Procedures for Departments with Employees Working from a State Other Than Arizona
Northern Arizona University is obligated to follow state specific laws for its employees working from another state. NAU is also required to track the employees who work out of state in order to comply with tax withholding for the appropriate city, county, and state in which the employee works and send unemployment taxes and worker’s compensation premiums to the state in which the employee conducts their work. More and more states have also adopted state specific employment and labor laws that are different than those in Arizona, making this situation more complicated and costly.
Due to the complexity and cost of complying with each set of state specific laws and unique tax requirements, an employee working from another state for their own convenience is not permitted.
Out of state work may be permitted in certain business-justified or mission critical situations with advance approval (see form). Departments will be charged an annual $1000 fee for each hire or transfer of an employee that is working from a state other than Arizona. This fee is for the administrative costs to manage and monitor payroll tax and employment related compliance. Any additional costs (higher payroll taxes, extra benefits required, etc.) incurred for employing workers in other states will also be charged as employer-related expenses (ERE) to the funding for that position.
In order to comply with these requirements, departments are required to do the following.
- Send a completed Out of State Employee Approval Form to Human Resources before an employee is hired or allowed to work from a state other than Arizona.
- Provide a speed chart number to charge the compliance costs on the form. This charge is applicable to departments for each out of state employee regardless of funding source, and only state and local speed chart numbers will be accepted for these charges. In July/August or each year, all departments that have employees working from out of state will be assessed the $1000 annual fee for each employee working out of state as a one-time charge for that fiscal year. Any subsequent out of state hire/transfers will be charged accordingly after the effective date of the hire/transfer.
- Notify Human Resources about any new hire or arrangement for out of state worker. Failure to notify HR about these situations may result in a liability for NAU.
HR does not need to know if an employee has an infrequent occasion when they are out of state on business or personal travel and perform occasional or infrequent work for NAU in that situation. However, the more frequently that this occurs in a particular state other than Arizona, Human Resources needs to know in order to determine if out of state employment laws and other tax requirements apply.
HR will work directly with employees authorized to work from a state other than Arizona on the other tax withholding options and requirements. Please send your other replies and questions to Maryalice.Minnick@nau.edu, Payroll Coordinator, 928-523-9401 or Cheryl.Brothers@nau.edu, Assistant Director – Payroll, 928-523-6085.