Introduction
Remote work has many benefits, including increased flexibility, lower expenses, and a larger pool of job candidates. However, it also raises legal issues for employers and employees, including which state law applies to remote workers. In this article, we will explore the different state laws that apply to remote employees, the challenges of determining which state law applies, and examples of how different state laws impact remote workers. We will also discuss the pros and cons of a federal law that would standardize treatment of remote employees, and review best practices for adjusting policies and procedures as necessary.
Different State Laws that Apply to Remote Employees
One of the most significant challenges for employers with remote workers is complying with state laws. Compared to traditional “in-house” employees, remote workers can complicate compliance efforts because they may be governed by the labor laws of multiple states.
Minimum Wage, Overtime, and Workers’ Compensation
Employers must ensure payment of appropriate minimum wage, overtime, and workers’ compensation benefits as required by state law. This can be especially difficult for employers with remote workers since each state has its own minimum wage laws, which are often higher than the federal minimum wage. These laws can vary widely, and failure to comply can result in significant financial penalties and legal liability. Employers must also comply with workers’ compensation laws, which essentially provide a safety net for employees who are injured on the job.
Impact on Compliance for Employers
Employers must contend with multiple state laws when mobilizing remote workers since it can be difficult to keep track of which laws apply. This can create compliance difficulties and may lead to legal issues. Employers may need to apply for multiple workers’ compensation policies and pay varying amounts of unemployment and disability insurance taxes across different states. Employers must also account for potentially differing paid time off (PTO) policies, sick leave requirements, and meal and rest break laws for each state where their employees live and work.
Challenges of Determining Which State Law Applies
Determining which state labor laws govern remote employees can be challenging, especially since such laws vary significantly state-by-state, often with respect to wage and hour rules, accident compensation and co-employment liability.
Factors that Determine Which Law Governs
There are several factors that determine which state law governs remote workers, such as the location where the employee performs the bulk of their work, the location of the employer, and the employee’s state of residence.
- The “situs of the employment” refers to the location from which the employee performs work and is where work is physically carried out.
- The “place of employment” refers to the overall worksite, while the “place of reimbursement” refers to the location where the employer pays its employees. In general, the laws of the state where the employee works determines the employee’s workers’ compensation and wage/hour rights.
Potential Solutions to These Challenges
To address these challenges, companies have resorted to collaborating with legal experts to clearly define state-level regulatory issues. They also need to be aware of the potential conflict of laws when their remote workers work in different states while being employed by the company.
Examples of How Different State Laws Impact Remote Employees
The different legal frameworks within each state can impact remote employees in many ways long-term. They can impact laws regulating employee rights and working conditions, as well as discrimination, harassment and employee leave policies.
Employee Rights and Working Conditions
State labor laws often establish specific requirements for employee rights and working conditions. These can include laws related to breaks and meal periods, payment of overtime, and the minimum wage. Employers who fail to comply with these laws may be exposed to significant legal liability through lawsuits, fines, and even revocation of licenses.
Differences in Discrimination Laws, Leave Policies, and Workplace Safety Rules
State laws also differ in prohibiting discrimination, covering employee leave policies, and regulating workplace safety issues. Remote employees may be regulated by myriad of state and federal laws, some of which may not exist in the states in which the employer has a significant physical presence.
Pros and Cons of a Federal Law that Would Standardize Treatment of Remote Employees
A federal law that would regulate the relationship between remote employees and their employers would increase standardization in compliance requirements, minimizing the compliance burden in multiple states. However, it would also create additional federal regulatory burden.
Potential Benefits of Greater Consistency in Regulation
A federal law providing regulatory uniformity could simplify the process of identifying when a state’s labor laws apply and eliminate complications in compliance across individual states. It would also ensure a standard level of protection for remote workers across different regions of the country.
Potential Drawbacks, Including Reduced Flexibility and Increased Compliance Costs for Employers
However, there are also potential drawbacks to a federal law for regulating remote work. One significant concern is that federal laws could create compliance challenges and increase costs for employers who would have to maintain a single set of regulations applicable to remote workers across all states. Such costs could mimic those that impact larger employers who work in multiple states.
Reviewing and Updating Policies and Procedures for Remote Employees
Employers must stay updated on changing legal requirements and implement best practices consistently to ensure compliance when working remotely.
Importance of Staying Up-To-Date on Changing Legal Requirements
Employers are accountable for regularly reviewing current federal, state, and local laws to identify necessary changes to policies and procedures to maintain compliance. Because laws governing remote work can change quickly, they must ensure they have a reliable attorney in their legal team to assist them in staying appropriate and changing policies to reflect these changes.
Best Practices for Adjusting Policies and Procedures as Necessary
Employers should have in place written remote work policies and procedures that establish clear expectations for remote workers regarding working schedules, expectations and task distributions, and referencing state-specific laws and regulations. Employers should train and educate their employees on these policies to ensure that remote work procedures are understood and followed.
Impact of COVID-19 on Remote Work and State Laws
The COVID-19 pandemic has greatly impacted remote work arrangements and forced more employees to work from home. This has also resulted in changes at the state level regarding labor regulations that govern remote workers.
Changes in State-Level Regulation of Remote Work
Several states have implemented systems that address remote work issues highlighted during the COVID-19 pandemic. For instance, changes were made to the taxability of specific benefits offered to remote employees, clarifying what constitutes a work-related expense, and how to calculate the state-level portion of the income tax for remote employees.
Long-Term Implications for Remote Workers and Employers
The consequences of COVID-19 on work may cause remote work to be an enduring fixture in the American business landscape. With the pandemic forcing remote workers to put down roots far from their employers’ physical locations to have more flexibility in work, state laws will continue to evolve to keep pace with the changes in the industry.
Conclusion
Remote work has significant legal issues that employers need to be aware of, especially in terms of identifying which state’s labor laws to comply with and the impact of a wide array of state regulations on remote workers. Those challenges should be met by implementing and enforcing effective policies and procedures, and by partnering with legal experts who can assist in examining evolving regulatory framework.
Key Takeaways for Employers
- Employers must comply with state laws, including minimum wage, overtime, and workers’ compensation regulations, as applied to remote employees.
- Employers must follow best practices developed to adjust policies and procedures to remain compliant with evolving state laws and regulations.
- A federal law regulating remote work could standardize treatment of remote employees but might also result in increased compliance costs for employers.
Final Thoughts on Remote Employees and State Laws
Remote work has the potential to revolutionize the future of work, but it also poses significant legal difficulties for employees and employers alike. Any employer using or planning to use remote employees must be aware of and comply with all relevant state and federal laws for remote work.