Out-of-State Employees Guidance

March 4, 2019
Categories: Manuals - Guides - Procedures, Resources Tags: Payroll Department

UNC Charlotte Strategy: physical location of workforce

  • UNC Charlotte has a strong preference for a North Carolina workforce. Hiring preference should be given to employees living and working in-state when all other factors are equal.
    • As a North Carolina entity, UNC Charlotte has a responsibility to provide NC public sector jobs when possible.
    • This applies to students, including graduate assistants, and temporary employees.
  • At this time, a workforce abroad should be avoided if possible considering the direct and indirect costs of compliance.
  • Restrictions:
    • Term: Out-of-state arrangements must be temporary in nature. Terms are limited to one year. Renewals must be approved annually.
    • Multiple jurisdictions: UNC Charlotte cannot accommodate withholding prorated income taxes for more than one state in a single pay period.
    • IT Security: Employees must use University-managed devices when working remotely.

Definition of Out-of-State Employee

An employee who will be located outside the state of North Carolina when performing work for UNC Charlotte. Examples:

  • A part-time faculty member teaching online classes 100% remotely outside of North Carolina.
  • A full-time faculty member on paid leave residing out of state and working on grant activity for UNC Charlotte.
  • Additional examples are included in the FAQs below.

Procedures

If a potential need arises for an employee to complete work for UNC Charlotte from a non-NC jurisdiction for more than one month, complete the Out-of-State Work Approval Form at least 60 days prior to the proposed start date of the arrangement. All approvals as indicated on the form must be obtained.

The form is not needed if:

  • the duration of the work to be completed outside of NC is for one (1) month or less; or
  • the employee will not be doing work for UNC Charlotte while outside of NC (e.g., employee is on leave, or employee is part of a faculty exchange program); or
  • the employee is attending a work conference in another state

Note that the Out-of-State Work Approval Form must be completed in addition to standard Telework/Remote Work Request Form:

potential costs

  • Pass-through costs (e.g., state-specific benefits) may apply to individual employees or their hiring departments.
  • Costs are incurred every time the University must set up to withhold income taxes and set up unemployment insurance in other states. To check if the University is already set up in a specific state, contact the Tax Office.
  • Out-of-country employment requires contracted service with a professional employer organization (PEO). Estimated additional cost is 40-60% of the employee’s salary.

Background

Almost all states require employers to withhold tax from wages earned in that state. To maintain a lawful out-of-state or international employee, UNC Charlotte must comply with requirements that vary by jurisdiction and include:

  • Employer registration
  • Employment and wage laws, including minimum wage and required pay frequency
  • Income tax withholding
  • Other taxes/withholding (e.g., disability, paid family leave, local jurisdiction requirements, required benefits)
  • Monthly/quarterly/year end reporting
  • New hire reporting
  • Unemployment insurance (UI)
  • Workers’ compensation

Resources

FAQs

Does this apply to faculty who are out of state while on paid leave? (e.g., FMLA or official Reassignment of Duties)?
Yes, but only if they are doing work for the University or receive special compensation while in a different state.

How does this apply to faculty/staff who are working remotely and who may live in South Carolina?
Employees should complete the Out-of-State Work Approval Form. If approved, they should switch their withholding to South Carolina by completing and signing the South Carolina Form SC W-4, South Carolina Employee’s Withholding Allowance Certificate, and returning it to the Payroll Department on campus (Reese Building 3rd Floor; do not email forms with Social Security numbers). If at any point employees need to change their withholding back to North Carolina, they should submit an updated NC-4 in My Charlotte and notify the Payroll Department to stop withholding in South Carolina via an email to PayrollDept@charlotte.edu.

If a faculty member teaches out of state/out of the country for 5 weeks, is that ok?
They should complete the Out-of-State Work Approval Form. Approvers will determine if the arrangement introduces additional compliance requirements in the jurisdiction in question.

What is the risk to the University?
The individual has the tax liability to pay; however, they may make a case to their department that they were not informed of the tax concern and need to report and expect the department to pay the taxes owed (which has occurred). The risk to the University is financial in terms of back taxes owed, interest, and penalties that may be applied to the campus from the taxing entity (out of state local or state entity or international entity) due to non-compliance. This risk is tied to the dollar level and pattern of non-compliance, but regulations are becoming more closely monitored by all entities given better use of data matching and the states’ needs for tax revenue in the current environment.

Contacts

Created February 2019
Rev. 3/5/19, 6/11/19, 10/4/19, 11/06/20, 3/18/21, 4/09/21, 7/01/21, 12/02/2022

Last Updated: December 2, 2022