One of the interesting byproducts of COVID-19 has been a spike in remote work arrangements. As we have discussed in the past, hybrid working arrangements are likely here to stay. As we work on finalizing our new updated policies related to hybrid work, there’s a companion topic: out-of-state work.

COVID-19’s impact on the mobility of the workforce has prompted many states to review their state practices on income tax treatment of teleworking employees and the threshold requirements for employers to register as a business in their state.

Consequently, we are taking a fresh look at our existing Out-of-State Policy to assure it is clear, consistent, and adequately addresses the new landscape shaped by the COVID experience.

It is important to note that each state has different requirements for employers conducting business within their borders. A separate set of state income tax laws impact employees conducting business in any given state. This policy is designed to appropriately manage risk associated with both of these topics.

Fun Fact: As of January, 2022, Drake is conducting business in several states where we anticipate an on-going need for active registration. These include: Iowa (naturally), Illinois, Wisconsin, Nebraska, Colorado, Texas, and Vermont. There are additional states where we have temporary registration based on short-term needs, but we do not intend to continue active registration. Most states require annual registration—so this list regularly expands and shrinks over time.

However, it’s more complex than that. If we are not currently registered to conduct business in a state, we also have to review the state’s unique labor and employment laws. There could be different forms of paid leave, a state (or municipal) minimum wage, workers’ compensation, etc. If we are going to have employees in another state working on Drake’s behalf, we want to do so lawfully and ethically and this doesn’t happen without time, care, and effort.

The updated policy is now posted for public comment, and it addresses both situations where Drake may be interested in hiring a new employee who will remain out-of-state and situations where an existing employee may want to temporarily or permanently relocate out-of-state. If you have questions, comments, or suggestions, please share them. This will help inform final edits.

Please be sure to read next week’s OnCampus for an update on the Customized Work Arrangements policy and related policies that have also been under review.

— Maureen De Armond, Human Resources; Heather Travis, Controller