Potential issues can arise when employees are no longer working in a single location.
Even as Covid-19 restrictions continue to be eased and more and more employees return to the office, remote work appears to be here to stay in many industries and for many workers.
Certain employers have always had remote workforces and workers in multiple states. However, with the trend toward more remote and hybrid work, employers that previously only had employees in a single fixed location, may now find themselves with workers in multiple states.
The ability of employees to work remotely from anywhere has benefits for both employers and employees, from reducing employers’ overhead costs to providing employees with flexibility that they desire. Remote work also enables employers to expand their recruiting efforts outside of the geographic areas where they have brick and mortar facilities, and allows workers to seek jobs with employers that are located far from home. With this new way of working, employers with remote workforces need to be aware of potential issues that can arise when their employees are no longer necessarily grouped in a particular geographic location.
Employing a remote workforce that is dispersed across numerous states can create complexities when it comes to complying with workplace regulations. For instance, many states have their own wage and hour laws that differ from federal law or from the laws of the state where the employer is headquartered. These laws govern a variety of issues including the applicable minimum wage, the required frequency of paychecks, the classification of employees and independent contractors, the use of direct deposit or payroll cards when paying wages, payout of unused vacation time at termination of employment, the deadline for final paychecks, the timing and frequency of meal and rest breaks, and jury duty pay, among other subjects. In addition to wage and hour rules, some states have laws that require employers to provide employees with protected time away from work to attend to matters related to their children’s schooling, to serve in local government, to attend military or national guard training, to perform services as a first responder in the event of a State of Emergency, or to address legal and safety concerns when they or a family member have been victims of domestic violence or other crimes. Multiple states have laws that require employers to provide paid or unpaid sick leave to employees under certain circumstances. A small, but growing, group of states have enacted various types of paid and unpaid parental, family and medical leave laws. Complicating matters further, some cities and counties have enacted their own versions of some of these requirements.
In addition to the workplace rules discussed above, employers need to be aware of any applicable state requirements to register to do business or begin paying into state unemployment funds once the employer has employees in the state. Employers also need to determine which state’s payroll tax rules apply, and withhold taxes accordingly. For all remote workers, whether they are located across multiple states or not, employers should implement policies covering matters such as working hours, expectations regarding productivity and availability, tracking of time worked by non-exempt employees, and procedures for protecting confidential information and securing data.
Employers with workers located in multiple states should determine which states’ laws apply to them. To do this, they first need to know where their employees are located or based. This is a question that does not always have a straightforward answer when employees can work remotely from anywhere. For remote workers, the answer to this question may depend on whether the employee is permanently or only temporarily located in a particular state. After determining which states are involved, employers with multi-state workforces should review their employee handbooks and other policies to confirm that they comply with the laws in the states where employees are located. Employers may need to update their standard employment agreements and any restrictive covenant agreements that they ask employees to sign, to ensure that they are enforceable under the applicable state’s laws. Employers may wish to consider changes to their pay structure to account for differences in the cost of living in different parts of the country. Employers should also implement procedures to track when there are changes in the list of states where employees are located, resulting from employee turnover or employees relocating.
Employing a remote multistate workforce can be complex. However, with awareness of the issues that can arise, employers can avoid or minimize difficulties that they cause, by planning properly and implementing policies that are tailored to their business. Employers with remote workers and multistate workforces should consider consulting with experienced legal counsel to ensure that they are in compliance with the laws that apply to them.