When offices closed and employees were told to work from home in March of 2020, there was no seismic shift in how the employment relationship was administered from a payroll, benefits, tax, reporting, and workers' compensation perspective. Why? Because most of those workers lived locally and just stopped commuting to the office every day. Although companies had to adapt their approach to employee engagement, collaboration, and performance management, they did not need to make significant structural changes to their day-to-day employment operations.
As time went on, however, and employers figured out that Work-From-Home actually worked for their business, they started hiring Remote Employees. THAT did cause a seismic shift. Hiring an employee who lives in another state and works remotely 100% of the time is vastly different than hiring a Tele-Worker, someone who lives locally but simply doesn’t need to commute into the office every day.
The considerations are extensive, but here is a list of just some of the things that need to be reviewed when you hire a Remote Worker as opposed to a Tele-Worker:
- Registration for state withholding and unemployment taxes
- Workers' compensation insurance policy updates
- Mandated family leave requirements based on state law
- PTO policy changes based on state law
- Recruiting changes based on state Salary History Bans
- Training requirement changes for Sexual Harassment Prevention
- Payroll changes based on Direct Deposit program regulations
- Application changes based on Ban-The-Box and Reference Check requirements
- Wage payment changes based on Overtime and Meal/Rest Break Requirements
- Salary changes based on Overtime Thresholds at the state level
- Termination process changes due to state final pay requirements
- Drug screening process changes due to legalized marijuana
- Retirement benefit changes due to state-mandated retirement plans
- Employee benefit changes due to state-mandated disability/sick requirements
- Accounting/reporting changes to track all of the information described above
What Does This Mean To You?
Companies need to carefully contemplate whether they will embrace Remote Work in addition to Tele-Work because they are most definitely NOT the same. The state in which an employee (or prospective employee) lives is not a protected class. Therefore, employers can discriminate against employees based on where they live and make employment decisions accordingly. Some companies for example might refuse to hire employees who live in California due to the extensive compliance requirements.
What Action Steps Should You Take?
- Partner with an HR expert who can help you think through the best strategy for your business. With the labor market being so tight right now, it is tempting to open up a search to fully remote employees. Do the costs offset the benefits?
- Plan ahead for Payroll. If you do plan on hiring a remote worker, ensure that you connect with your payroll provider well in advance of the employee’s first day. Getting prepared to pay someone in another state takes time. Allow at least several weeks to get everything done.
- Check with your Insurance company to ensure that workers compensation and employee benefits are adjusted and updated if necessary.
Connor & Gallagher OneSource has many specialists to help you address any or all of these compliance areas. Please reach out to me and I can put you in touch with the right person. We’re always here to help!
Sandra Teague, SPHR, SHRM-SCP
President, OneSource Division
Connor & Gallagher OneSource (CGO)
Questions for Sandra? Email info@GoCGO.com
This blog is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice.