Kennewick company answers the call when remote workers hit the road

Wendy Culverwell | July 2022

Muncie, Indiana, is offering $5,000 cash for remote workers who move to the town an hour northwest of Indianapolis.

 

Muncie, home to Ball State University, is one of dozens of towns in dozens of states competing for well-paid workers on MakeMyMove.com, a website helping towns woo remote workers who can live anywhere.

 

John Heaton, president and founder of Pay Plus Benefits Inc., a Kennewick-based company that serves as the HR department for hundreds of clients, relishes the offerings and their flowery language.

 

Muncie, for example, touts its Cornerstone Center for the Arts, noting it “provides opportunities for creative expression.” It is the reputed birthplace of Garfield the cat, served as a model for “Parks and Recreation” and Ball State claims David Letterman as an alum.

 

Heaton laughs because the come-hither offers seldom disclose the downside to moving across state lines with an existing job: Each state has its own unique mix of income taxes (or not), workers’ compensation, family leave, health insurance and other requirements.

 

Employee and employer can easily run afoul of the rules of the new state if they don’t go in with their eyes open and the rules followed.

 

Finding a niche

 

Pay Plus Benefits spied an opportunity to serve companies with remote workers when Pew Research statistics indicated the share of remote workers interested in moving rose to 17%, up from 9% in 2020.

 

Heaton doesn’t think remote work is going away. He noted Amazon and other employers recruited Tesla workers upset over orders to return to the office.

 

“The genie is out of the bottle,” Heaton said.

 

Heaton’s new business line, Out-of-State Easy, manages the rules for a growing list of clients with workers who want to decamp from high-cost communities to lower-cost ones, or to be closer to family. It is set up to employ workers in 45 states on behalf of employer/clients and will add the remaining five if the need arises.

 

It charges a one-time set-up fee of $1,500 and a fee of $125 per pay period for the first employee, with discounts for additional ones.

 

Unintended consequences

 

While he is selling a service, Heaton said he sought publicity to raise awareness of the unintended consequences of interstate moves. The downside seldom gets mentioned in the breathless coverage of tech workers fleeing high-cost locales such as Seattle for lower-cost ones such as Boise.

 

Employees who move without alerting employers get tripped up when their new state sends a bill for, say, unpaid state income taxes. Or an employee who has moved to another state and is injured on the job may have trouble filing workers’ compensation claims. The employer’s health insurance plan may not align with the new state’s requirements.

 

Colorado is a telling example, he said.

 

To employ a Colorado resident, an out-of-state company first needs permission from the secretary of state. Then, it must register to do business in Colorado and engage a local agent. It needs an account with the state Department of Revenue and to begin deducting Colorado income taxes from the employee’s check.

 

The business itself must file quarterly tax statements in Colorado, even if it has no other presence there.

 

Colorado isn’t unusually challenging. It was just a convenient example, Heaton said, adding that there is no movement to simplify the rules regarding remote workers in different states.

 

“The states are not doing anything to accommodate this,” he said.

 

‘Fully flexible’ future

 

Color Creative LLC, a creative content company in Seattle with an office in Los Angeles, is a new Pay Plus client. Prior to the pandemic, all employees worked in the offices and the company valued its lively corporate culture.

 

“We were very much an in-office culture,” said Andrea Ostrovsky, chief operating officer and general manager.

 

As the pandemic lingers, 105 of its 115 full-time employees work from home and the company envisions keeping that as an option in the future.

 

As it considers a “fully flexible” future, it realized it needed to cast a wider net as it recruited animators, designers, illustrators and more. It was set up for California and Washington but knew talent could be anywhere.

 

It turned to Pay Plus Benefits in early 2022, allowing it to recruit from a broader geographic area. The results are encouraging, though Ostrovsky said it is still “early days.”

 

Ostrovsky said it has recruited remote workers from other states and allowed two employees to move.

 

The company pushes the limits of technology to maintain the social connections it had when everyone was in the office. It uses Teams, the Microsoft Office software, and has goofy channels where employees share interests in everything from manicures and horror films, to books, plants and hiking.

 

“I’m mindful of the fact that it might be harder for people who are fully remote to feel connected to the company. We’re going to do everything we can to help people feel fully connected,” she said.

 

Helping manage from afar

 

Heaton said the worst thing an employee can do is to relocate on the sly. The process should start with a question: Will you support me in a different state?

 

Washington is one of only eight states without an income tax, so odds are good the state a worker is looking at has one.

 

Applying for a driver’s license or registering a vehicle in a new state will trigger a residency requirement. Workers who aren’t paying local income taxes can expect to get a bill. Heaton said that can lead to awkward conversations and deteriorating relationships between employees and their employers.

 

Chad Mackay, chief executive officer of Fierro Tech, a Seattle-tech firm catering to the hospitality industry, turned to Pay Plus Benefits to manage its out-of-state workers earlier this year after its old payroll company couldn’t keep up with its growth.

 

Mackay, whose ventures include high-end restaurants such as El Gaucho in Seattle and Portland, said he was accustomed to managing the rules for Washington and Oregon. But prospective employees with experience in hospitality and software may live beyond the Northwest.

 

“Pennsylvania, Texas – workers’ compensation is totally different than Washington,” he said. “I can’t keep track of all that stuff as a small employer.”

 

He regards it as an advantage to recruiting workers who for whatever reason don’t want to move to Seattle or even Washington.

 

“We have people who’d rather be in Boise and frankly, I’m OK with that,” he said.