As many businesses are looking ahead to returning to their offices by this Labor Day while maintaining a remote work policy, I thought it would be timely to share some best practices I have come across from an employment and human resources perspective. As every business and situation is unique, please consult with your attorney, accounting, and HR professionals.
If you do not already have a remote work policy, you should work with your attorney, accountant, and HR team to develop one, given the broad implications of remote work for any business. Below are some considerations when formulating such a policy. Employers should be aware that laws impacting remote work vary by state.
- Tax Impact – a big surprise may await employers with employees that have elected to work remotely in various states and cities outside the employer’s corporate residency. This holds true for employees working outside the USA. In addition to state and local payroll requirements, the employer-employee relationship may prompt corporate tax obligations.
- Corporate Registration – the employer-employee nexus may trigger the requirement that the employer register its business with that state’s secretary of state as well as appoint a registered agent.
- Payroll & Hiring Requirements – Many states and locales have particular requirements for payroll statements. If those are not followed, it could result in a large penalty to the employer. As recently reported in the Wall Street Journal – Many Companies Want Remote Workers—Except From Colorado – WSJ, requirements to disclose salary or pay range to potential remote employees have some employers purposely excluding Colorado as a state from which they will hire remote workers.
- Licensure – if the nature of the employer’s business requires a license (i.e., attorney or accountant), both the employer and employee may be required to obtain a license in the state where the employee is working.
- Accommodations – just because an employee is working from her/his home does not excuse the employer from compliance with regulations from ADA, OSHA, and the like, in addition to the state and local requirements where the employee is located.
- Wage and timekeeping rules – requirements vary among states and cities relative to minimum wage and overtime as well as the classification of “exempt employees” who are not subject to these rules. Some high wage markets, i.e., NYC, have a much higher salary threshold for what is considered an “exempt employee.”
- Paid Leave – this could be another area of surprise for employers who are now required to comply with the state and local employment laws for paid leave for illness, bereavement, and maternal and paternal leave, etc.
- Confidentiality – it is particularly important for attorneys to preserve attorney-client privilege as well as those working with any information that would fall under HIPAA and/or applicable state privacy laws. This can be challenging when employees are working from home where privacy may be breached by allowing other family members to have access to the employee’s work device or have technology (i.e., “smart speakers”) that may be listening to the employee’s conversations.
- Data Security & Ransomware – the Wall Street Journal recently published an article, Why the Hybrid Workplace Is a Cybersecurity Nightmare – WSJ . In this article they cite estimates by the World Economic Forum that cyberattacks increased by 238% across the world between February and April 2020. To avoid these nightmares and citing statistics within the WSJ article, here are a few things to consider:
- As 85% of employees reportedly allow others to use their work devices, are employees restricted as to who can use their work-related devices?
- Are employees prohibited from accessing company networks and files over public WiFi?
- Must employees use VPNs?
- What security training are you offering your employees?
- As 88% of employees reportedly download unauthorized software to help with their work, are there standards in place for downloading work related software?
- Are employees permitted to use their personal devices for work related activities?
- Implementing a zero-trust system for network users with multi-factor authentication.
- Regular updates for security and software patches, particularly for any devices that sat idle for over a year.
- Quarantining personal devices and remote devices to confirm they were not corrupted before having full access to the employer’s network.
- Expense Reimbursement – another area where state and Federal laws vary considerably is wage violations which can be triggered when the employee is carrying more than their share of work from home expenses. Illinois and California have some of the strictest state laws. The Illinois Wage Payment and Collection Act (820 ILCS 115/9.5) provides that “[a]n employer shall reimburse an employee for all necessary expenditures or losses incurred by the employee within the employee’s scope of employment and directly related to services performed for the employer.” Under this Illinois Act, “necessary expenditures” refers to “all reasonable expenditures or losses required of the employee in the discharge of employment duties and that inure to the primary benefit of the employer….”
- This Illinois Act exempts an employer for compliance where the employer has an expense reimbursement policy in place. Specifically, it states under subsection (B) as follows: “An employee is not entitled to reimbursement under this Section if (i) the employer has an established written expense reimbursement policy and (ii) the employee failed to comply with the written expense reimbursement policy. An employer is not liable under this Section unless the employer authorized or required the employee to incur the necessary expenditure, or the employer failed to comply with its own written expense reimbursement policy. If the written expense reimbursement policy of an employer establishes specifications or guidelines for necessary expenditures, the employer is not liable under this Section for the portion of the expenditure amount that exceeds the specifications or guidelines of the policy so long as the employer does not institute a policy that provides for no reimbursement or de minimis reimbursement.”
- Discrimination & Harassment – just because an employee is working remotely, does not make them immune from discrimination or harassment. Safeguarding employees from discrimination and harassment with the employer “in” the employee’s home via video conferencing adds a whole new dimension to these issues. State and local laws of the location of the employee may impose additional requirements.
- Remote Employee Performance – If an employee’s performance suffers, the employer should have the right to cancel the remote work policy for such employees where they are then required to return to the office.
- Privacy Considerations – another area where state laws vary considerably. Can an employer install surveillance software on the devices of their employees?
- Video Conference Protocols – to maintain the company’s reputation, are there attire requirements? To avoid any controversy and maintain reputation, is there an approved virtual background?
- Workers Compensation Requirements – this could be another surprise to employers, but employees working remotely and depending upon applicable laws, may have a claim against their employer for an injury they incur while working remotely under applicable workers compensation laws. Likewise, employers will be required to meet the applicable statutory requirements for workers compensation insurance coverage.
- Visa Requirements – for foreign workers, employers need to pay attention to Visa requirements for the location of remote foreign employees.
- Employee’s homeowner’s insurance – to protect against casualty loss, employers should confirm that employees have adequate homeowner’s (or renter’s) insurance.
- Health Insurance – determine what adjustments, if any, need to made to the employer’s health insurance policy to cover employees in other states.
Blackacre Advisors LLC
DISCLAIMER. Our writings are from a real estate transaction perspective and for informational purposes only. Nothing herein shall be considered legal, accounting, tax, or architectural advice. Please consult with the appropriate professional(s).