Potential Pitfalls for Employers to Avoid in the New Remote Working World
The COVID-19 pandemic rapidly accelerated a previously slow trend toward remote work for employees. To adjust to the difficulties of this rapid change, many states and the federal government allowed exemptions from various laws which would have otherwise applied to employees working remotely. Some of these exemptions have since expired, and many states intend to remove the remainder beginning January 1, 2023. Yet, as many as 37% of Californians still work remotely at least part of the time. To ensure employers are following all applicable laws, it is important to review these issues once again before the end of 2022.
Generally, employers must comply with the employment and tax laws of the state and locality where an employee is physically present and working, even if the employer has no other presence in that location. Therefore, employers must take steps to become informed of local law and ensure compliance with it. This can be tricky, especially for certain types of laws which vary greatly between different areas.
A significant compliance issue for employers involves income taxes. Forty-one states plus the District of Columbia have income taxes of varying amounts. Further complicating matters are the differing definitions of who is an employee subject to a local tax. Many jurisdictions will also require some type of registration as an employer even if the employer has no physical presence other than a single at-home employee.
One example of another legal matter is the minimum wage. Many states and local governments have minimum wages greater than the federal number. Although the California minimum wage is fairly high in relation to other states, there are cities within California with greater minimums. Therefore, it is important to know the state AND city where an employee is working. Failure to comply with a local minimum wage ordinance can result in a state agency enforcement action or a civil lawsuit.
Another situation which can trip up employers is compliance with meal and rest breaks. California wage orders typically require a 30-minute duty-free meal period that must start within the first five hours of work. However, at least one state requires a meal period between the third and fifth hours of work. Further, if the employee is working in a different time zone, then the meal period timing becomes even more tricky. The employer would need to ensure the employee receives meal periods according to the local schedule without interruption.
Another potential problem with remote workers involves the requirement of postings. In California, employers must post certain things such as various Labor Code requirements, safety issues, and worker’s compensation. California law allows employers to “post” through email, but other states may not. Further, the postings themselves will be different in other states.
Because of these potential pitfalls, employers should ensure they know where their remote workers live and ensure they do not move without notification. A written remote work policy can be an important part of legal compliance efforts, and an employment attorney can assist with its preparation.
This communication may be considered advertising in some jurisdictions. It is intended to provide general information about legal developments and is not legal advice. If you have questions about the contents of this alert, please contact Kellen Crowe.