Which State Laws Apply to Remote Employees: Wage, Leave, Posting and Non-Compete Rules by Work State

Short answer: a remote employee is covered by the employment laws of the state where they physically do the work, not the state your company is registered in. Where federal law and state law both apply, the standard more favorable to the employee generally wins. In practice the differences show up in five places: minimum wage and overtime, paid sick and family leave, final paycheck timing, expense reimbursement, and what your job posting has to disclose.

Payroll teams usually get to this question from the tax side, and the tax side has clear answers: you withhold where the work happens, you register there, and unemployment insurance follows its own federal hierarchy. We walk through all of that on our page covering state tax withholding for remote employees. Employment law is the other half, and it is the half that generates the actual complaints.

Which state's laws apply to a remote employee?

The governing principle is territorial. A state's wage and hour law reaches work performed inside that state. So an employee who lives in Austin and works from their spare bedroom is a Texas employee for legal purposes, even if every colleague, the CEO and the office are in Manhattan. Your New York handbook does not travel with the paycheck.

Layered on top is the federal floor. The Fair Labor Standards Act sets a national minimum wage and overtime standard, and every state has to meet it. Many exceed it. When federal and state rules both apply and disagree, the employee gets the more protective one. The same logic runs between a state and its own cities: Seattle, Denver, New York City and dozens of others set their own minimum wages above the state figure, and a remote employee inside those city limits is usually covered by the local rate.

That gives you a simple test for any policy question. Ask which state, and sometimes which city, the work is physically performed in. Then check that jurisdiction's rule, and apply whichever of the federal, state and local rules is best for the employee.

The five places the difference actually shows up

Most of your handbook is unaffected. These are the sections that are not.

Do California labor laws apply to out of state remote employees?

Usually not, and this is the single most common worry we hear from employers headquartered in California. California wage and hour law is tied to work performed in California. An employee living and working entirely in Nevada, doing no work inside California, is a Nevada employee for minimum wage, overtime, meal and rest breaks, and sick leave.

Two caveats keep it from being a clean rule. First, work performed inside California counts, so an employee who relocates temporarily, or flies in for a week of onsites each quarter, can pick up California protections for those days. Second, some California rules are not wage and hour rules at all and can reach further, which is worth checking with counsel if you have a genuinely borderline arrangement. If you want to read the statute yourself rather than a summary of it, you can look up the actual statute and the cases interpreting it in plain English before you call anyone.

The mirror image is the part employers forget: if you are based in Texas and hire someone in California, you now owe California rules to that person. The direction of surprise runs both ways.

Does a remote job posting have to include the salary range?

For a growing list of states, yes, and the trigger is not where your company is. Colorado, California, New York, Washington, Illinois, Minnesota, Maryland, New Jersey and Vermont all require pay information in covered job postings, and the covered test is generally whether the job could be performed in that state.

Colorado is the clearest example, and the one that came first. Its Equal Pay for Equal Work Act sits at C.R.S. 8-5-101 and following, the Division of Labor Standards and Statistics enforces it through interpretive notices INFO #9 and #9A, and the Division publishes a separate fact sheet dealing specifically with which remote jobs are covered. That fact sheet exists because the question is unavoidable: a fully remote posting is, by definition, a job that could be performed in Colorado unless you say otherwise.

The practical effect for anyone hiring remotely is that a single posting can pull in several disclosure regimes at once, and a posting with no salary range on it is the highest-risk version. It is also, separately, the version that gets fewer good applications. We looked at that in more detail in our piece on how to write a remote job description, and every listing on this board shows a range for the same reason.

Are non-compete agreements still enforceable for remote employees?

State law controls this again, because the federal attempt to settle it is finished. The FTC Non-Compete Clause Rule was set aside by the Northern District of Texas in Ryan, LLC v. FTC in August 2024, the Commission voted in September 2025 to drop its appeals, and on 12 February 2026 the FTC published a final action in the Federal Register removing the rule from the Code of Federal Regulations. 16 CFR Part 910 no longer exists. The Commission has said it will keep pursuing restrictive covenants case by case, but there is no national ban.

So enforceability depends on the employee's state. California, Minnesota, Oklahoma and North Dakota broadly void employee non-competes. Several states, including Colorado, Illinois, Maine, Maryland, Oregon, Virginia and Washington, allow them only above a salary threshold. Most other states apply a reasonableness test on scope, duration and geography.

For a remote workforce that mostly means one thing: the agreement your general counsel wrote for the head office may be void for a chunk of your team, and a choice-of-law clause pointing at your home state often will not rescue it. Worth an audit if you have restrictive covenants in your standard offer.

Do you have to reimburse a remote employee for home office costs?

In some states you do, and the leading text is California Labor Code section 2802. It requires an employer to indemnify an employee for "all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties," and it goes on to say that unreimbursed amounts carry interest at the civil judgment rate and that necessary expenditures include the attorney's fees of an employee enforcing the right. That is an unusually strong remedy for a payroll-adjacent obligation.

Illinois has a comparable requirement in its Wage Payment and Collection Act, and Massachusetts, Montana, New Hampshire, North Dakota, Iowa, Pennsylvania, the District of Columbia and the city of Seattle all have some version of the rule. In practice the disputed items for remote staff are home internet, mobile phone, and occasionally a share of electricity. A flat monthly stipend is the usual answer because it is simple to run and easy to evidence, but it has to be genuinely reasonable rather than nominal.

A compliance routine that is actually maintainable

None of this requires an employment lawyer on retainer for a ten-person team. It requires knowing where everybody is.

1. Record the work state in writing at offer stage. One field in the offer letter drives tax registration, labor law, workers compensation and posting requirements. Get it before day one, not after the first complaint.
2. Keep a core handbook plus a one-page state supplement per state. Sick leave accrual, final pay timing, breaks, expense reimbursement, and any state-specific notice. That is nearly all of it.
3. Review the supplements once a year, in December. Minimum wages and paid leave rules overwhelmingly change on 1 January.
4. Ask annually whether anyone has moved. A quiet relocation is the most common way a company ends up out of compliance in a state it did not know it operated in, and it breaks the tax registration at the same time.
5. Decide your posting policy once. Either publish ranges on everything, which removes the question, or maintain a list of excluded states, which is more work forever.

The wider point is that multi-state employment is an administrative cost, not a legal risk, as long as you know where people are. Companies get hurt by the employee nobody knew had moved to Denver, not by the one they onboarded there deliberately. If you are still working out what a hire costs you in total before any of this, we broke the arithmetic down using current federal data on the cost of hiring an employee, and the operational side of a new state is covered step by step in hiring remote employees in another state. When you are ready to open the search, you can post the role to a fully remote audience and say exactly which states you can employ in.