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In last week’s bLAWg post, I discussed the remote working trend and how some industries are adopting it permanently. Remote work is changing the way businesses operate. Obviously, one critical area is employer-employee interaction. Today’s post provides a listicle of some of the compliance and legal issues to consider when preparing a permanent work from home plan for your employees.

The Listicle

Consider the following items and questions if you are considering remote working for your business:

Foreign Business Registration

  • If employees are working from another state, you may have to register your business as a “foreign” entity.
  • Registration requirements are different for each state. If you have to register, then it is a likely bet you will have to consider taxes, and labor and employment laws of the new state.
  • Some states and counties also restrict the type of businesses that can operate in residential areas, so if your employee is going to set-up shop at home, you may have to get a permit depending on what they are doing.

Taxes

  • If an employee is working outside of the employer’s state of operation the employer may have to pay the taxes of that state, for instance payroll and withholding.
  • Employees should review the way they receive benefits from their employer and where they must file income taxes with a tax adviser/preparer.

Labor and Employment

  • Workers’ compensation and general liability insurance
  • TDI
  • Discrimination
  • Disabilities accommodation
  • Occupational health and safety
  • Privacy and HR records access
  • Meal and rest breaks
  • Overtime/wage/compensation
  • Expense reimbursements
  • Benefits
  • Restrictive covenants

Privacy & Security

  • Review the current IT set up and policies to implement for remote working.
  • Are you having employee’s set-up a home office? Are they using their personal devices or a company-issued one?
  • How are they accessing/sharing files?
  • How would your customers/clients feel if they know your workers are accessing sensitive information in a remote location?
  • How are you monitoring communications? Are you having Zoom calls with your workers while family members are in the room?

Employment Agreements and Policies

  • Employment agreements are covered by labor and employment laws; however, employers are legally allowed to contract away liabilities or make other arrangements.
  • What happens to the written relationship when the worker moves to a more protective or less protective state?
  • You may have signed in California, but can you enforce in Hawaii court? What provisions are you enforcing?
  • Workplace policies created to be compliant for one state may not apply to remote workers scattered across the globe.
  • Review, discuss, and revise/amend where necessary.

As Always Do Your Homework and Consult with Others

The above listicle is not meant to be exhaustive. As with everything with the law it will be a case-by-case basis. This is especially so with a highly valued or professional employee negotiating for this change.  It is best that you conduct your research and plan accordingly. You will need to understand all the laws in your home state and the state that the employee will be remotely working in. Especially, when it comes to HR and employment, the labor laws can differ vastly from state-to-state in their worker protections, insurance requirements, etc. Last week’s bLAWg post listed some advisers you should consult with when making this decision.

Thoughts and Questions

Is your business currently thinking of transitioning to permanent remote work? Do you think it is worth it for all the planning needed? Do you have questions about compliance/legal issues? If so, then contact us at admin@hewbordenave.com. Check back next week and I’ll discuss some of the questions I’ve gotten about remote working.

DISCLAIMER: This post provides general information, but does not constitute legal advice in any respect.  No reader should act or refrain from acting based on information contained in the post without seeking the advice of  an attorney in the relevant jurisdiction.  Hew & Bordenave, LLLP expressly disclaims all liability in respect to any actions taken or not taken based on the contents of this post.

Generally, when larger companies change their workflow arrangement to comply with new regulations, small and medium-sized businesses tend to follow suit. Remember your email inbox when the largest retailers and social media giants updated their web/app privacy policies in the face of the General Data Protection Regulation (GDPR)? Smaller companies then tended to follow suit by updating their own privacy policies because they were following what bigger companies were doing. Will the same happen for remote working?

Trending Toward Remote Working

COVID-19 has accelerated the work-from-home/remote working trend. First, several of the tech giants (as well as other larger companies) have turned the temporary policy in to a permanent one. Also, newer companies that rely on professional, administrative, and tech workers were already leaning into utilizing less office space to reduce overhead costs.

Many industries have grown and thrived during the stay-at-home orders. Others have re-invented their business due to people spending most or all their time at home. For example, why offer a gym membership, or an on-site gym when customers are buying at home workout equipment?

