May 23, 2022
It is no secret that employers are currently struggling to find qualified individuals to fill vacant positions, and local governments in Washington State are no exception. This difficulty in filling vacancies appears to be the fallout of the so-called Great Resignation, where individuals left their jobs in record numbers (with many not returning to the workforce), which resulted in a tight labor market, making it difficult to fill vacant positions.
This blog explores outside-of-the-box approaches to filling vacant local government positions, including hiring individuals who live out of state, providing hiring bonuses or additional incentives, and allowing for alternative work schedules (and locations).
Considerations for Hiring Employees Who Live Out of State: Payroll Taxes
While I am not an expert on payroll taxes, one consideration for local governments employers when hiring an out-of-state worker is whether any out-of-state taxes need to be withheld from that employee’s paycheck. For example, the majority of other states have an income tax, but Washington does not. Does a Washington employer need to withhold the other state’s income tax from the employee’s paycheck?
The answer is that although the Washington municipality is not legally obligated to withhold the other state’s income tax, they may nonetheless want to do so, both for the convenience of the employee and to avoid any future compliance issues. The Washington State Office of Financial Management (OFM) prepared guidance for state agencies on hiring out-of-state remote workers, which can be extrapolated for Washington local governments. Here is how OFM described the income tax issue:
State agencies should plan to withhold income tax for out-of-state workers, since most other states have income tax. Employers withholding income tax from employee wages are required to have an income tax withholding account and may be subject to a civil penalty of up to $100 for each day such employer should have, but did not have, such an account. Although it is permissible for an employee to withhold and pay their own income tax in their state of residence, if the employee fails to pay the appropriate tax the onus will be on the employer to address the taxes due if a compliance issue arises. To avoid this complication and the risk of financial penalties, Washington state agencies should proactively withhold payroll taxes.
In an FAQ, the Oregon Department of Revenue also touches on this issue as follows:
Question: What about employers located outside of Oregon? Are they required to withhold [income tax] for Oregon residents working out of state?
Answer: It isn’t required but we do ask employers to register and withhold taxes as a convenience to the employee.
Note, however, that income tax is only one of the payroll taxes to consider. There could be other taxes unique to that state that must be assessed against the out-of-state employee or even the Washington local government employer. For example, according to OFM’s Out-of-State Remote Work Guidance and Resources, Oregon has a statewide transit tax imposed at a rate of 0.1% on wages of all Oregon residents, even if that individual performs their work out of state (e.g., for a Washington local government).
As a comparison, Washington has a few payroll taxes unique to our state — such as premiums for paid family and medical leave as well as premiums for long term care. So, those taxes must be collected from Washington residents even if they work remotely for an Oregon company (See Bullard Law: Traps for the Unwary Employer with Washington Residents as Telecommuters.) Therefore, when hiring an individual who lives out of state, make sure to research whether that state may have state-specific payroll taxes similar to Washington. If so, your local government should collect those out-of-state taxes for the state in which the employee resides.
Unfortunately, OFM’s guidance only includes applicable taxes for residents of Oregon and Idaho, so the agency will need to consult other resources for workers who live in other states.
Signing bonuses, where an individual is paid a bonus upon their initial hire (and/or at a certain period after the hire), are also an acceptable method for attracting new employees. As a general matter, these types of bonuses don’t implicate the gift of public funds prohibition contained in Article 8, Section 7 of the Washington State Constitution because the employer is receiving something in return: a new employee. However, the local government should adopt a policy authorizing signing bonuses and other hiring incentives.
Spokane County’s Sign-on Bonus Policy uses the sign-on bonus as a recruiting tool to attract highly competent candidates into positions that are difficult to fill. The policy provides 50% of the bonus with the new employee’s first paycheck and the remaining 50% upon their first year of service: executive and department heads can receive up to $10,000; managerial positions can receive up to $7,000; and sheriff’s office and detention services employees can receive up to $7,500. In another example, the City of Everett’s Lateral Police Officer Hiring Incentive Program provides a $25,000 monetary incentive for in-state lateral hire officers who successfully complete their fourth anniversary as an Everett Police Officer.
