Employment Law Issues to Be Aware of When Using Remote Workers

 Posted on January 19, 2023 in Employment Law

By: Attorney Jaclyn Kallie

The use of remote work has increased considerably since the onset of the COVID-19 pandemic. More and more people have been able to work from home, and the ease of online communications has allowed employers to hire people located in other states or even other countries. The growing use of remote work has changed the way many businesses operate, and it has opened up a range of opportunities for both employers and employees. However, it is critical for employers who utilize remote workers to understand the employment laws and regulations that may apply in these situations. Here are some critical legal issues to be aware of with respect to remote employment.

Applicable Law

Knowing what law applies to remote employees is critical to understanding the implications of this business decision. Generally, the default rule is the state where the employee resides is the applicable law. This applies to laws regarding wage and hour, employee injuries and employer data protection, among others. This distinction is particularly important where the laws differ significantly between the home state of the business where a majority of its workforce may reside and that of a single remote employee. For example, where a Wisconsin based company hires a remote employee who lives and works in California, the business must be aware of the differences in various employment laws between the two states. One such distinction relates to restrictive covenants: in California restrictive covenants are virtually unenforceable whereas in Wisconsin they are enforceable. By understanding the differing laws ahead of time, employers can avoid claims for violating them later on.

Worker Classification

It is important for employers to ensure that workers are classified correctly as either employees or independent contractors. As discussed above, different state laws may apply depending on where a person is located, and their classification may depend on whether they have established their own independent business, whether they have control over the hours they work, and whether their work is substantially different from an employer's standard activities. By classifying workers correctly, employers can avoid tax penalties and other related issues.

Wage and Hour Compliance 

The Fair Labor Standards Act (FLSA) has established laws addressing minimum wage, overtime pay, and other issues that may affect employees. For non-exempt employees, employers are required to pay at least the federal minimum wage for all hours worked up to 40 hours per week and at least 1.5 times an employee's regular rate of pay for all hours worked over 40 hours per week. For hourly employees who work remotely, employers must ensure that these requirements are met. Employers should develop clear and robust policies and procedures that outline the schedules their remote employees must follow and must monitor their remote employees to ensure those policies and procedures are followed. Failure to take these actions ahead of time could result in liability for uncompensated work time. 

Employee Leave

Employers who utilize remote workers must understand the employment laws and regulations that apply to employee leave. The Family Medical Leave Act (FMLA) permits employees to take up to 12 weeks of unpaid leave each year for medical purposes or family-related reasons. Employers must provide this leave regardless of whether the employee is working remotely or in an office setting. Additionally, some states have their own sick leave laws which may require employers to provide a certain amount of paid or unpaid time off for employees who work the required number of hours. Employers should establish clear policies regarding how remote employees can use any existing vacation days or other types of paid time off. By understanding employment law issues related to leave for remote workers, employers can ensure compliance and protect their business from potential liabilities.

Employment Taxes 

Employers must withhold income taxes from each employee’s paycheck based on their wages and other compensation paid throughout the year. However, state income taxes may apply in the state where the employee lives, and other taxes may need to be paid in the state where the employer is located. In many cases, states have reciprocity agreements that allow employers to pay taxes for employees in a single state. Understanding the tax laws that apply to employees in specific states can be crucial for ensuring that employers will not be subject to tax penalties.

Employment Rights & Benefits 

Finally, employers should be aware of all relevant rights and benefits associated with employing remote workers in order to avoid potential disputes down the line. This includes benefits or entitlements such as health insurance or pension contributions that may be required by law or company policy. Additionally, employers should be sure to understand whether they are required to provide reimbursement for employee expenses, such as costs related to communication equipment and software needed for them to do their jobs effectively.

Contact Our Milwaukee Employment Lawyers

When it comes to employing remote workers, there are several important employment law issues that employers must consider in order to ensure compliance with federal and state laws as well as company policies and procedures. It is essential for businesses to take the time before hiring remote staff members to develop written remote work policies, procedures and agreements, to ensure that they can remain compliant while providing an excellent working environment for all workers. If you have any questions about the legal issues that may need to be addressed when hiring remote employees, contact the Milwaukee, WI employment law attorneys at Gimbel, Reilly, Guerin & Brown, LLP, LLP by calling 414-271-1440.

Sources:

https://www.adp.com/spark/articles/2022/06/implications-of-work-from-anywhere-when-remote-workers-cross-state-lines.aspx

https://www.thehrteam.com/blog/employment-laws-for-remote-employees-18-important-things-to-know-for-compliance/

https://www.businessmanagementdaily.com/68241/which-state-laws-apply-to-remote-employees