Hiring Out-of-State Employees: What Employers Need to Know About STD and Paid Family Leave Requirements

As remote and hybrid work become more common, many employers are finding themselves with employees living in multiple states. While this provides flexibility, it also introduces a layer of compliance complexity, particularly when it comes to state-mandated Short-Term Disability (STD) and Paid Family and Medical Leave (PFML) requirements.

State-Mandated Short-Term Disability (STD)

Some states require employers to provide short-term disability insurance to employees, often funded through payroll taxes and administered through a state program or approved private plan. As of now, the following states mandate STD coverage:

• New York
• New Jersey
• California
• Rhode Island
• Hawaii

Each of these states has unique rules around eligibility, benefit amounts, length of benefit offering, employer contribution requirements, and approved carriers. For example:

• New York requires employers to provide disability benefits for off-the-job illnesses or injuries, generally through an insurance carrier.
• California runs STD through its Employment Development Department (EDD), funded by employee payroll deductions. Disability benefits can last up to 52 weeks.

Paid Family and Medical Leave (PFML)

In addition to STD, several states have implemented mandatory Paid Family and Medical Leave programs, which generally cover:

• Bonding with a new child
• Caring for a seriously ill family member
• Addressing the employee’s own serious health condition
• Certain military family needs

Currently, 13 states and D.C. have passed PFML laws. States with active or soon-to-launch programs include:

• California
• Colorado
• Connecticut
• Delaware (starting 2026) employer and employee contributions started in 2025
• Maine (starting 2026) payroll contributions started in 2025
• Massachusetts
• Maryland (starting in 2027)
• Minnesota (starting 2026)
• New Jersey
• New York
• Oregon
• Rhode Island
• Washington
• District of Columbia

Each state has its own specific application process, eligibility criteria, benefit amounts, duration of benefits, and employer contribution requirements. In addition, should your company offer its own paid benefit policy, you’ll want to evaluate how that aligns with the state’s policy.

Note: These laws often overlap with—but are distinct from—federal FMLA. Unlike federal FMLA (which is unpaid), state PFML programs provide paid benefits, usually through state-administered funds or payroll tax contributions.

Employer Action Steps

If you're employing someone in one of these states, you’ll likely need to:

1. Register with the state’s labor or family leave department
2. Withhold payroll taxes or fund coverage (depending on state requirements)
3. Provide required notices or postings
4. Update internal leave policies to reflect state-specific programs

Hiring across state lines means employers must adapt to the rules of each state where employees reside. This is especially critical for leave and disability benefits, as non-compliance can lead to penalties or benefit ineligibility for employees.

If you’re hiring or currently employ team members in states with mandated STD or PFML, it's important to coordinate with HR, payroll, and legal advisors to ensure full compliance.
‍Need help navigating the requirements? Our team is here to guide you—reach out today.

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