📝 Overview
A work location is the physical address where an employee performs their job duties. It plays a key role in payroll processing, tax withholding, and compliance with labor laws.
📍Why Work Locations Matter
Work locations affect several important aspects of payroll and compliance. Here is what is determined based on where your employees work:
Income tax withholding: Different states and municipalities have their own tax rates. An employee's work location determines which jurisdiction's income tax rules apply.
Minimum wage and labor laws: Wage requirements, overtime rules, and other labor regulations vary by location. You are responsible for following the laws that apply to where your employees work.
State unemployment insurance (SUI): SUI taxes are calculated based on the state where your employees work. The correct work location ensures your SUI contributions go to the right state.
Local taxes: Some cities and counties have additional local tax requirements on top of state and federal taxes. These are triggered by the employee's work location.
Benefits: Certain benefits, such as commuter benefits or cost-of-living adjustments, may be tied to where an employee works.
Payroll records and reporting: Accurate work location data is required for tax reporting, compliance filings, and proper payroll recordkeeping.
⚠️ If your employees work across multiple states or locations, you may need to evaluate each worker's primary work location individually to ensure accurate tax withholding and compliance.
🖥️ Remote Work Considerations
For remote or hybrid employees, the work location is typically the address where the employee performs most of their work. This is often their home address. If an employee works from multiple locations, consider where they spend the majority of their working time when determining the primary work location.
💡 Tip: Always confirm work locations with remote employees, especially if they relocate. A change in work location can affect tax withholding and compliance requirements.
❓Frequently Asked Questions (FAQs)
Find answers to common questions or additional details that may not be covered in the main instructions.
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Do employees need to be assigned to a work location before I can run payroll?
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Yes. Payroll cannot be processed until at least one work location has been set up for your company and every employee has been assigned to a work location. During onboarding, you can designate a default work location to simplify this step, which will automatically assign all workers to that location.
What if my business does not have a physical address?
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If your business does not operate from a fixed physical location, use the address where you primarily conduct administrative work or where your vehicle or equipment is garaged. This is typically a home or office address. For more guidance, see the article on work locations for mobile businesses.
Can I have more than one work location?
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Yes. You can set up multiple work locations if your employees work across different addresses, cities, or states. Each employee should be assigned to the location where they primarily perform their work.
What happens if an employee moves or changes where they work?
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You should update the employee's work location in the system as soon as possible. A change in location can affect state income tax withholding, SUI contributions, and local tax obligations. Running payroll with an outdated work location may result in incorrect tax filings.