There is remote work. The headaches that come along with it are a problem for employers.
Companies were forced to use remote work as a normal part of their business after COVID-19 changed the way employers juggle their workforce. Traditional work arrangements and a slow-to- change legal landscape have created challenges for organizations in balancing the considerations that can arise from remote work
There are no easy answers or a one-size-fits-all model for every organization. The convergence of remote work and legal compliance patchwork will be a top of mind topic for your employer clients.
Even if the organization does not operate in that location, remote employees will be subject to local employment laws if they work there. Local laws can require employers to provide paid sick time, leave entitlements or other benefits. State and local laws have different thresholds for hours of coverage.
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New York requires employers to give paid leave for 30 or more days for employees working in the state. Depending on the remote arrangement, the employee can be covered by multiple sets of local requirements.
The types of employees subject to restrictions and the scope of those restrictions may be enforced by the state laws. The restrictive covenants may no longer be enforced if an employee entered into an agreement before starting a remote work arrangement.
State laws differ when it comes to reimbursing employee expenses, including remote working expenses. In California, an employer must reimburse all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties, which has been interpreted to include work related use of cell phones and internet services. Expenses that were not paid for by the organization may be reimbursed by the employer.
If the employee is working outside the states in which the employer is physically based, the employer may have to change its tax and registration obligations. Guidance was issued to address withholding practices for employees working remotely. States began reverting to their standard tax practices, which may or may not address how employers should handle remote work arrangements
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Depending on the responsibilities of the employee, remote work may force the organization to conduct business, which may require corporate filings and related registration fees. The organization may be subject to corporate taxes in a state where the employee works, as well as paying unemployment taxes.
There are unique challenges in remote work arrangements in which an employee will work in a country other than where the employer is located. Unless the employee is a citizen of the country in which he or she is electing to work, the employee is likely to need authorization to work in that country.
In some places, an organization has to register with the local government to hire an individual there. If the employer does not have a legal presence in that country, it can be hard for the employer to sponsor work authorization or set up payroll. Not all countries allow professional employer organizations to act as legal employers of employees.
The position of many countries is that all employees are subject to local employment laws immediately upon performing work in that country. It is possible that an employee working outside of the U.S. will need to be paid through local payroll to support mandatory benefits provided in the country.
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Outside of the U.S., employee protections and privileges are typically generous, meaning an employer that allows remote work in a particular country may need to provide additional benefits for employees. There could be restrictions on the working relationship. In a lot of countries, employers don’t require employees to work over a certain hours threshold. Local employment laws may make it more difficult to establish a compliant international work arrangement and should be considered when implementing these work arrangements.
This trend cements itself as a necessity for managing today’s workforce, as remote work presents an array of legal challenges that will continue to plague employers.