As part of our Spotlight series, we welcome David McManus, a partner in our New York office and the deputy leader of Morgan Lewis’s labor and employment practice, and Emily DeSmedt, a partner in our Princeton office, who represents employers in a wide variety of employment-related matters. David frequently works with our team on the employment aspects inherent in outsourcings and other technology and commercial transactions, and Emily provides counseling on complex issues such as leaves of absence, disability, pregnancy, and religious accommodation requests. We have invited David and Emily to discuss employment topics related to remote work.
David and Emily, thanks for joining us. Since the beginning of the COVID-19 pandemic, many companies have shifted to a fully remote or hybrid workforce. How does remote work affect certain employee rights, such as leave rights or reasonable accommodations?
Federal, state, and local laws related to protected leaves of absence and reasonable accommodations, such as the Family and Medical Leave Act (FMLA) and the Americans with Disabilities Act (ADA), apply to remote employees in the exact same manner as nonremote employees. Employers must therefore assess requests for leave and accommodations for remote employees in the same way that they assess requests for leave and accommodations from nonremote employees. Remote work, however, presents both new opportunities and challenges for employers, particularly when it comes to accommodations.
On the one hand, the prevalence of remote work can make it easier for employers to accommodate employees who are truly unable to work in an office setting full-time due to bona fide medical conditions. On the other hand, the prevalence of remote work has caused some employees to expect that employers will just rubber-stamp remote work as an accommodation even when the employees do not actually have medical restrictions that inhibit their ability to work in the office. Additionally, remote work can make it more challenging for employers to dialogue with and assist employees who need special equipment or technical assistance as an accommodation of their medical restrictions, so it is recommended that employers make the necessary effort to communicate with remote workers to ensure they have the support they need to perform their job functions.
What are the tax and insurance implications of remote work for employers?
Remote workers who work outside of the state where their employer’s office is located can create tax and insurance issues for the employer. Employers who have employees working remotely in different states may be subject to additional state income and sales tax (including withholdings) and should monitor the impact of these remote work locations with tax counsel. Additionally, consideration should be given to whether remote workers create an obligation for the employer to register to do business in the state(s) in which the remote workers are located.
Remote work raises similar issues for insurance coverage for unemployment and workers’ compensation, and employers should review the impact of remote work locations with their insurance brokers. How different states treat remote workers from a tax and insurance perspective varies significantly, so it is critical to consult with counsel who are state subject-matter experts.
In addition, although many states adopted safe harbors for remote work to cover these issues during the early stages of the pandemic, many of those safe harbors have expired.
What kind of wage and hour issues arise from remote work?
Wage and hour laws, including overtime and minimum wage laws, can vary significantly from state to state, and employees who work remotely even some of the time may be covered by the wage and hour laws in the locations where they perform their remote work. Thus, it is important that employers have processes in place to track and record where their employees are working when they are not onsite to ensure proper treatment under wage and hour laws, and proper payment for all regular and overtime hours worked.
What are some proactive measures that employers can take to address these issues?
Employers should review and update their HR policies and handbooks to ensure that they properly account for where their workforce is actually working. Employers should assess business needs and be clear about whether (and how much) of a physical presence in the workplace is required. Employers should require that employees disclose where they are working at all times and obtain permission before working in a different state for extended periods.
Employers should also ensure that their employees who work remotely receive adequate training on their obligations in relation to data protection and confidentiality. Employers should carry out a data-privacy impact assessment of the data protection implications of employees working from home. Employers should also check their insurance policy to make sure they are covered for remote workers using business equipment.
We would like to thank David and Emily for sharing their thoughts on remote work employment issues.