Lincoln, AL asked in Gov & Administrative Law, Workers' Compensation and Employment Law for Alabama

Q: Hi, I am an LLC looking to hire remote workers throughout the country. Would we need to file a foreign llc in each state

Would we need to file a foreign LLC in any state that we conduct business. We are hiring them as independent contractors. Also would we need to have worker's compensation?

1 Lawyer Answer

A: Each State has its own rule on what constitutes "doing"/"conducting" business for the purpose of determining whether an out-of-state business must register there as a "foreign" entity. Having an employee in a particular State may be, but isn't always, a factor in the analysis. However, even States that don't require foreign registration still may require a foreign entity with at least one employee there to register with other government agencies. This commonly includes that State's tax, unemployment, and/or workers' comp office.

Since an independent contractor isn't an employee, merely having one in a particular State typically isn't enough to require any type of registration there. But keep in mind that most people who are classified as independent contractors don't actually meet the requirements for the law to consider them independent contractors. These workers are "misclassified" employees.

An employer who misclassifies an employee may be held liable for back wages, back taxes, and fines/penalties, as well as unemployment, workers' comp, discrimination, etc. This is why it is important to evaluate potential independent contractor classification for each individual worker before hiring them, and especially before making other legal decisions based on whether the worker is an independent contractor or an employee.

A knowledgeable employment law attorney can help evaluate independent contractor classification, as well as foreign registration requirements based on employee location.

Justia Ask a Lawyer is a forum for consumers to get answers to basic legal questions. Any information sent through Justia Ask a Lawyer is not secure and is done so on a non-confidential basis only.

The use of this website to ask questions or receive answers does not create an attorney–client relationship between you and Justia, or between you and any attorney who receives your information or responds to your questions, nor is it intended to create such a relationship. Additionally, no responses on this forum constitute legal advice, which must be tailored to the specific circumstances of each case. You should not act upon information provided in Justia Ask a Lawyer without seeking professional counsel from an attorney admitted or authorized to practice in your jurisdiction. Justia assumes no responsibility to any person who relies on information contained on or received through this site and disclaims all liability in respect to such information.

Justia cannot guarantee that the information on this website (including any legal information provided by an attorney through this service) is accurate, complete, or up-to-date. While we intend to make every attempt to keep the information on this site current, the owners of and contributors to this site make no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to from this site.