Interstate hiring in the US comes with complex compliance, tax, and payroll challenges. That’s where an Employer of Record (EOR) becomes an essential partner. An EOR enables you to compliantly employ people across state lines without setting up legal entities or navigating unfamiliar regulations — and it can be a game-changer for recruiters looking to move fast and stay compliant.
Here’s a look at the most common challenges of hiring out-of-state, and how an EOR provides a seamless solution:
Challenge: State-by-State employment law differences
Each US state has its own set of employment laws covering minimum wage, sick leave policies, termination procedures, workers compensation, and much more. When hiring across state lines, you must comply with the state laws where the worker is working.
The solution
An EOR already has the legal infrastructure and expertise to comply with state-specific employment laws. They manage employment contracts, HR policies, and labor law requirements so you can stay on the right side of regulations — without needing to become legal experts.
Challenge: Tax registration in multiple states
To legally employ someone in a new state, you must register for state payroll taxes — even if they’re hiring just one employee there. For many businesses, that’s not worth the time, cost, or admin involved.
The solution
When you work with an EOR, it acts as the legal employer, eliminating the need for you to register in new states. The EOR handles all local tax requirements, filings, and deductions, making it easy to onboard remote employees anywhere in the US.
Challenge: Insurance & workers’ compensation requirements
Insurance requirements — especially workers’ comp — vary by state. Missing or incorrect coverage can lead to penalties or liability issues.
The solution
An EOR can provide access to fully compliant insurance packages, including workers’ comp, that are tailored to the employee’s location. They can advise on the legal complexities and help you make sure you proceed with the best options, so you don’t have to shop around or risk noncompliance. Moreover, they can save you valuable time you’d otherwise spend making sure
Challenge: Onboarding & paperwork
From state-specific W-4s to mandatory employee notices and reporting obligations, onboarding across state lines is far from one-size-fits-all.
The solution
Your EOR will manage the entire onboarding process, including documentation, contracts, and state-required forms — ensuring nothing gets missed and your candidate has a smooth start. According to research from Bullhorn, contingent workers are 50% more likely to be loyal to staffing firms if they have a smooth onboarding experience. Moreover, there is a 70% improvement in productivity when organisations use a robust onboarding process.
Challenge: HR & payroll compliance
Running payroll means complying with state-specific rules around pay frequency, overtime, deductions, and wage statements.
The solution
When you work with an EOR, you can trust that payroll is fully compliant and timely, no matter where the employee is based. This reduces admin, stress, and risk.
Challenge: Expanding into new states without infrastructure
Many recruitment businesses want to explore new markets or access talent pools in other states — but setting up a legal entity is a major barrier.
The solution
Partnering up with an EOR allows you to work with clients and candidates in any state without the need to establish a local entity. It’s a low-risk way to grow, hire remotely, and test new territories.
Final thoughts
For recruiters placing talent across the US, working with an EOR unlocks flexibility and speed — while protecting you from compliance headaches. It removes the legal and administrative roadblocks that come with multi-state hiring, making it easier for your placements to go smoothly and stick long-term.
If you want to work with clients and candidates outside your state and expand your talent reach but without the complexity of out-of-state hiring, an EOR might be the smartest next step – get in touch today.