What's the worst state to be an employer?

Claire Baker
Jan 3
3 min read

Hey, Claire. What's the worst state?

I've paid people in nearly every state. Every state tax agency feels like The Worst when you're dealing with them, but which ones are REALLY the worst?

Here's a rule of thumb: The best states to work in are some of the worst states to work with.

If you live in any of the states below, you probably have no idea the grief that some poor payroll pro has to go through to make sure you get paid correctly.

The 10 worst states to pay people are...

🔟 Pennsylvania

Every little podunk town in the keystone state has its own local tax code that needs to be withheld separately. Sometimes, you have to call City Hall to find out how it works. It turns out that there's only one person in the entire town, named Peg, knows how it works. Peg takes a lot of days off and long lunch breaks.

9️⃣ Connecticut

Requires state approval for semimonthly pay. Why would you even waste taxpayer dollars passing a nonsense law like that, let alone continue paying a Peg in perpetuity to review the exception applications?

8️⃣ Tie between DC and Rhode Island

Both DC and Rhode Island have parental leave laws that give a giant middle finger to the conventions that most other family and medical leave follow.

Leave is available for two years instead of one.

Rhode Island allows 13 weeks instead of 12... but only if you take the time consecutively.

Rhode Island and DC are too small to be demanding such inconveniences.

7️⃣ Hawaii

Most mainland health plans aren’t valid in Hawaii. So you’ve got to set up a whole separate health plan for your Hawaii employees.

And deal with the Pegs and HIMMs, who are pleasant enough, but couldn’t possibly give instructions for making toast in less than 4,000 words.

6️⃣ Minnesota

Most states understand that the business owner isn’t actually the one submitting the registration. It’s a taboo topic that they generally know how to work around.

But not Doug in Minnesota.

Doug will shut down the employer account if a non-company email address was used to set it up. And Minnesota will refuse to accept your taxes until Doug gets to speak to whoever’s in charge around here.

If you tell Doug that it's no more reasonable for him to demand to speak to the business owner right now than it is for you to demand to speak to the governor, Doug will laugh at you. Doug is a real d*ck.

5️⃣ California

California is generally pretty easy to deal with despite all of its laws. But there’s this one poorly-written requirement for final paychecks that makes it sound like you need to get separate authorization to pay a final paycheck via direct deposit.

The regulations text doesn’t actually say that, but several PEOs err on the side of caution and require the employee to sign a separate authorization to be paid their final paycheck, which all but guarantees that they’ll be paid late in some situations.

4️⃣ Maryland

The instructions on the MD state website for registering as an employer say that they use a combined application for income tax and unemployment. But if you call Peg in Maryland, she’ll say, “Oh yeah. We haven’t used a combined application since the pandemic.”

Also, the website is especially bad.

3️⃣ New York

The New York state websites are a pain, but that’s just the beginning. Because the New York Worker’s Comp board isn’t messing around. They will show up at your house to tell you that you're out of compliance (true story).

Also, many people miss that New York’s paid family leave and state disability income are actually private insurance policies that you have to purchase separately, but that’s nothing compared to the Worker’s Comp Board, which is more like an extortion racket than a government agency.

2️⃣ Oregon

Like number 1, if number 1 were run by people who wake and bake every day of their lives.

1️⃣ Washington

Washington. is. insane.

There are separate registrations with some thrumpteen billionty different agencies, on a website that works like a Rubik’s Cube.

They have a sick time law that says you have to track sick time separately, even if you have a combined sick and vacation policy and the employee never sees that secret sick ledger.

To Washington’s credit, all the Pegs that work there are lovely and have a good-natured sense of humor about it all.

👋 I’m Claire. I live in no. 5️⃣ and think it's not that bad, but mostly because that direct deposit rule doesn't say what you think it says.

Are you having trouble managing your payroll tax registrations? Is your payroll company messing up all the time?

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