About 61% of employees prefer to work fully remote. With this trend towards hiring more remote workers, you may consider hiring remote workers for your business. However, before you take the plunge, there are a few legal considerations that you need to think about.
1. Applicable State Law
Your business is located in one state, and your employee is located in another state. It can be tricky knowing which state’s law applies to you and the employee. Unfortunately, there is no hard-set rule that covers every situation. A lawyer can help you navigate the fact-based determination of which state’s laws apply to your particular legal situation. For example, certain discrimination claims should be filed in the employer’s state and not the remote worker’s. In contrast, the employee’s home state laws apply when determining leave policies.
2. Taxes
The general rule is that employees pay state taxes to the state where they are physically located and earn their money. However, there is an exception to this rule. There are seven “convenience of the employer” states:
- Arkansas
- Connecticut
- Delaware
- Nebraska
- New York
- Pennsylvania
- Massachusetts
Remote employees who work for a business located in these states must pay taxes to the company’s state of residence.
3. Wage and Hour Laws
Your payroll department will need to know the law in each state where your remote workers are located. Your company must comply with each state’s minimum wage, the information, frequency, delivery, deduction, and tax calculation requirements.
Some states require companies to compensate their employees for telecommuting expenses. For example, if your business is located in Florida, but your employees are located in Illinois, California, Washington D.C., or Alaska; then you may be required to pay for your remote worker’s telecommuting.
Employment and labor laws can become even more complicated if you hire remote workers that live in different countries. You’ll then need to comply with the labor laws of those locations. Some countries have an additional requirement of you registering your business before legally hiring remote workers.
4. Required Notices/Postings
States have varying requirements for companies to comply with when distributing notices and postings to their employees. Failing to comply with the more rigorous requirements could result in hefty fines.
When you have a physical location, you can simply post signage in the break room or other community areas of the commercial space. However, with remote workers, you’ll need to find another solution. This could be through official training or even by sending an email.
5. Health and Safety Standards
Just because your employees are not physically working in your company’s location does not mean you can ignore health and safety legislation. Your company still has a duty to identify potential hazards that your employees may face. They just may look different. You’ll need to work with your employees to identify risks and then take measures to mitigate the risk. It’s helpful to establish a system where your remote employees can report illnesses and injuries. Then you can investigate the incident to determine the appropriate course of action.
6. Employee or Independent Contractor
Do not assume that a remote worker is automatically an independent contractor. The worker’s physical location is not as important as many other factors that go into determining whether or not an employee is an independent contractor. Courts focus on the economic exchange that happens between the worker and the company. They also consider how integral the worker’s services are to the company’s business. Finally, the worker’s level of initiative and ability to make judgments during routine activities is considered. Depending on these facts, a remote worker could be either an employee or an independent contractor. If you’re unsure, you can consult with an employment attorney who can help you make a determination.
Responsibly Hire Remote Workers
Hiring remote workers gives you a chance to hire employees from a much larger candidate pool. While this presents plenty of opportunities, it also brings additional responsibilities and legal considerations. Consulting with an experienced attorney can help you navigate the process of hiring and employing remote workers. This can help you avoid potentially costly mistakes.
Schedule a consultation with one of your knowledgeable attorneys to discuss your plans to hire remote workers.
