lawyers for tricky contracts or disputes
- Accountants or tax pros for filings and risk management
And here’s your friendly reminder: No one expects you to know every answer. The smartest owners ask questions early before small bumps turn into big problems.
The Bottom Line
Expanding into new states, working with part-timers, or getting that first (or fifth!) wage garnishment notice doesn’t have to throw your business into chaos. Sure, the rules are always changing, but with clear routines, solid software, and expert advice when you need it, you’ll stay compliant and keep your team paid.
Payroll might never be “one and done,” but you don’t have to lose sleep over it. With the right tools, smart habits, and a little curiosity, you’ll keep everything running smoothly.
