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The pandemic has caused a fundamental shift from the traditional office to what many experts call the “hybrid workplace,” where more employees are working from home most of the time. Although various technologies have facilitated the transition, things are not so straightforward from a labor law perspective.
To understand why, consider an employer with offices in New York and Washington, D.C. Prior to the pandemic, all of its staff worked from these two locations; the employer was therefore subject to the employment laws of New York and DC. Following our collective transition to the hybrid workplace, some employees who were based in the New York office can now work from home in Connecticut, New Jersey and Pennsylvania, while some employees who were based in the DC office are working now remote in Virginia, Maryland, and Florida.
The problem with this very common scenario is that remote employees trigger compliance obligations in the states they work from, rather than the state(s) where their employer is based. This means that our hypothetical employer, once subject to the employment laws of two states, is now subject to the employment laws of six states.
This checklist is intended to familiarize attorneys with compliance obligations that may be triggered when remote employees work in a different state or city than the employer.
1. Employee Locations
- The starting point of the analysis is to determine where each employee works. What is the location of each remote employee?
Practical tip: Without knowing the states, cities, and localities (“work locations”) from which employees perform their work, implementing a comprehensive multi-state compliance program is impossible.
2. Minimum wage and overtime
- What are the minimum wage requirements in each workplace?
- What are the overtime obligations in each workplace?
- Are federal minimum wage and overtime requirements sufficient?
3. Various pay, notice and break considerations
- What are the meal and break requirements at each workplace?
- Do some workplaces require rate of pay notification forms? Do they need other specific documents at the time of hiring?
- What is the timing of severance pay in each workplace?
- What are each workplace’s notice requirements for a change in compensation?
4. Rights to family, medical, pregnancy and Covid-19 leave
- What holidays do employees have at their place of work?
- If stricter state obligations do not apply, is the employer subject to the requirements of the federal family and medical leave law?
Practical tip:. Many states and cities require paid time off for short-term health needs, preventative care, serious illness, caring for sick family members, welcoming new children, and/or Covid-19
5. Reimbursements for home office and technology expenses
6. Anti-discrimination laws
- Are there workplaces with anti-discrimination laws that provide broader coverage than federal anti-discrimination laws?
Practical tip: Federal anti-discrimination laws may not include certain employers to whom state and local anti-discrimination laws still apply. Likewise, federal anti-discrimination laws may not protect certain characteristics that are specifically protected by state and local laws.
7. Mandatory policies and training
- Does a workplace require specific employee training or workplace policies?
Practical tip: Some states require employers to provide sexual harassment prevention training to every employee, as well as a sexual harassment prevention policy and reporting procedure. Other states require members of certain professions to receive certain hours of training.
8. Notice in the workplace
9. Unemployment Insurance
- Does the employer maintain unemployment coverage in each state in which a remote employee works?
Practical tip: Employers only need to obtain coverage in one state per employee, but it should be the state in which the employee works. If the employer paid the wrong state policy, the problem must be corrected before an employee makes a claim.
10. Workers Compensation
12. Tax and Corporate Considerations
- When remote employees establish a business presence in a new location, is the employer obligated to withhold state and local payroll taxes, corporate income taxes, franchise taxes, and sales and use taxes in these locations?
- Do remote employees require the employer to register as a foreign company in certain states? If so, does it require maintaining a registered agent in the state, office, and local mailing address, among other requirements?
Practical tip: Although this checklist addresses labor law considerations, it would be remiss not to mention certain tax and corporate law considerations that should be assessed in consultation with a tax/corporate advisor.
13. Compliance Approaches
- Should the employer implement workplace policies that meet the most stringent requirements of each workplace?
Practical tip: The benefits of having uniform policies for all employees are two-fold: first, the simplicity of having one set of policies for all employees, and second, the positive HR implications of giving employees more rights than is legally required. .
- Should the employer implement separate workplace policies that depend on the workplace?
Practical tip: While this is a common approach, especially for heavy-handed policies that can only apply in one state, the downside is that it creates the administrative challenge of having to apply different policies to different employees.
This checklist is intended as an educational starting point for developing a comprehensive compliance plan and does not include all legal areas to consider. Employers should consult with a qualified attorney to develop a plan based on their particular situation
Originally published by Bloomberg Law, April 06, 2022
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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