As Austin continues to grow as a hub for innovation and business, many local businesses are expanding their teams by hiring employees outside of Texas. Before companies post the job, it’s important to understand legal and operational challenges that come with employing people outside of Texas.
Here’s what Austin business owners should keep in mind when hiring out-of-state employees.
Registering a Foreign Corporation
If your business hires an employee in another state, you’re generally considered to be “doing business” there. That means you’ll need to register as a foreign corporation.
This process involves filing paperwork with the Secretary of State in the new jurisdiction, appointing a registered agent, and providing your business’s contact details. Registration ensures the state knows who you are and can reach you for regulatory or legal purposes.
Read Our Blog: The Basics of NDAs
Employment Law Compliance
Every state has unique employment laws. If your Austin company expands its team across state lines, you’ll likely need to:
- Register with that state’s Department of Labor or employment agency
- Pay employment taxes and unemployment insurance in that state
- Withhold and remit state income taxes (if applicable)
- In some cases, obtain a local business license, depending on the city or county rules
Failing to meet these requirements can result in penalties, making careful planning essential.
Insurance Adjustments
Because insurance is regulated at the state level, hiring an employee outside of Texas may affect your policies. It’s a good idea to talk with your insurance provider or agent to decide whether you’ll need new or updated coverage.
Read Our Blog: Are You Misclassifying Your Workers as Independent Contractors?
Secure Remote Communication & Productivity
While hiring remote workers is a relatively common practice for businesses following the pandemic, small business owners may still have operational concerns when managing employees remotely. You should comfortably ask yourself:
- Can I effectively manage a remote employee?
- Do I have the tools to track productivity and communicate clearly?
- Would in-person oversight be more valuable for this role?
These considerations will influence not just compliance, but also team performance.
You should also address data security for remote employees. Implement systems to safeguard sensitive communications and establish clear procedures from the outset.
Expanding your workforce outside of Texas can be a smart move, but it comes with its own complexities. With compliance with state employment laws to remote management, this choice requires careful consideration.
Before hiring out-of-state, consult with business counsel who understands both Texas law and the requirements of interstate business. At Richards Rodriguez & Skeith, our transactional business attorneys guide business owners through these decisions with clarity and confidence.
Contact our office today if you have any questions or concerns when hiring out-of-state employees.
Key Takeaways for Austin Business Owners
- Register and comply with the laws in the employee’s state.
- Update insurance and secure remote communications.
- Get legal guidance before hiring out-of-state.
