Why Do Telecommute Jobs Have a Location Requirement?

Updated October 2023

Telecommute jobs provide numerous benefits for individuals and businesses alike, but companies can’t always offer employment to out-of-state workers. Sometimes, telecommute jobs are restricted by geographic location for legal, financial, or operational reasons. These location restrictions confuse many aspiring remote workers as they search for work-at-home positions. If you are among those seeking answers, here are some of the reasons why telecommute jobs have a location requirement.

State-Specific Employment Laws

Though federal labor laws exist, each state has its own set of specific requirements. For example, the Fair Labor Standards Act (FLSA) is a federal law that guarantees a minimum wage, overtime pay for more than 40 hours’ worth of work per week, forbids unequal pay based on discrimination, and prevents labor abuse. However, each state determines the minimum wage value, allocation of work hours, designated paid holidays, and sick leave allowance.

In fact, the National Conference of State Legislatures (NCSL) reports that the minimum wage ranges from $7.25 to $15.74 across states, depending on state laws, business income thresholds, and whether companies offer benefits to their employees. Therefore, companies that pay minimum wage to remote employees may not want to hire individuals who reside in states with higher minimum wage standards.

The Family and Medical Leave Act (FMLA) is another federally enforced law that states can expand upon based on the number of employees a company has, marriage laws and family member designations, medical issues, and other state-specified factors. Employers that operate in states with minimal FMLA standards may not be so keen on hiring out-of-state telecommute employees in states with generous FMLA coverage.

Other state-specific employment laws regarding residency, qualifications to do business, providing reasonable accommodations to certain employees, seasonal and agricultural jobs, whether employees are allowed to receive tips, and even Occupational Health and Safety (OSHA) regulations influence an employer’s decision to hire out-of-state remote workers.

Tax Restrictions

State income tax contributes a significant portion of each state’s revenue. Employees typically pay state income tax to the state in which they perform work. This means that companies with out-of-state employees are responsible for withholding and paying income tax to each state in which their employees work. Though states often practice reciprocity or reimbursement, hiring out-of-state employees creates more work for companies to set up correct tax withholdings and accounts.

Plus, some states have specific restrictions on taxing employees who perform work within state lines, regardless if the state is their permanent residence. It’s not surprising that companies seeking part- or full-time employees are easily discouraged when they attempt to navigate other state’s taxes and withholdings laws. Many companies find it easier to hire in-state employees to relieve themselves of the hassle.

Health Insurance

Health insurance companies can regulate group plans based on the number of employees a company has within a given state. Thus, some companies don’t qualify for group plans because their workforce is scattered across the nation and they don’t meet individual state standards. However, companies that do qualify for group plans sometimes can’t provide benefits to remote employees who don’t live or work in the same state as the employer. Companies can get around this by offering a healthcare contribution or reimbursement plan on an individual basis or across their entire workforce.

States also vary according to family member definitions and marriage laws, which further complicates healthcare eligibility. For example, some states recognize same-sex marriage and allow same-sex spouses on family insurance plans, while other states have stricter definitions for spousal relationships. Opposite-sex civil unions fall under a similar complexity. Since employers must adhere to each state’s healthcare regulations, there may be a disparity in what they can offer their remote workforce.

Professional Certification or Licensing Requirements

Most states require certifications or licenses for certain occupations. Licenses allow workers to perform their jobs legally after passing a state exam. Certifications don’t provide legal authority, but they’re issued by accredited organizations that set industry standards. Common remote occupations that require licenses are nurses, teachers, legal professionals, social service workers, engineers, insurance sales representatives, and accountants. Examples of telecommuting occupations that usually require a certification but not a license include managers and cyber security analysts.

Licenses and certifications don’t always cross state lines, which makes the hiring process challenging. Companies may find exceptional telecommute candidates with all the licenses, bells, and whistles, but state requirements might not acknowledge the candidates’ credentials. However, some states offer reciprocity for certain occupations, such as teaching. For example, The National Council for Accreditation of Teacher Education (NCATE) helps create partnerships among states so that recent graduates and current teachers can easily transfer their credentials to different states.

Onsite Requirements

Technically, telecommute jobs can require up to 80% travel. However, travel doesn’t necessarily imply flying vast distances around the country. It can simply mean occasionally traveling to and from a company’s headquarters or client work site. This confuses many aspiring remote workers who assume “work-at-home” means “never-leave-the-house.”

Some employers require new remote staff members to attend in-person onboarding, training, and meetings to get fully acquainted with the company and immersed in its culture. Some companies offer a “remote option,” which might allow employees to work from home two or three days each week. In such cases, employers prefer staff who live within the same city or county for faster commutes.

Sometimes companies are happy to offer full remote work environments, but the clients they serve require onsite or in-state workers. In such cases, the level of telecommuting depends on the client, project, and nature of the job.

Time Zone Differences

One of the main perks of telecommute jobs is the freedom to work on a flexible schedule anywhere in the world. However, some companies need their staff to work within specific time zones. For example, companies who provide customer service during Central Time business hours may require that customer service representatives live in a state within the Central Time zone. That limits candidates to 20 states, where ten are only partially in Central Time.

Some companies allow employees to normalize their work hours according to a particular time zone depending on the job and worker reliability. For instance, remote jobs that require quick responses and early morning conference calls on Eastern Time may be challenging for some employees on Pacific Time. However, night owls on Eastern Time might enjoy conforming their schedule to Pacific Time.

It is possible to work with companies and adjust your normal business hours, but employers may prefer keeping their staff on the same time zone so that issues can be escalated to management and resolved within regular hours. Some jobs, especially those that require close collaboration and include minimal independent work, just don’t lend themselves to multiple time zones.

Other Considerations

Though employers face challenges when hiring out-of-state employees or employees in different time zones, many are still willing to recruit remote candidates. If you’re having trouble finding remote jobs due to geographic restrictions, review the job descriptions closely and attempt to identify the reasons for the restrictions. For example:

• If an employer simply wants their staff members to attend a weekly meeting at the corporate headquarters, consider pitching video conferences and offering to travel onsite one per month.
• If you have a state-specific license or certification, research state reciprocity and consider acquiring new state-required credentials before or while applying for jobs.
• Consider working as an independent contractor rather than an employee. Contractors don’t always receive the same benefits as employees, but there is generally more legal flexibility across state lines. If contract work doesn’t sound appealing for the long haul, it might just be a stepping stone to develop relationships with companies and try remote work on for size. It’s easier for employers to convert trusted contractors to permanent employees than search for new candidates.

Regardless the route you choose, familiarize yourself with your state employment laws, tax requirements, and healthcare insurance standards. Evaluate what you are willing to offer in terms of travel, work hours, and professional credentials. Once you have a general sense of your state-specific laws and work preferences, you can focus your job search and position yourself to find the best remote jobs for you.

Have you wondered why telecommute jobs have a location requirement? Did we help answer this question for you? Connect with Virtual Vocations on Facebook, Twitter, LinkedIn, Instagram, and YouTube to share your thoughts and tips. We’d love to hear from you!