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Remote Work is Here to Stay…Is Your Business Prepared?

HR Works recently conducted a survey to collect information on what changes employers are making given the current legislative landscape related to leave policies and remote work arrangements during and beyond the pandemic. While our survey results suggested that the key business driver for the decision on remote work for most employers was compliance with state restrictions on business operations during the pandemic, many employers also made the decision for employee-centric reasons, such as attracting and retaining top talent, along with enhancing company culture/providing a better employee experience. [DOWNLOAD A COPY OF THE SURVEY RESULTS]

The demand for flexibility and telework arrangements has been increasing for years, and the pandemic showed many employers remote work was possible and often found employees to be more productive while working remotely. As businesses began to reopen, many employees voiced strong desire to remain either fully remote or have a hybrid work option. For these reasons, we believe remote work is here to stay. That begs the question, “Is your business prepared?”

While offering the flexibility of remote work sounds very pro-employee and may help employers realize cost savings by downsizing office space, it is not a decision that should be made without careful consideration and planning. There are numerous federal and state compliance considerations, as well as operational changes that may need to be made.

One often-overlooked area of compliance related to remote workers is business expense reimbursement requirements. Federal law does not require employers to reimburse employees for incidental work-related expenses and permits employees to bear the cost of such expenses provided doing so does not reduce the employee’s wages below minimum (including the minimum salary required for exempt employees) or cut into overtime pay owed to a non-exempt employee. However, state and/or local laws may be more stringent and require employers to bear the cost of certain business expenses, including California (CA), District of Columbia (DC), Illinois (IL), Iowa (IA), Massachusetts (MA), Montana (MT), New Hampshire (NH), North Dakota (ND), South Dakota (SD), and Seattle, Washington (WA).

Other state wage and hour laws, including DE, NY, PA, address reimbursement for business expenses based on an employer’s agreement to provide fringe benefits or wage supplements.

The specific requirements of these state laws vary and, in some cases, are extremely comprehensive and pro-employee. For example, CA Labor Code 2802 requires employers to cover all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of their duties. The term “necessary” may help exclude items that are more for an employee’s convenience, such as wireless headphones or a coffee maker. CA case law has provided examples of expenses for which employees may need to be reimbursed to include:

  • Use of personal cell phones for work-related calls, for which the reimbursement owed is a reasonable percentage of the employee’s cell phone bill (Cochran v. Schwan’s Home Service, Inc., 228 Cal. App. 4th 1137 (Cal. App. 2d Dist. 2014)); and
  • Use of a personal computer, printer and home internet connection, for which the employer must pay a reasonable percentage of the cost, even if the employee does not incur an extra expense for the business use of the personal equipment (Fox v. Eclear Int’l Co., 2018 U.S. Dist. LEXIS 226213 (C.D. Cal. 2018)).

In the strictest of states, such as CA, courts may find expenses such as a portion of rent/mortgage payments and/or utilities to be a necessary business expense where the work-from-home arrangement is not voluntary (e.g., the employee does not have dedicated workspace at the employer’s place of business).

When employees work remotely, employers should consider establishing a Telecommuting Policy that clearly outlines expectations around the reimbursement of certain business-related expenses such as phone calls, shipping costs, etc. that are reasonably incurred in accordance with job responsibilities, whether such reimbursements are required by state law or not.

Managing the reimbursement of business expenses is just the tip of the iceberg when it comes to considerations for remote workers. Other areas that require attention when establishing remote work policies include wage and hour compliance, particularly for non-exempt employees; OSHA/safety/workers’ compensation; payroll/tax withholding; confidentiality/data security; maintaining productivity/managing remote workers; and employee engagement, to name a few.

How HR Works Can Help

HR Works recognizes the challenges employers face in managing remote workers and ensuring compliance with various federal and state laws. Whether you have a compliance-related question, need a sample policy on teleworking, are searching for an LMS or need support with engaging a remote workforce, HR Works has a solution for you. Current clients can contact their dedicated HR Works’ representative. If you are not currently an HR Works’ client, contact us at 1-877-219-9062 or for assistance.

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.