By Anthony Kaylin, courtesy of SBAM Approved Partner ASE
As we begin to pass by the pandemic and bring back workers to the physical workplace, a host of issues has to be reviewed by HR with the new workplace. In some cases, employers are having a hybrid approach to working. In other cases, employers are allowing for 100% remote work. Finally, other employers are requiring 100% return to the office. And in today’s world, if the job can be remote, recruitment could be expanded outside the normal recruiting area, possibly across the U.S. The talent crunch is dictating a new workplace. So, what should employers be concerned with?
Payroll
The first and easiest issue is payroll. Depending on the location of the employee, the employer may have to pay payroll tax in the state the employee is living. In certain cases, such as New York, if the employee is working remotely in one state, say Pennsylvania, yet reports into the workplace in New York, New York taxes have to be paid. There is case law on this point. Payroll needs to be aware of which state taxes require withholding depending on where the employee is located as well as registering the company in that state to pay withholding.
A corollary issue is payment for unemployment taxes. The employer needs to register and ensure compliance in those states in which the state taxes are paid for the remote employee with unemployment tax requirements.
Healthcare
The second issue is healthcare. Does the healthcare plan support providers in the state in which the employee is situated? The plan’s network of “preferred” or “in-network” providers matters. If it does not, an employee may have to pay out of network rates (if there is any out-of-network coverage at all in the plan) if they see a provider who is not considered “in network.” If network does not apply, it may be full cost for the providers’ services. As such, benefits for HSA and possibly HRA should be reviewed to support employee choice for work at home. All health insurance plans cover emergency services at any hospital in the United States. Employers should discuss this issue with their broker.
Workers’ Compensation
Another issue is workers’ compensation. Workers’ compensation insurance typically will apply in states where the employer is physically located. Many states have reciprocal agreements with other states allowing workers to be covered under their home state’s workers’ compensation law if they are injured in another state, so this should not be a problem. Employers, though, should discuss this potential problem with their broker just to close out the issue.
Paid Time Off
What if the employee needs time off for illness? Employers need to not only integrate their time off policy with the employee’s needs, but also any state and local requirements for paid time off for medical and other reasons. FMLA regulations state that an eligible employee under the FMLA must, among other things, be “employed at a worksite where 50 or more employees are employed by the employer within 75 miles of that worksite.” 29 C.F.R. § 825.110(a)(3). FMLA regulations do not define “worksite.” However, Section 825.111(a)(2) of the regulations, which addresses how to determine whether 50 employees are employed within 75 miles, states:
An employee’s personal residence is not a worksite in the case of employees, such as salespersons, who travel a sales territory and who generally leave to work and return from work to their personal residence, or employees who work at home, as under the concept of flexiplace or telecommuting. Rather, their worksite is the office to which they report and from which assignments are made.
As such, a remote employee’s worksite can be a location where they do not physically work. Further, the employer must coordinate all leave with state and local law with paid time off if applicable as well.
Required Postings & Handbooks
Other issues include required federal, state, and local jurisdictional postings and exempt/nonexempt and breaks and meals. Employers should have a folder on the intranet or in their shared drives that employees can access to see all required postings. Moreover, handbooks will need to be updated to ensure compliance with the various laws on these issues.
WARN Act
Finally, with a remote workforce, the employer who conducts a reduction in force needs to ensure compliance with the federal WARN Act as well as any state and/or local requirements where the employee is situated. This situation becomes a question of whether “outstationed” WARN regulation applies. Employers should discuss all these questions with their legal counsel.