By Clay Creps
In less than a year, COVID-19 changed nearly everything across the globe. And one of its major impacts was the definition of workplace. In March, the coronavirus pandemic sent U.S. employers scrambling to keep their businesses afloat and their workers safe. To their credit, many of these companies turned on a dime — instantly reworking their corporate structures to accommodate work-from-home solutions and then pushing forward despite the pandemic.
For many businesses, this new normal worked surprisingly well, and plenty of workers are now comfortably ensconced in their home offices.
So, what happens when the pandemic fades?
COVID-19 fundamentally reshaped the workplace. A growing number of workers not only want to continue working from home, but some want to work from a new home — far from the office — such as in an adjoining state or even across the country.
Employers will need to be more flexible, particularly if key employees are requesting novel work arrangements in far-flung locations. However, flexibility is just a small part of the equation. A redefined workplace means employers face a world of new considerations. Here are just some of them:
- Discrimination claims: If some workers are allowed workplace flexibility, will others translate this as discriminatory? Employer remote-work policies will need to be crafted using objective criteria to facilitate, and demonstrate, fair and equal treatment based on job requirements.
- Americans with Disabilities Act (ADA) accommodations: Current reasonable accommodation policies regarding work-from-home arrangements will likely need review, and equal expansion, if an employer’s general workplace parameters have changed.
- Workplace tools: What are an employer’s obligations regarding workplace tools, such as desks, hardware/software or internet service? Policies will be impacted by requirements from different jurisdictions. For example, California requires employers to provide workplace tools and even reimburse workers for cellphone calls. In many other states, there are no requirements to provide workplace equipment. Employers will need to ensure they are fully compliant within each applicable jurisdiction.
- Liabilities: What about workers’ compensation? Does the employer’s jurisdiction or the remote worker’s jurisdiction apply? Tricky issues can arise here, and employers will need to be in compliance.
- Varying compensation: If employees move from a high cost of living area to a lower cost of living environment, can an employer take the differences into account in setting compensation? Companies do this all the time when they have multiple offices. However, making salary adjustments on an individual basis for employees who work remotely might be a delicate matter requiring weighing multiple factors, including competitive risks.
- Competitive considerations: In some industries, talent is in short supply, so employers will likely need to expand their remote-work policies or risk losing talent to competitors that are more flexible. On the flipside, remote-work options offer new opportunities to acquire talent from a vastly expanded pool of available workers.
Surprise: There could also be adverse tax implications
Another aspect of working remotely includes tax implications for both the employer and the employee. For example, depending on the jurisdiction, double taxation is a possibility.
Employers with no current presence in a jurisdiction where an employee will be working remotely could incur greater tax burdens and the associated administrative costs of compliance. For example, there could be state payroll tax registration requirements and/or corporate income tax obligations in the new jurisdiction.
However, employees are likely assuming the larger burden — and employers may need to provide some guidance — because of personal income taxes in differences jurisdictions. It could come as a surprise, and even serve as a deterrent, for some remote workers when they learn they will owe taxes to both the state in which they work remotely and the state in which the business is located. While many adjoining states have reciprocal agreements to accommodate commuters who live in one state and work in another, the double taxation risk is significant and highly variable depending on jurisdictions so preemptive due diligence is recommended.
More questions than answers
While the reshaped workplace adds many considerations for employers, it was inevitable. COVID-19 simply brought the situation to the forefront. Now many organizations need to rethink workforce policies to maintain their competitive advantage, while maintaining flexibility in what is clearly a dynamic environment with more questions than answers.
Contact Clay Creps with any questions on how to implement, maintain, or manage your remote workforce.
Clay Creps is a partner in Tonkon Torp’s Labor & Employment Practice Group. He provides employment-related counsel and litigation services to employers and has extensive experience in federal and state courts. He can be reached at 503-802-2059 or email@example.com.