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?
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.
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