When Your Workforce Is No Longer Local, Which Employment Laws Apply?

December 8, 2020

Topics: Employment Policies and Practices

Employees have traditionally worked from their employers’ offices or facilities.  As a result, businesses only needed to concern themselves with the employment laws of the states (counties or cities) where they had physical locations.

Although the practice of telecommuting has been becoming more prevalent in recent years, the pandemic has created a larger remote workforce than ever before. With remote employees working from various states and cities, employers must now comply with the sometimes completely unfamiliar employment laws of the locality where the employee actually works.  These laws are often quite different from those that apply to the employees when they were working at their employers’ office/facility.   Employers need to consider how they may need to modify their policies and practice for telecommuters: below we discuss examples of where companies may have obligations to remote workers.

Leaves of Absence

Leave laws typically apply based on where an employee physically works.  As a result, an employer may have to address different leave policies for employees who work remotely in other states and cities.

For example, what if a Florida employer has an employee working remotely in Seattle?  While Florida does not impose an obligation to provide paid sick time, Seattle does.  Seattle’s Paid Sick and Safe Time (PSST) Ordinance requires all employers, regardless of location or number of employees, with employees performing work in Seattle to provide their employees with PSST.  This results in a Florida employer having to provide Seattle PSST.

Similarly, many other locations, such as New York, New Jersey, and California, permit remote workers to accrue rights to paid sick leave, family and medical leave, etc., even though the company’s office(s) may be located in a state that does not mandate an employer to provide such leave.  Many of these leave laws do not require a waiting period for the employee to be eligible for the leave, nor require a minimum number of employees in the jurisdiction for the law to apply to the employer.

Wage-and-Hour Law Implications

The virtual workplace poses compliance challenges far beyond tracking the work hours of remote employees. Many states have specific legal requirements relating to items such as employee expense reimbursement, meal and break time, wage notices, wage deductions/withholdings, pay frequency, daily overtime, etc.  Failure to take notice of these requirements can lead to substantial liability for a business.

In certain states, employers may have to cover some or all of employees’ telecommuting expenses.  For example, Illinois, California, Washington D.C., and Alaska all have laws that may require employers to pay for the costs an employee incurs in telecommuting.

Even in states or cities that do not have laws directly mandating expense reimbursement, there may be state wage-and-hour laws that could be implicated. For example, non-reimbursement of telecommuting costs, under certain circumstances, may cause an employee’s hourly pay to drop below the required minimum wage, or may constitute an indirect deduction of wages, in violation of a state’s minimum wage or deduction laws.

Required Notices/Postings

Perhaps now more than ever, employers have found the freedom to hire talent regardless of location. Notably, all 50 states (and many localities) require that certain documents be given to new hires. These documents often include various wage, leave/benefits notification or documents related to anti-harassment or discrimination laws.  Some states, such as New York, New Jersey and California, have more robust requirements, and depending on the state, these notification obligations can come with substantial penalties for non-compliance. Companies who hire remote employees should be mindful of the relevant state’s new hire requirements.

Many states or localities also require certain postings in the workplace (e.g., postings related to wage and hour laws, anti-discrimination provisions, and laws prohibiting sexual harassment). In many cases, providing these “posters” via email or on an electronic portal can suffice. It is important to ensure that any applicable requirements are met for remote workers.

Steps Employers Should Take

In addition to the legal issues discussed above, employers should be mindful of other issues like privacy and data security, payroll tax, workers’ compensation and unemployment compensation benefits, predictive scheduling, etc.

Employers should audit the location of their remote employees, assess how long the current telecommuting arrangements may remain in place, and what steps may need to be taken.  Companies who envision a long-term remote work force may consider modifying their practices and policies to comply with state and local requirements. This can be achieved by creating state-specific employee handbook addendums, or stand-alone state policies.   Internal human resources staff should be trained to identify that the company’s obligations (e.g., leave, pay, etc.) to remote workers may be different and coordinate closely with employment counsel to ensure compliance.

Even if your business intends to have only a temporary teleworking arrangement, we recommend having a written telecommuting policy to address some of the issues we discussed above to mitigate potential legal risks.

If you have any questions on this topic, please contact authors, Kevin M. Doherty and Keli Liu or your personal Greenwald Doherty contact.