Our firm allowed for remote working prior to COVID-19 and may continue to allow it into the foreseeable future. Employees in general may in fact enjoy the flexibility working from home allows. I’ve noticed that stay-at-home workers are now launching their Twitch stream, lifestyle YouTube channel, or other streaming platforms. Will workers even want to go back to traditional office settings once things return to “normal?” Answers depend, and may be divided.

Some Food for Thought for Hawaii and Remote Working

The trend causing remote working presents interesting opportunities for Hawaii. As certain industries close and people move away, this will create space for others to move in. It is true that the cost-of-living here is high for current residents. However, for those moving away from even more expensive zip codes or for higher income individuals wanting to return home, Hawaii might now be an option. I find tech workers, lawyers, accountants, and for others who can comfortably do their job almost entirely remotely, that the “cost of paradise tax” is manageable. I discussed potential legal issues with a telehealth specialist who would be directing calls to another state, but operating their practice from their home office here in the islands.

Even prior to COVID-19, the state government was keen on emphasizing other sectors beyond tourism. The question is whether law and policymakers at the state and county governments decide to lure companies and workers by either restructuring compliance issues, or creating new incentives. This is nothing new, as many have presented ways for Hawaii to diversify the economy by offering incentives, such as Act 88, and content production.

Ask for Advice

Businesses must adapt. As a transactional attorney, I have assisted business owners with strategic relationships. I have received inquiries about legal issues allowing employees to work remotely. Usually, in the context of having to alter operations in the face of COVID-19 restrictions. While, remote working is an option, if you are changing the relationship, you should do some research and planning prior to implementing. Permanent work from home can reduce the costs, such as commercial space rent, but presents new challenges. One of the biggest is an employee moving out of state to work, whether temporarily or permanently.

Always consider consulting your usual advisors:

  • Attorney – possibly several due to jurisdiction and subject matter issues
  • Accountant – taxes
  • HR Consultant – best practices for communication, etc.
  • IT – review software, hardware, and internet access needed for remote work

Also, consider speaking to others for insight. Possibly, a mentor or another business owner that took the plunge. Check back next week for my listicle of some compliance issues to consider for remote working implementation.

In the meantime, what do you think? How do you think remote working will impact Hawaii? How are you adapting to deal with changes in the economy and your workers? Contact us at admin@hewbordenave.com to let us know your thoughts.

Last week the City and County of Honolulu announced the expansion of the Small Business Relief and Recovery Fund (SBRRF) and has added $75 million to the program. Businesses may qualify for up to $50,000 in reimbursement grants.

Business owners that missed the first round of SBRRF should consider applying this time, and those who applied in the first round can apply for a second time. Wondering if you qualify or when the application opens? See the guidelines below.

Who Qualifies:

  • O‘ahu businesses with $5 million or less in annual revenue
  • Must operate in a commercial space prior to March 2020
  • Farmers and agricultural land or commercial fishing companies may qualify
  • 501(c)(3) or 501(c)(19) nonprofit groups
  • Owner must be Hawai’i resident and business must be located in Honolulu

When to apply:

  • September 21, 2020 – Businesses with annual revenue less than $2 million
  • October 1, 2020 – Businesses with $2 million to $5 million in annual revenue

These grants are a huge help to the businesses that remained closed during the multiple stay-at-home orders. For further information about the Small Business Relief and Recovery Fund visit, OneOahu.org.

Honolulu Plans Re-Opening with Complex 4-Tier System

For Honolulu-based businesses, Mayor Kirk Caldwell announced earlier this week a 4-tier framework for reopening O‘ahu. The tiers are based on the COVID-19 case amounts and positivity rate.

What is reopening in each tier?

  • Tier 1 began today with limited business openings. Some of the businesses opening with restrictions are retail, hair and nail salons, and restaurants. In tier 1 public gatherings of up to five people who are not from the same household is allowed. Keep in mind the exception of restaurants, where parties of only five from the same household are allowed.
  • Tier 2 would allow arcades at 25% capacity, as well as gym and fitness facilities. Personal care services will be allowed.
  • Tier 3 would see many businesses increase from groups of 5 people allowed to 10 people, such as real estate services, restaurants, and commercial attractions.
  • Finally, Tier 4 is still not full capacity and a “return to normal,” but group amounts increase to 25 people for businesses like bowling, tours and skydiving, and restaurants.
  • Unfortunately, bars and night clubs remain closed throughout Tiers 1 – 3, and even for Tier 4 it is TBD.

There is a lot to digest in this tiered-system. It is best to review for your personal, and business choices. To see the full reopening strategy, visit this website.

With many changes in regulations, people may be confused or see potential loopholes/pitfalls. Additionally, business owners have to worry about  noncompliance, and liability to their workers and customers in navigating these tiers.

Do you understand the new reopening 4-tier system? Do you have questions about how it applies to you? Or underlying liability issues?  Let us know by e-mailing us at admin@hewbordenave.com.

Are you considering taking advantage of the President’s Executive Order for payroll tax cut? If so, just understand it defers Social Security taxes till the end of the year. Defer means the deferral amount has to be paid back. So that deferred amount, over 4 months, can create a large tax liability.

For employers, first consider that the deferral is permissive, that you are not required to defer. So business owners should consider continuing to withhold payroll taxes from paychecks as they normally do rather than deferring if the payback is of concern to their employees.

For employees, if you are in a situation where payroll tax withholding is deferred, then it is up you to be accountable by managing your spending, and saving the proper amount to payback the deferred payroll tax. Then for you those of you owners of s-corporations,  that if you are a shareholder-employee, you are also an employee. Therefore, subject to employment taxes and rules.

For general information view this article.

And as always, when it comes to taxes, employee law, HR policies, and structuring agreements consult with your professional advisors.

Ryan Responds trade name vs trademark

What Should go in your Operating Agreement?

In this Ryan Responds video, I go over some of the more important items that an Operating Agreement should cover. While, not an exhaustive list, it is illustrative of the conversations LLC members and managers should have with one another. Business partners should strive to have this organizational document meet their expectations. It is a contract after all.

We also provide a one-sheet if you would like to read more about Operating Agreements. Finally, if you have any questions about reviewing, drafting, or even disputing an operating agreement please contact us or an attorney in your relevant jurisdiction for an initial consultation.

If You have a Question for Future Ryan Responds Videos …

We launched this on a YouTube channel, as we hope to publish educational videos on other topics in the future. Finally, if there is a short question you want the answer to submit them to admin@hewbordenave.com with the Subject line “Ryan Responds”. Please keep your questions short, general, and related to a business topic. Please do not provide specific details of  your matter or attempt to seek direct and specific legal advice through this format. If you need assistance and legal services, then please schedule a consultation with an attorney in your relevant jurisdiction.

Thanks and Cheers!

RKH

Disclaimer: The content of this video is for general information purposes only. Nothing should be taken as legal advice for an individual cases or situations. The viewing of this video does not create an attorney-client relationship. If you need legal advice, please contact an attorney in your relevant jurisdiction.

Ryan Responds trade name vs trademark

Ryan Responds Video on “Do I Need to Form a Business (Entity)?”

One of my New Year resolutions was to finally start doing short informative videos on various aspects of business law. Many social media consultant and other small practice firm friends urged me to do this, as I already do educational seminars for business owners. If you are in Honolulu on January 31st, you can come attend one.

So the “Ryan Responds” videos are meant to be a quick reply to people’s FAQs about business law. They are not specific in-depth advice. So they are not a replacement for consultation time directly with an attorney. Rather they are meant to bite-sized and approachable for people that have general questions.

If You have a Question for Future Ryan Responds Videos …

We launched this on a YouTube channel, as we hope to publish educational videos on other topics in the future. Finally, if there is a short question you want the answer to submit them to admin@hewbordenave.com with the Subject line “Ryan Responds”. Please keep your questions short, general, and related to a business topic. Please do not provide specific details of  your matter or attempt to seek direct and specific legal advice through this format. If you need assistance and legal services, then please schedule a consultation with an attorney in your relevant jurisdiction.

Thanks and Cheers!

RKH

Disclaimer: The content of this video is for general information purposes only. Nothing should be taken as legal advice for an individual cases or situations. The viewing of this video does not create an attorney-client relationship. If you need legal advice, please contact an attorney in your relevant jurisdiction.