The COVID-19 pandemic may have permanently changed the future of work. From banking to insurance and the legal industry, employers have embraced remote work for employees. Prior to March 2020, many employers only allowed a select few to work remotely—typically exempt employees who travel. Now, employers are permitting more employees to work remotely. Some businesses like Nationwide Insurance are reducing their office footprint as they allow more employees to work from home. However, before an employer decides to allow more remote work, there are some aspects of employment laws to consider.
Establish policies based on clear criteria
It is essential that an employer with a remote workforce have a plan and specific policy in place addressing the remote workforce. The plan should address which workers may work remotely and establish guidelines for the work. In establishing who may work remotely, employers must be mindful of discrimination laws to ensure no selection could be viewed as discriminatory. Policies should address security, expectations, and workload issues. Employers are encouraged to study each job that will be allowed to work remotely so that the standards and expectations are reasonable. Employers should base eligibility for remote work on clear criteria and reserve the right to terminate the remote work policy at the employer’s discretion.
In implementing a remote work policy, an employer should:
- Clearly define the effective dates of a remote working plan
- Establish expected hours of work
- Establish expectations for work performance
- Continue application and enforcement of all employment practices
- Continue employment reviews with an emphasis on employees achieving expectations
- Have a policy/agreement that allows for a home office inspection
- Determine a policy for use of equipment, reimbursement, and insurance requirements
- Protect the company's right to recall employees to an on-site location, to the extent allowable under local law
- Ensure rules and expectations apply to all employees working remotely
Employers should also consider other more complex issues. For instance, employers may need to strengthen the payroll function so that more complicated employer tax withholding requirements are appropriately satisfied. This is a common challenge for employers that have historically only needed to address federal, state, and local income withholding in a few jurisdictions. Across the U.S., state withholding requirements are quite varied, so moving to a remote work set-up with employees working from multiple states introduces complications. Scenarios with multiple state requirements typically need some analysis before implementing the withholding. Employers should contact counsel should these types of issues arise.
Establish where employees may work
As a part of remote work, employers may seek to limit employees to working from their primary residence; specifically, working from the employee’s home which is in the same city or state as the employer’s office. Employees, on the other hand, may want to work from a vacation home, or a location farther from the employee’s “home” office.
Employee expansion into a new location may trigger legal issues because some jurisdictions may see employees working there as establishing a legal presence for the employer.
Before allowing remote work in new jurisdictions, employers should consider these potential legal issues:
- local, state and/or municipal leave laws including wage and hour, vacation, and sick, among others
- local, state, and/or municipal health and safety regulations
- registration as a local employer for payroll tax withholding
- unemployment insurance contributions
- notification to workers' compensation and health and welfare insurance provider
The problems with remote work become more complicated if employees are working in locations outside of the U.S., where obligations to set up collective representation, requirements for hiring employees in protected categories, and termination protections may apply. Also, employees working from home in a particular state or jurisdiction may constitute a presence of the employing entity in that location for corporate tax purposes. Employers should communicate to employees that they may be responsible for changes in their individual tax consequences because of relocations made in connection with a remote work program.
Employers should also consider the impact remote work may have on other employment laws, including anti-discrimination and anti-harassment, information technology resources and communications systems, data privacy and other confidential and proprietary information, and workplace safety.
All of these issues should be investigated with counsel before a remote work policy is published to ensure that the company can meet additional legal requirements if allowing remote work from a wider geographic area, or to set the policy to exclude remote work from certain areas or all areas outside the current operating locations.
Communicate with your employees
Finally, and importantly, employers should communicate openly with employees about the application process and eligibility for remote work along with associated expectations.
Like with other employee “benefits”, the employer must keep in mind that once a remote work policy is implemented, it will be difficult to retract the policy. Once a policy is in place, and absent firm guidelines for its application, it will be difficult or impossible to reject remote work requests falling outside of the policy, so careful thought must go into the formulation of the policy.
The Big Picture
To transition to remote work more seamlessly:
- Determine which job positions can be performed productively in a remote setting
- Develop standard and supported requirements for each job, considering factors like skills, required interaction, employee seniority, security, and public interaction in deciding positions eligible for remote work
- Consider how the employer will provide remote workers with the equipment necessary to perform their jobs and whether the employer will cover certain costs of remote working (computers, internet, security software, etc.)
- Define eligible locations where employees may work remotely
- Ensure compliance with applicable local law, including tracking hours/overtime for remote workers
- Consider salary/cost of living adjustments based on employees’ new locations
- Establish clear expectations and compensations policies for remote workers
- Communicate openly with your employees
While establishing a remote work policy may seem burdensome and unnecessary, the uncertainty of the coronavirus pandemic may mandate these considerations moving forward, and some companies may decide the benefits of reduced office space leasing outweigh the upfront costs. With planning, establishment of clear policies, and open communication, employers can prepare more easily for a remote workforce if and when the circumstances justify.
Davis Brown Law Firm blogs, legal updates, and other content are for educational and informational purposes only. This is not legal advice and it does not create an attorney/client relationship between Davis Brown and readers. Each circumstance is different; readers should consult an attorney to understand how this content relates to their personal situation. You should not use Davis Brown blogs or content as a substitute for legal advice from a licensed attorney in your state. Reproduction of Davis Brown content without written consent is prohibited.