Additional Recruitment Tools and Hiring Incentives
Other recruitment tools besides signing bonuses are available to Washington local governments. As described on MRSC’s Hiring Procedures webpage:
Recruitment may encourage applications from more qualified and experienced candidates who might not otherwise be aware of the position. The cost of recruitment is specifically recognized as an expense that may be paid through an emergency expenditure (for cities, see RCW 35.33.081, 35.34.140, 35A.33.080, and 35A.34.140). Recruitment may be handled in-house or through a job placement, “headhunter” firm. State law allows the direct payment of lodging and transportation costs of candidates who are sought to be interviewed.
In addition to candidate lodging and transportation costs, other incentives could include front-loaded vacation and/or sick leave, payment of moving expenses, a paid visit to the municipality to search for housing or for other matters, and interim housing expenses. The City of Redmond includes all of these recruiting tools in its hiring toolkit for non-union supervisors and managers. (See the city’s Personnel Manual, Section 3.50.)
Another recruitment tool is payment of a referral bonus, which is a bonus paid to an existing local government employee (not the new hire). Like the other incentives, the local government agency should adopt a policy detailing the specific criteria for what triggers payment of a referral bonus, the amount of the bonus, at what point in time the bonus will be paid, and other similar considerations.
The U.S. Office of Personnel Management provides helpful guidance on developing criteria for referral bonuses. Although this guidance is more applicable to federal employees, the discussion it generates can help a local government identify similar policy matters that should be considered and addressed.
In searching for Washington local government referral bonus examples, we found several in the law enforcement context, such as King County’s referral program for corrections officer and juvenile detention officers and Kitsap County’s collective bargaining agreement authorizing a referral bonus for lateral hire candidates for deputy sheriff and corrections officer. However, referral bonuses can be used outside of the law enforcement context. For example, Maple Valley’s Resolution No. R-20-1431 authorizes a referral bonus for recruitment of the vacant city engineer position.
The local government’s policy on referral bonuses should also identify the public purpose for providing the bonus in order to satisfy any gift of public funds concerns. As well, the agency will want to review whether this type of referral bonus is in sync with its equity policy and any diversification goals.
Remote Work Arrangements
Since the onset of the COVID-19 pandemic, remote work has been the norm, and it continues to be the expectation for many employees today — especially those with “desk” jobs. Offering new employees a remote or telecommute opportunity can make the difference between a successful and unsuccessful hire, and local governments should examine which of their positions could accommodate a fully (or partially) remote worker. A recent Pierce County job posting clearly states the department’s hybrid work structure (i.e., primarily remote work with the option to reserve a drop-in office on site).
Remote work arrangements are also an exceptional tool to recruit applicants who cannot work during traditional work hours or in the traditional office environment, such as those with disabilities or limited childcare support.
The agency should also adopt a clear internal remote work policy in order to articulate it to applicants; Kitsap County offers a good telecommuting policy example, plus a helpful interactive guide for employees.
Other approaches Washington local governments are taking to fill vacant positions include:
- Shortening the time between posting the job and the initial review. While it used to be common to wait several weeks until a first review, a better approach in a tight job market is to have an initial review much sooner. This makes it less likely that a good candidates will take a different job in the meantime.
- Linking to the agency’s values statement in the job description. Other helpful measures are to include a message about your agency’s culture and describe your diversity, equity, and inclusion plan. Also, be clear about the benefits your agency offers, as these may be more generous than those offered by other employers.
- Posting job openings on a variety of job sites. If you post on LinkedIn, consider that your post may gain better visibility if the agency uses LinkedIn for more than just job announcements. Some cities have shared with MRSC that they have seen a pretty dramatic increase in response to job opening posts on LinkedIn once the city stared posting other content regularly to the site. Here are additional ways to help your agency get noticed on LinkedIn.
While it’s a tough recruiting world out there, these hiring incentives and practical tips can help your local government find success in filling positions.
MRSC is a private nonprofit organization serving local governments in Washington State. Eligible government agencies in Washington State may use our free, one-on-one Ask MRSC service to get answers to legal, policy, or financial questions.