How Allowing Remote Work Can Affect Your Business

The COVID-19 pandemic forced many businesses to allow their employees to work remotely on what they thought would be a temporary basis. But now, almost a year later, those temporary remote work arrangements may have become permanent.

With remote work becoming more common, are businesses inadvertently running afoul of federal, state, or local employment laws that relate to remote workers and how businesses treat them?

Wages, Hours and Overtime

The federal Fair Labor Standards Act, as well as several local laws, governs minimum wage and overtime for all employees, whether they work in-person or remotely. These laws require employers to track hours worked by non-exempt employees to determine overtime. And if the employer fails to maintain records of hours employees work and a dispute arises, many of these laws presume the employee’s claims of overtime are correct.

It can be much more difficult for employers to track the hours an employee is working when they are working remotely, but ease of implementation is no excuse. It is especially important that businesses employing remote workers put good systems in place to track the hours employees are working, and to prevent them from working off of the clock without permission. All unscheduled work should be reported, and employees should be required to ask permission before working any overtime hours.

In addition, the location where the employee is working may affect the minimum wage or overtime rate that he or she must be paid. If the state where the employee is working has a higher minimum wage or overtime rate than the federal rate, the employee must be paid the rate required in the state where the employee is working, even if it is higher than that required in the state where the business is located.

Workers Compensation 

Workers compensation is another thorny area for businesses with remote employees. Workers compensation is awarded to an employee who is injured “in the scope of their employment”. But when that employment occurs in the employee’s home, it can be much more difficult to determine whether the injury was actually a work-related injury.
An employee is entitled to be compensated for an injury only when it occurs when the employee is actually performing work during work hours. If the employee is engaged in a personal, non-work-related activity at the time of the injury, or if the injury occurs outside of the employee’s working hours worker’s compensation should not apply.
Again, creating clear policies delineating an employee’s work hours and duties, and providing the employee with the necessary equipment and supplies to adequately complete their job duties at home should help avoid any problems – or at least help to clarify whether the injury qualifies for workers’ compensation.

Income and Employment Taxes

With remote work arrangements, more employees could be located in a different state than the business than would typically be the case with in-person work arrangements. That means the business must be aware of and comply with the state laws for income and employment taxes that apply not only in the state where the business is located, but also in any state or other local municipality that an employee of the business is located. These laws may affect an employee’s withholding.

The location where remote employees are performing their work could also have an impact on other aspects of the business; having an employee in another state may, under that state’s laws, be enough to qualify the company as doing business in that state, which may have other implications for the business.

If your business has remote employees, especially if those remote employees are working in another state, it would be wise to consult an attorney who can help determine what laws apply and what the implications are for your business. Use our site to find a qualified business attorney who can help guide you and your business so your company is protected and you can retain your best employees – whether they work in your business location or elsewhere.

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Posted - 03/01/2021