The new geography of work: What employers need to know about compliance
ADP reports that the geography of work is changing as employers increasingly hire employees across state lines, which
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The new geography of work: What employers need to know about compliance
When long-distance work expanded during the pandemic, many assumed the geography of employment was changing because people were moving.
ADP Research discovered a different story. The bigger shift wasn’t employees moving. It was how workplace teams were built once people and employers discovered that daily co-location was no longer a prerequisite for effective collaboration. Organizations increasingly hired people outside their local markets and reorganized reporting structures that crossed metropolitan areas, creating long-distance working relationships even when employees stayed put.
That shift shows no signs of slowing. By the end of 2025, nearly one-third (32.3%) of U.S. employees in ADP’s sample reported to a manager in a different metropolitan area. Just as notable, long-distance employment is no longer concentrated among large enterprises. Mid-sized employers have been among the fastest adopters, with geographically distributed teams enabling employers to compete for specialized talent and expand their reach. What was once an advantage reserved for the largest employers has become an option for businesses of every size.
For employers, that’s good news. Hiring beyond commuting distance broadens the talent pool and gives organizations the flexibility to find the best candidate, regardless of location.
It also changes the rules. Hiring across state lines or across national borders doesn’t simply expand where an organization recruits. It can expand the employment laws, payroll requirements and tax rules the business must navigate. For many small and mid-sized employers, those obligations are often unfamiliar, making compliance an increasingly important part of the hiring decision.
Know where employees are actually working
The most important compliance question may also be the simplest: Where is the employee performing their work?
Employment laws generally follow the employee’s work location, not the company’s headquarters or the manager’s office. One new hire in another state can change an employer’s compliance obligations.
Imagine a 150-person company in Ohio that hires a software engineer in Colorado because that’s where it found the strongest candidate. The company’s business hasn’t changed, but its compliance landscape has. For instance, Colorado has state-specific rules regarding minimum wage, overtime, paid sick leave, paid family and medical leave, mandated meal and rest breaks, and payment of accrued vacation at termination of employment.
The same issue can arise when an employee relocates without telling the company. Someone who moves from Pennsylvania to New Jersey, for example, may become covered by different state disability laws. If the employer isn’t aware of the move, it may need to correct payroll records or respond to questions from state agencies after the fact.
That’s why employers should make it easy for employees to report address changes or relocations. Self-service address updates, periodic reminders and clear communication about why location matters can prevent much larger issues later.
Crossing state lines changes more than your talent pool
Every new hiring location introduces the possibility of different employment requirements. Employers need a process for determining which rules apply.
Areas that commonly require attention include:
- Payroll tax withholding and unemployment insurance
- Wage and hour requirements, such as minimum wage, overtime and meal/rest break mandates
- Paid leave and other employee protections
- Pay transparency and reporting rules
- Workers’ compensation requirements
- Employer registration and other state-specific obligations
Not every requirement will apply in every situation, but if employers assume the rules are the same from one jurisdiction to the next, that can create unnecessary risk.
Pay close attention to tax obligations
Tax considerations deserve particular attention. Depending on the circumstances, the presence of a single employee in another state can create new payroll tax withholding and reporting responsibilities for the business.
Factor in international requirements
The same principle applies internationally. An employee working temporarily from another country may trigger local payroll, tax or employment requirements sooner than many employers expect. In some jurisdictions, those obligations begin immediately or after only a short period of work.
The takeaway isn’t that employers should avoid long-distance employment. It’s that every new hiring location deserves the same planning as any other business expansion.
Build compliance into every hire
Many employers don’t set out to build a geographically distributed workforce. It happens gradually. A company hires a specialist in another state. An employee relocates closer to family. A hiring manager fills a difficult-to-hire role with the best fit, but that person lives hundreds of miles away. Over time, what began as a few exceptions becomes the norm.
That’s why compliance works best when it’s built into the hiring process rather than addressed after an employee starts work.
A few practical steps can make that easier:
- Establish a clear process for employees to report relocations.
- Define when approval is needed before working from another state or country.
- Ensure HR, payroll, finance and legal teams work from the same employee location data.
- Review policies and payroll practices regularly as employment laws evolve.
Technology can also simplify the process. Integrated HR and payroll systems help employers maintain accurate location information, apply payroll rules more consistently and adapt as legal requirements change. Combined with knowledgeable guidance, they make it easier to expand into new jurisdictions with confidence.
Opportunity comes with new responsibilities
The geography of work has changed. Today, organizations of every size can recruit talent well beyond commuting distance, giving them access to skills and experience that were once out of reach.
That’s a competitive advantage. It’s also a reminder that hiring across jurisdictions is no longer an exception. For many employers, it’s becoming business as usual.
The organizations that adapt most effectively will treat compliance as part of that evolution, not a hurdle to it.
This story was produced by ADP and reviewed and distributed by Stacker.
