Federated HR Question of the Month: Remote Workers

We just hired our first remote employee. The employee will be completely remote and will be living and working in a different state than where our company is located. Which state laws apply to this employee — the laws of our company's state or the laws of the employee's state? What are some additional considerations we should be aware of?

While remote work may provide employees with a great degree of flexibility, employers should be aware of the potential legal implications of such work arrangements. In general, the state and local employment laws that will govern an employment relationship are based on where the employee is physically working and earning wages. There is a common rule of "boots on the ground" implying that the applicable laws are those of the location where the employee is physically working. Federal law, by contrast, is the "law of the land" and applies no matter where in the United States an employee is working. Aside from wage and hour laws, other items that employers may need to consider include (but may not be limited to) workers' compensation insurance, unemployment insurance and tax obligations.

Additionally, in any remote work arrangement, an employer should set clear expectations regarding working hours, availability and time off, and the employer should address how equipment and expenses will be handled. Note that some states require reimbursement of employee business expenses, so it is important to check applicable state and local laws for any requirements. Employers should develop clear policies on remote work with the assistance of an experienced attorney.

Furthermore, remember that an employee who works remotely should still be held to his or her position's performance and productivity standards to ensure fairness and consistency. The employee should ensure that he or she has reliable internet and phone service (if needed for the role), as well as a quiet and private place to work (again, if needed for the role). As with any employee, remote or onsite, the employer should properly monitor the employee's performance and hold the employee accountable.