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Remote work arrangements have taken hold of employers as a result of the COVID-19 pandemic. As we enter the third year of cultivating the “work from anywhere” mindset, employers should consider the legal and administrative obligations that may impact their remote workforces. This client advisory provides a starting point.

1. Stay Current with Applicable Laws

Local, state, and federal employment laws can differ greatly for workers based on their physical locations. These differences can affect aspects of employment ranging from new hire procedures and reporting forms to pay equity obligations and anti-harassment training requirements. Some of the most significant impacts are seen in the following categories:

  • Labor Standards: impacts include overtime and minimum wage entitlements, meal and rest break requirements, wage notification and paycheck disclosure obligations, procedures for paycheck timing and frequency, and definitions of “wages.”
  • Paid Leave: the federal Family and Medical Leave Act requires covered employers to provide unpaid job-protected leave to eligible employees. Other laws may require that employers provide paid sick or family leave, or may impose different qualifying reasons, accrual rates, and carry-over policies for such leave.
  • Restrictive Covenants: an employee’s location affects whether and to what extent they can be subject to restrictive covenants. For example, California generally will not enforce post-employment noncompete restrictions, whereas Florida will so long as the restrictions are reasonably tailored to protect a legitimate business interest. 
  • Background and Drug Testing: differences in applicable laws may impact the ability of employers to request pay history information, administer marijuana or other drug tests, or use certain background screening procedures.

2. Review Applicable Insurance and Tax Obligations

  • Workers’ Compensation: these requirements are governed by where an employee’s work is localized. Employees are often localized in the state where they perform work, but this determination may also consider the location where: (i) the employee works regularly at a specific worksite, (ii) is domiciled; (iii) spends most of their working time; and (iv) if they travel, where they regularly travel to perform work.
  • Unemployment Benefits: the test for where employers report wages and pay unemployment insurance taxes considers the: (i) location where work is performed, (ii) location where work begins/ends, (iii) place of direction/control, and (iv) employee’s residence. For remote workers, it also includes whether an employee’s work in a state is an isolated transaction, whether the employee intends to return to their original state, whether the employee’s out-of-state work differs from their in-state work, and the respective duration of the employee’s work in each state.
  • Tax Obligations: employers with remote workers may face income or sales taxes in different or multiple locations. Depending on the employer’s nexus with a specific location, they may need to register to do business in that location as well.

Failure to comply with insurance and tax obligations can expose employers to serious penalties. Employers need to carefully examine whether remote workers have triggered any new withholding or insurance obligations. In the process, they should consider the impact these new obligations may have on their policies and practices, particularly for remote workers.

3. Consult with Legal Counsel

Remote workforces are extremely prominent in the labor and employment world right now. As a result, many employers need guidance on how to ensure their permanent remote work and flexible attendance policies are legally compliant. Likewise, many employers are seeing a need to revise job descriptions, employment agreements, and cybersecurity trainings in light of remote workforce complications. Buchanan is home to more than 60 dedicated labor and employment lawyers who are ready to help you evaluate these issues and make any needed updates to your practices and policies. Buchanan monitors and reports on regulatory changes in labor and employment advisories. Subscribe to receive the latest insights to help you with your daily decision-making.