Hiring Summer Staff and Managing Out-of-State Remote Employees: Payroll Tips for Colorado Employers
As the summer months approach, many Colorado businesses gear up for a seasonal influx of workers. Whether you’re staffing up for the tourism boom, hiring interns, or bringing in temporary workers to meet higher demand, it’s important to approach seasonal hiring with a solid payroll plan.
At the same time, many companies are navigating the growing trend of remote work. With team members logging in from multiple states—even while technically on your Colorado payroll—multistate compliance becomes increasingly important.
In this post, we’ll walk you through key payroll considerations for:
- Hiring seasonal and summer employees
- Paying remote employees who live and work out of state
Part 1: Payroll Tips for Hiring Seasonal and Summer Workers
Whether you’re operating in hospitality, retail, outdoor recreation, or another seasonal industry, summer hires are vital to meeting business needs. However, improper handling of seasonal employees can lead to tax issues, labor law violations, and costly penalties.
Classify Workers Correctly
Before you onboard anyone, determine whether the individual is a temporary employee or an independent contractor. The IRS and the Colorado Department of Labor are strict about classification:
- Employees must be on payroll, with taxes withheld.
- Independent contractors must meet specific criteria around control and independence.
Pro tip: Just because someone works for a short time doesn’t automatically make them a contractor.
Know Colorado’s Minimum Wage and Youth Labor Laws
As of 2025, Colorado’s minimum wage is $14.81/hour, with some cities (like Denver) having higher local minimums. Make sure seasonal hires—especially teens—are paid appropriately.
If you’re hiring minors:
- Follow federal and state youth labor laws
- Limit working hours based on age
- Ensure appropriate breaks and working conditions
Handle Onboarding Properly
For each new hire, even seasonal, you need:
- A completed Form W-4
- Form I-9 with identity verification
- Enrollment in Colorado’s Paid Family and Medical Leave (FAMLI) program (yes, even for short-term hires unless specifically exempt)
Don’t forget to report new hires to the Colorado State Directory of New Hires within 20 days.
Part 2: Managing Payroll for Remote Employees Working Across State Lines
Remote work is here to stay, and many of the businesses we serve have employees working outside of Colorado. If your staff has gone remote—whether in Texas, California, or even just over the border in New Mexico—it’s essential to understand how that affects payroll.
Withholding the Right State Taxes
You must withhold income taxes for the state where the employee physically works, not just where your business is located. If your remote employee lives and works in Arizona, you’re on the hook for complying with Arizona state tax laws.
In most cases, this means:
- Registering your business with that state’s tax authority
- Withholding and remitting that state’s income taxes
- Filing quarterly payroll tax reports
Unemployment Insurance and State Registration
You must also pay State Unemployment Insurance (SUI) where the employee is located. Each state has different rules and tax rates, so your payroll system must be equipped to handle multistate compliance.
Tip: Many states require you to register before the employee’s first paycheck, so plan ahead.
Local Labor Laws May Vary
Remote workers may be subject to local laws on:
- Paid sick leave
- Meal and rest breaks
- Overtime pay
- Mandated benefits
For example, California has more stringent overtime rules than Colorado, and New York has unique paid sick leave requirements.
Even if your business is headquartered in Colorado, you’re responsible for following the labor laws of the employee’s work location.
How to Stay Compliant (and Sane)
Managing seasonal employees and multistate payroll isn’t impossible—but it does require preparation and the right tools.
Best Practices:
- Use a robust payroll system that supports multistate taxation
- Create a checklist for onboarding seasonal workers
- Consult a tax advisor or payroll provider (like us!) to stay compliant
- Keep detailed records of employee locations, classifications, and pay history
Final Thoughts
Colorado businesses face unique challenges during the summer months—not just because of seasonal demand, but also due to the rise of remote work across state lines. By understanding how to correctly classify and pay both seasonal and out-of-state employees, you can avoid payroll pitfalls and focus on running your business.
If you’re not sure how to handle multistate payroll or want to streamline seasonal hiring, our team is here to help. We specialize in Colorado payroll and offer tailored support for businesses with remote workforces.
Need help navigating seasonal or remote payroll challenges?
Contact us today for a consultation—we’ll make sure your payroll runs smoothly all summer long.
Avid Payroll
970-223-4913
