Expanding Business to a New State? HR Items to Consider

Whether you are moving or expanding your business to a new location, the process requires a lot of planning and research. In addition to new tax requirements, overhead costs, and market details, you will need to be aware of the state’s employment laws and applicable human resources (HR) regulations. 

To help with your research, we have created a non-comprehensive list of HR requirements to consider in your new state.

HR Regulations to Consider in Each State

• Background checks

While the federal “Ban the Box” law prohibits certain industries that are regulated by the federal or state government from requiring applicants to disclose their criminal background on an application, you will need to see if your state also has restrictions in place for public and private employers. 

• Job application and interview rules

Some states, such as California, have limits on employers’ job advertising, application procedures, and pre-employment questioning and medical examinations. You may also be required to reveal the salary in job posts. Be sure your recruiting processes are legal! 

• New hire reporting

Each state has its own new hire reporting requirements and timelines of when newly hired employees must be reported. Be sure you can comply, starting with your first newly hired employee. 

• New hire forms

Various states have forms that must be provided to new hires, such as their state withholding allowance certificate, workers’ comp details, unemployed information, paid family leave, and more. You will need to have all required forms ready upon hire. 

• Employment posters and notices

Employment posters and notices vary by state. You will need to get the applicable state and federal law notices and post them in a conspicuous place for employees to see. 

• Minimum wage

Many states and municipalities have their own minimum wage that is higher than the federal rate. Some states also have regulations about tip credits and exemptions. View this minimum wage tracker by state to see what your state’s minimum wage is. 

• Compensable work time

Some off-the-clock practices may be considered compensable work time in certain states, such as security screenings before or after work. Be sure you are paying employees within the law. 

• Overtime

While most states adhere to the federal standard of paying overtime for over 40 hours in a workweek, some states also have daily overtime cutoffs. Check your state’s requirements for nonexempt workers. 

• Pay frequency

Most states have regulations for how often employees must be paid (weekly, bi-weekly, semi-monthly, or monthly). Many of these requirements are based on size of employer, industry, and/or exemption status. Ensure your employee pay frequency aligns with state requirements. 

• Meal breaks

Federal law allows employers to clearly communicate and designate a nonpaid meal period of at least 30 minutes. Beyond this, several states have their own minimum length of meal periods required for private employers. There are also many jurisdictions that have separate laws requiring meal periods for minors. Determine whether you need to offer meal periods before your first workday. 

• Mandated employee benefits

Many states require employers to withhold and/or contribute (depending on employer size) towards state benefit plans such as disability, paid sick leave, paid family/medical leave, retirement, and more. Check with your certified HR expert to know whether these employee benefits are required in your state. 

• Employee leave

Leave benefits are generally agreed upon between employer and employee. However, several states have laws in place for employers to grant paid or unpaid leave that protects employees’ jobs in the event of jury duty, voting, military, school activity, rehabilitation, emergency responder, and more. Be sure you know the timelines and requirements for your state. 

• Employment training

While most employers recognize the need to conduct employee trainings, some states mandate employers provide annual trainings, such as sexual harassment prevention training for supervisors and employees. Whether or not your state requires it, it is a best practice to provide regular employee training. 

• Health insurance

Although there is no longer a federal requirement to have health insurance, some states have an individual mandate that may also incorporate an employer requirement, depending on company size. Check with your insurance broker to know your state’s requirements. 

• Child labor laws

Each state varies with its maximum daily and weekly hours and nighttime prohibitions that minors can work. Many of these fluctuate depending on whether public school is in session. See a breakdown by state regarding child labor laws here to help you stay compliant. 

• Maximum work hours

There may also be hour restrictions for nonexempt employees working in certain industries, depending on the state, such as trains and railroads, underground mines, pharmacies, and more. Ensure your employees are not working beyond what is allowed. 

• Minimum paid rest periods

Many states have their own paid rest periods for nonexempt adults, as federal law does not require employers to offer paid breaks. See a breakdown by state for paid rest periods here. If your state is not listed, it defaults to the federal standard. 

• Social media privacy

Some states have laws that prohibit employers from requiring employees to divulge social media activity that is not affiliated with an investigation. Be sure you are not breaching any employee privacy rights. 

• Drug testing and legalized marijuana

Although many states have legalized marijuana for medical and/or recreational use, most states permit employers to conduct random drug tests, especially where an employee holds a safety- or security-sensitive position. However, some cities may have ordinances with more restrictions. For example, San Francisco prohibits employers from requesting, requiring, or conducting random or companywide drug tests under any circumstances; they are, however, allowed to test for reasonable suspicion. While you are not expected to tolerate drug use or impairment at work, you do need to know local drug testing restrictions. 

• Final payments

When an employee is terminated, they must receive their final paycheck within a specific timeframe, depending on the state and cause for termination (voluntary quit, layoff, or fired). Some states may also require unused vacation and other vested employee benefits to be calculated into the employee’s final paycheck. Be sure your payroll team adheres to applicable timeframes. 

How can you simplify moving to a new state? 

Expanding to different states can be an administrative nightmare when you are carrying the burden yourself. While contacting the state labor department can help you become familiar with local requirements, you could also lighten your load by outsourcing to Stratus HR. Our team will help you maintain compliance with governing employment laws and absorb your HR administrative work to position you as the workplace hero. 

For more information, book a free consultation and our team will contact you shortly.