Expanding your workforce across state lines can fuel growth – but it can also create headaches if you’re unsure where to remit state unemployment insurance (SUI) taxes. Getting it wrong can mean fines or paying the same tax twice. Here’s what every multi-state employer needs to know.
Why It Matters
SUI taxes fund unemployment benefits for workers who lose their jobs. Each state has different rules, so you must remit payments to the right state for each employee to stay compliant and avoid penalties.
How to Determine Where to Pay
Follow the Department of Labor’s “Localization of Work” test:
- Where is the work performed? If all work is done in one state, pay SUI there.
- Base of Operations: If work spans multiple states, where’s the employee’s main office?
- Direction and Control: If there’s no clear base, where do they get assignments and supervision?
- Residence: If none of the above apply, use the employee’s state of residence.
Example:
An employee splitting work between NJ and NY but mainly working in NJ means you pay NJ SUI tax. If they’re fully remote in another state, that may shift your tax obligations too.
Tips for Staying Compliant
✅ Keep accurate work location records.
✅ Revisit roles and work locations regularly, especially with remote or hybrid setups.
✅ Register to pay unemployment taxes in every applicable state.
✅ Get help – multi-state payroll and HR compliance is complex!
Conclusion
Multi-state hiring brings huge advantages but adds layers of compliance responsibility. Understanding where to remit SUI taxes protects your business from costly mistakes.
Abel HR helps employers handle the complexities of multi-state employment – so you can grow your team with confidence and stay focused on your business.
