Most remote workers I talk to think about state lines the same way they think about server locations — something that matters to the IT department, not to them. Then tax season arrives, or their employer asks them to update their work location, or they relocate to a lower-cost area and suddenly their paycheck looks different. The legal framework around multi-state remote work has been evolving faster than most policies can keep up, and the gaps are where the real problems surface.
Multi-State Taxation
Remote Work Compliance
Employee Rights
Wage & Hour Laws
The tax trap hiding in your remote agreement
If you live in one state and your employer’s office is in another, the question of who gets to tax your income sounds straightforward — you pay where you work. But six states apply what are called “convenience of the employer” rules, and they flip that assumption. Under these provisions, if your employer is based in New York, Pennsylvania, or one of the other states with such rules, your income may still be taxable there even if you haven’t set foot in the state all year. The Tax Foundation’s analysis of these rules walks through a scenario that makes the stakes concrete: a Vermont resident working for a New York company could owe over $10,000 in combined state taxes on $100,000 of income if New York’s convenience rule applies and Vermont denies a credit for taxes paid out of state — compared to roughly $4,600 if they worked from Vermont for a non-convenience-rule employer.
The states that currently apply convenience rules — Arkansas, Connecticut, Delaware, Nebraska, New York, and Pennsylvania — define “convenience of the employer” broadly. The narrow exception is when the work genuinely cannot be performed in the employer’s state, like a field technician servicing equipment. For knowledge workers, the assumption tilts the other way: your work could be done in the office, so your remote location is treated as your choice, not the employer’s requirement. Massachusetts adopted a temporary rule with a similar effect during the pandemic, drawing objections from New Hampshire officials concerned about their residents being taxed by a state they never worked in. Most of the specific tax analysis in this section comes from the Tax Foundation’s detailed report on convenience rules and their consequences.
What does this mean in practice? If your employer is headquartered in one of these states, your tax bill could jump significantly if you work remotely from another state and your home state doesn’t offer a credit for taxes paid to the employer’s state. The proposed Multi-State Worker Tax Fairness Act would restrict states from taxing nonresident telecommuters, but it hasn’t passed. For now, the burden falls on employees to understand where their employer’s state draws the line.
What your employer owes you for that corner of the dining room
One of the quieter shifts in remote work law over the past few years has been around who pays for the equipment and connectivity that make working from home possible. Several states now require employers to reimburse necessary remote work expenses — internet service, ergonomic chairs, job-specific software — following court cases in California and Illinois that set precedents, according to an analysis by Fred Miller Lawyer. The MRSC, which advises public agencies on employment law, notes that remote work agreements should spell out responsibility for work-related expenses explicitly, rather than leaving it to informal understanding.
- Monthly internet bills and any upgrade costs needed for work
- Ergonomic equipment purchases — chairs, standing desk converters, monitor arms
- Job-specific software or licensing fees not covered by your employer
- Any written communication about what your employer will and won’t cover
Wage and hour compliance is another area where remote work complicates what used to be straightforward. The U.S. Department of Labor’s Wage and Hour Division Field Assistance Bulletin No. 2023-1 addresses telework under the Fair Labor Standards Act, emphasizing that employers must track compensable break time, monitor unscheduled work hours, and apply the same overtime rules as they would for on-site staff. The PUMP Act requirements for nursing worker accommodations apply to remote employees too. If your employer assumes that working from home means fewer compliance obligations, they’re misunderstanding the law — and you may be bearing the cost. The MRSC recommends that telework agreements address timekeeping, attendance, and break policies explicitly, so there’s no ambiguity about what counts as working time.
For more detail on how pay equity intersects with remote policies, see our earlier piece on pay equity audits.
When telework is a reasonable accommodation — and when it isn’t
The EEOC’s February 2026 guidance on telework accommodations for disabilities, while directed at federal agencies, applies the same principles that govern private employers under the ADA. The key question the guidance clarifies: telework as an accommodation must enable an employee to perform essential functions, participate in the application process, or access equal benefits — not just make symptoms more manageable. The EEOC puts it directly: “What the law does not require … is accommodations that only mitigate symptoms without also enabling the performance of essential functions.”
This distinction matters more now than it did during the pandemic, when many employers temporarily excused in-person attendance as an essential function. The guidance makes clear that those pandemic-era accommodations did not permanently alter a position’s essential functions. If an employer determines that in-office presence is essential for a role — for supervision, teamwork, or specific job requirements — they may require the employee to return, provided they have engaged in the interactive process and considered other accommodations first.
