Employee Moves States - Settings to Ensure are Updated for Proper Taxation

Employee Moves States - Settings to Ensure are Updated for Proper Taxation

Overview: Article covers what to do if employee changes home address or changes work location to a new state.

Step 1: Do you have the State Tax ID(s) on file for the State the employee is moving to? 

Verify Tax ID on File 

In order to verify that your company already has the proper "Payroll Tax" ID's on file for the state the employee will be moving to, navigate to Hamburger Menu > Settings Tab > Payroll Set Up > Company Taxes. From there a view of all company taxes will show as seen below. (Note - if your company has more than one EIN on file, the report will be slightly different and grouped by EIN. Be sure the state you're looking for is on file for the EIN the employee works for).

To quickly search, key in the state under the filter "Tax State/Province". Then ensure that the tax ID(s) are not in "Applied For" status. If they are, you'll be able to use the State Tax ID, but keep in mind that we need the ID on file in order to properly pay and file your taxes.
If the ID(s) are on file, move onto the next steps of employee updates. If not on file, see below "Tax ID Not on File"

Tax ID Not on File 

If the State the employee will be working in is NOT on file, you must reach out to the Tax Department
in order to have the Tax ID added to the system. This step is crucial. The act of adding the State Tax ID as a place holder will allow the employee to update their state withholding form. The State will not be an option until this step is complete.

Before submitting the Ticket, determine if you'll be applying for the State Tax ID's in house or contract Green Leaf to apply on your behalf. If you will be applying in house, please apply as soon as possible and be sure to obtain all ID's the state requires. Some states have State Withholding, State Unemployment, State Family Leave, and even Locals, all of which require a separate application. Each state is different and can take anywhere from 1 day to 6 weeks to obtain. Feel free to use the Knowledge Center State Agency Articles to assist in the application process and which ID's will be required.
If you'd prefer to have Green Leaf apply for the Tax ID(s) on your behalf, please fill out this FORM. Here's the full article on the process if needed. Once the team receives the form, they will start the application process for you and add a place holder in the system.
If you choose not to have Green Leaf apply, be sure to still submit a Tax Ticket in order to have the Tax ID added to the system. Choose "Need to Add Tax Jurisdiction (Hired Employees in New State" option.


Step 2: After Tax ID(s) on file, Update Employee Record 

If you have HR Actions, you can prompt the employee to complete an "Address Change" checklist, which will have the employee update their data and prompt them to fill out a new form. Share this link with your employee. Follow all steps below. If the employee updates via the checklist, skip all steps that indicate "On Checklist".
If the employee will be using the HR Action, skip "Update Employee Address" as the employee would have completed in the checklist as well as "Have Employee Fill out New State Forms", which is also in the checklist.

 Employee Updates Step 1: Update Employee Home Address 

Navigate to the Employee Roster by clicking the hamburger menu > Team > My Team > Employee Information. Search for employee, click on employee information icon > Personal Information > Update employee's home address > Save

Employee Updates Step 2: Update Worksite Cost Center 

Once the employee's address is updated, the employee's worksite cost center needs to be updated and saved. If the employee is working in a state where the company does not have a physical location, you will want to make this field "Remote". (The Remote worksite cost center will use the employee's home address and state tax  they moved to a state where the company has a physical location and we have a cost center already created you will want to make sure that is updated to the new cost center. If you need a new cost center added, please reach out to your Payroll Specialist.

 

Employee Updates Step 3: Have Employee Fill out New State Forms  

If you do not have HR Actions, the employee will need to complete a new state withholding form. Provide the employee with this article. Once the employee completes, the administrator who is tasked to approve these forms will need to approve to make the update on the employee's tax screen.  *If the employee is moving to a state that has no personal income tax (AL, FL, NV, NH, SD, TN, TX, WA, and WY) there will not be a new withholding form for the employee to complete. The state tax in the employees' profile will then need to be manually updated. From the Employees Profile > Navigate to the Payroll Tab > Tax Information > State > +Add.

 

Employee Updates Step 4: Update Unemployment State  

The unemployment state will need to be updated as well after the employee's address has been updated unless the employee is living in one state but working in another state. The unemployment state should be the employee's work state. **If the employee works in multiple states, please contact your tax professional for guidance. From the Employees Profile > Navigate to the Payroll Tab > Tax Information > State > Unemployment State > Edit.

 

What to do if payrolls were processed incorrectly ?

If the employee has been being taxed incorrectly due to the system changes not being made in the system, please reach out to your Payroll Specialist to discuss. In some cases, the data can stay as is where in others, we would need to complete a "state to state correction" which entails backing out wages from the incorrect state and applying them toward the new. If quarters have closed, there may be amendments needed with amendment fees. Its best to discuss with the team in order to determine the best next steps as every scenario is different.

Related Details to Think About When Moving Employees From State to State 

Does the new State Require different documents to be signed? 

When your employees move to a different state, it's important to be aware that different states may have varying requirements when it comes to providing copies of labor law forms. Employers should proactively assess the labor law requirements in the new state of residence to ensure compliance. This may include providing employees with the necessary state-specific labor law forms, such as tax withholding forms and employment-related notices, as mandated by the new state's regulations.

Does the new State Require a new Worker's Comp Code? 

Workers' compensation laws and regulations can vary significantly from one state to another. Some states have unique workers' compensation codes and requirements. Employers should proactively assess whether the new state requires a different workers' compensation code and the corresponding compliance measures.

Does the new State have different Sick Pay Requirements? 

Different states may have their own rules and regulations regarding paid sick leave, including accrual rates, usage, and other provisions. Employers should assess the new state's sick time laws to ensure compliance. You can review all state sick time requirements by navigating to our knowledge center for the State Sick Leave Requirements article.

Do you offer different Accrual Policies for employees in this state? 

It's important to consider the potential differences in accrual requirements for benefits like paid time off or vacation days. Each state may have its own regulations governing how these benefits accrue, how they can be used, and whether they can be transferred. Employers should proactively assess the accrual requirements in the new state to ensure compliance.

Does this new State have different Time and Labor Calculation Rules?  

Different states can have unique labor regulations, including rules regarding minimum wage, overtime, meal and rest breaks, and more. Employers should proactively assess these differences to ensure compliance.

Looking for expert guidance in managing multi-state employee compliance challenges? 

Our HR consulting services provide tailored solutions to ensure your business adheres to state-specific labor laws, workers' compensation codes, sick time policies, benefit accruals, and time and labor laws. If you are interested in learning more about our HR consulting service, please fill out the Product Inquiry Form.


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