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8 remote work compliance tips

Search Remotely 8 Remote Work Compliance Tips

This article presents eight remote work compliance tips in observation of Labor Day. Workers are truly celebrating Labor Day. Many are probably thinking that without the activitist of yore, the benefits of remote work may not have been extended to workers. There may be some truth to this viewpoint. The federal holiday to celebrate workers and their contribution to innovation and advancement in civilization is observed on the first Monday of September. The U.S. Department of Labor states that this holiday was established to “recognize the social and economic achievements of America’s workers.”

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Although there were scattered efforts at the local, municipal, and state levels to observe Labor Day, a law was signed by President Cleveland to enshrine the day as a national celebration. As with most ideas and inventions, there is disagreement as to who actually founded Labor Day. Was it Peter McGuire or Matthew Maguire?  Maybe it doesn’t matter that much. Where there is general agreement, however, is that both gentlemen participated in the first Labor Day that was held on September 5, 1882, in New York City.

As remote workers look back on the origins of Labor Day, think about how we are pushing for more. We may find that the reasoning for origination of Labor Day festivities was less rosy than one is made to believe. PBS indicates that the concept of a national celebration of the labor was drawn from worker advocates and labor union activists who wants to draw attention to worker mistreatment and poor working conditions.

Legal liabilities of remote work

There are a range of legal liabilities associated with remote work acceptance.  Employers are being pressured to adopt national remote work policies on a real time basis. In the same instance, there can be relatively little analysis of the state-by-state  governmental laws and mandates governing workers residing in their jurisdiction. As such, monumental problems can arise when regulations are unintentionally not observed.

Accordingly, the Society for Human Resources Management warns employers seeking to adopt remote work policies. “Out-of-state telecommuting [ work from home, working remotely, and working from anywhere ]  may bring unexpected legal liability.”  Employers must do their best to abide by local, state, regional and federal employment laws.

Further, under the advisement of a Philadelphia attorney with BakerHostletler, Michael Semes, remote employers who employ remote workers that work in a state other than the office for which they are assigned could be incurring added costs to their employers. Namely, “sales tax, income tax, and, in some cases, local or city gross receipts taxes that they were not subject to before.”

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Personally, we have had staff at Search Remotely that can attest to this. As a small business owner whose home office is different from the physical office for which I am assigned, I have had to complete, file and pay income taxes from income generated from the state in which I travel and work as well as report the income in the state of my permanent residence.  The good news is that some states have reciprocity agreements with other states and will not withhold taxes from a partner state. Unfortunately, according to ADP less than half the states in the US have such agreements. Managing multi-state agreements can be time-consuming for small and mid-sized firms without the in-house staff to help achieve compliance.

This aspect of digital nomad, remote work, work from home, work from anywhere, tele-commuting and hybrid work arrangements are sure to become a nightmare with the approximate 80,000 IRS agents added to the mix to ensure remote worker reporting conformity to myraid laws governing the workplace.

But tax complications notwithstanding, another attorney practicing in the state of Florida, Peter Seigel of Greenspoon Marder, cautioned employers to think about “daily overtime, enforceability of noncompete agreements, PTO carryover, post-separation payments, family leave rights, 1099 misclassification, unemployment compensation, workers’ compensation, licensure requirements,” as challenges to an already changing environment of remote work.

To summarize, ADP asserts that once remote workers are given the opportunity by remote employers to work from home, work remotely, and/or work from anywhere  outside of state lines, dangers may be revealed that were previously unknown.

Failure of remote workers to report working location to remote employers

Adding to these dangers in the heightened risk associated with remotely working employee who fail to report that they are working in a location other than the one they indicated upon hire. This is not an isolated act, but rather an ongoing occurrence. Issac Mamaysky and Kate Lister conducted research that will appear in the ABA Journal of Labor and Employment Law Journal. A draft of their paper, written in July 2022, shows that 2/3rd of the employees who worked from home during the pandemic, “failed to  notify their employer of their interstate work status for some or all of the time.” In so doing they increased risk of noncompliance of state and local locals to themselves as well as to their employer.

On the surface, working in a state other than the state where the physical office is located may not be considered by many as a big deal. However, if one were just to consider the varying state mandated minimum wage laws; remote worker location is a huge deal. Mamaysky and Lister provide an example of a remote worker who lives in New York state is entitled to a $12.50 minimum wage per hour, whereas in New York city, the minimum per hour would be $15.00.  If they moved to a border town in Pennsylvania, the minimum hourly rate would drop to $7.25 per hour.

8 remote work compliance tips

In reviewing best practices for remote work compliance,  Search Remotely as curated the following suggestions from the remote work experts:

  • To meet minimum wage and condition requirements, at the time of hire and subsequent routine check-ins, remote worker declaration of place of residence and/or place of remote work is in order. Further. Reviews of respective state level working conditions (mandated breaks, duration of the breaks and timing of work breaks) should be undertaken and followed.
  • To comply with the mandated federal requirement to post specific laws Government Docs (an employment law news blog) advices remote employers to set up an employee handbook that is electronically distributed as well as the use of other electronic communications to disseminate legal law information. To be compliant, remote workers must have access and remote employers must use electronic communication to direct their remote workers regularly. As with ‘in person’, ‘in office’ federal requirements for legal labor law postings, the electronic posting must be located in a conspicuous place.
  • To ensure that remote workers, their remote supervisors and remotely working colleagues are knowledgeable about the remote work guidelines, policies and procedures, Peter Seigel suggests that remote employers make these inclusions into the employee handbook as well: workers’ compensation, time sheet protocols, dress code for video conferencing, reimbursement for items directly related to working remote, confidentiality, cyber and digital security enhancements while working from home.
  • To refrain from running afoul of labor laws related to work time, clocked time, and overtime hours when employees work remotely, the Department of Labor has issued guidance to indicate that the remote employer must take reasonable diligence to inquire about unscheduled working hours. Therefore, Government Documents suggests that remote employers should develop a tracking process for documenting this time.
  • To adhere to the federal requirement to give notice to employees when there is a qualifying event related to health and sick leave, Government Documents advises remote employers to recognize that remote employees are still eligible for the benefits and rights afforded under the Family Medical Leave Act even if they work offsite. In fact, a remote worker’s home is technically not considered the legal worksite. Rather, the work site is still the location of which the remote worker reports. Therefore, those remote workers working from home, working from anywhere and tele-commuting may still be eligible for family and medical leave benefits.
  • To make sure that remote employers follow guidelines related to the reimbursement of office supplies expenses (tools, devices, equipment, high speed internet, toner, paper, staples) incurred by remote workers, Government Documents suggest that remote employers check the state law. While there is no federal mandates to cover remote work expenses, there are nine states that have said requirement (CA, IL, MA, MO, NH, ND, DC, WA, and SD).
  • To follow anti-discrimination laws, to conduct trainings, and to implement policies; remote employers should conduct a review of applicable federal and state law and institute trainings and schedules to ensure that remote employees understand and are trained to identify and refrain from prohibited activities. Further, remote employers should be cognizant of the ever expanding groups considered protected individuals as well as the growing lists of acts that are now considered illegal and or discriminatory at the state and local levels.
  • To adhere to unemployment and worker’s compensation insurance requirements, remote employers should obtain coverage in all states in which their remote employee pool works.

In recognition of these heavy administrative and compliance hurdles, 60% of remote employers surveyed reported to PWC that “they would restrict remote work to locations in which they already have an established business presence.”

Perhaps, until the kinks of remote work is fully fleshed out, this might be the most prudent approach yet.