Whether in-person attendance is an essential function depends on the role, not the employer’s preference. The EEOC guidance emphasizes case-specific assessment. If you’ve been working remotely successfully for years, that track record may matter in an accommodation discussion — but it doesn’t permanently lock in remote work as a right.
The guidance also addresses anxiety as a basis for telework. The ADA “does not create a general right to free from all discomfort and distress in the workplace, including anxiety,” the EEOC states. The relevant question is whether symptoms create a material barrier to performing essential functions. A difficult commute, by itself, does not warrant telework as an accommodation, though temporary telework may be reasonable to allow time to relocate or arrange alternative transportation. Employers may also ask for updated medical information if they’re reevaluating an existing accommodation, and they may consider reliable conflicting evidence — including social media activity — that appears inconsistent with reported limitations.
For more on how licensing rules interact with remote employee rights, see our guide to licensing requirements for remote workers.
The state-line shuffle that catches everyone off guard
Relocating while working remotely used to be a simple conversation: update your address, keep your job. In practice, that conversation is more complicated. When you move to a new state, you immediately become subject to that state’s employment laws, and your employer must register for unemployment insurance and workers’ compensation, update tax withholding, and ensure compliance with a different set of regulations. Some states require businesses to register as employers if even one employee works remotely from that state — a requirement that, as industry guidance notes, became widely known after small businesses received unexpected notices from state tax departments.
Minimum wage is one of the most visible differences. Washington leads at $16.28 per hour, followed by California at $16.00 and Connecticut at $15.69, according to state-level data compiled by RemoteLaws. If you move to a state with a higher minimum wage than your employer’s headquarters state, the higher rate applies to your work. The same logic holds for overtime rules: California and Nevada mandate daily overtime beyond eight hours, while federal law only requires overtime after 40 hours per week. The most protective law applies to your situation.
Moving to a lower-cost city is one of the most cited advantages of remote work, and it can save thousands annually. But the legal and administrative friction of crossing state lines — tax withholding changes, employer registration, benefit adjustments — means the savings aren’t automatic. They require both you and your employer to be paying attention to the same details.
Paid leave is another patchwork. Seventeen states mandate paid sick leave, and eleven operate paid family and medical leave programs with wage replacement ranging from 60% to 90% of income, typically funded through payroll taxes. If your employer hasn’t accounted for the state you live in, you could miss out on benefits you’re entitled to. The time zone and wage adjustment questions we’ve covered previously become even more layered when state lines are involved.
The written policy that covers the gaps
Much of the legal risk around multi-state remote work comes from the absence of clear written policies. The MRSC’s guidance on telecommuting emphasizes that memorializing approval and documenting the business rationale for allowing or denying remote arrangements minimizes legal risk if decisions are challenged. A written remote work agreement should address at-will employment, the right to revoke the arrangement, work schedule and availability, communication expectations, data security, and workspace standards.
Courts increasingly use company policies to determine liability in disputes, according to industry analysis of 2025 trends. One HR blog notes a case where a tech company faced penalties after failing to reimburse a remote employee’s equipment expenses, with courts ruling that remote work should not financially disadvantage employees. In another documented case, an employer who tried to discipline a worker for refusing after-hours messages lost the dispute because the company had no clear policy defining communication expectations after work hours.
At minimum: the at-will nature of the arrangement, expected work hours and availability, how communication should happen and within what timeframes, who pays for equipment and connectivity, timekeeping and attendance policies, data security expectations, and workspace safety obligations. The MRSC’s guidance for public agencies provides a solid template that translates well to private-sector use.
The “right to disconnect” is gaining traction as a concept, with several states evaluating rules that would protect employees from work demands outside scheduled hours. Even without state mandates, some companies have adopted internal policies. If your employer hasn’t defined when you’re expected to be available, the ambiguity works against you when conflicts arise. The transparency principles we’ve discussed before apply directly here — the more explicit the policy, the fewer surprises for everyone.
The landscape of multi-state remote work is still being shaped — by state legislatures, by court cases, by federal guidance that sometimes clarifies and sometimes creates new questions. What’s clear is that geographic flexibility, one of the most celebrated features of remote work, comes with legal complexity that neither employees nor employers can afford to ignore. The best approach is the least glamorous one: read the agreements you sign, document what you spend, and know which state’s laws apply to the room you’re working from.