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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.

Your Personal Resolutions vs. Corporate Resolutions

So we are midway through January 2019 as of this post. How are your New Year’s Resolutions coming along? Are you preparing for your 2018 tax returns? Government shutdown or no the IRS will still be collecting taxes, so that’s always a struggle. In particular keeping your accounting and records in order to help yourself or your accountant.  So working on your taxes and helping out your accountant, whether you own a business or not, may be a personal resolution.

If you are responsible for a corporation’s records you probably want to make it a personal goal to make it the corporation’s goals to be prepared and organized for corporate meetings and docs.

For businesses though, another issue they may struggle in trying to do better each year is in their record keeping. Particularly, a problem acute to corporations, is documenting a corporate board’s decision-making process. Sometimes for corporate compliance concerns documenting the board’s decisions is crucial. It might be what is at issue in an IRS audit or an investigation by a licensing/permitting government agency.

From following the Articles of Incorporation, By-laws, calling meetings, setting agendas, sending notice, etc … there is a lot of keep track of for corporate formalities. One of the important documents in the corporate governance and record keeping process is the corporate resolution.

Understanding Corporate Resolutions

Corporate resolutions should be stored with other records like minutes.

Good record keeping, including documenting resolutions is key for corporate governance and compliance.

So what is a corporate resolution exactly? Corporations are legal persons. While, they are not living, breathing people like you and me they are persons under the law. They can own property, sue others, and be sued themselves. However, in order to do something, that is take action, corporation’s have boards that make decisions. In that way, corporate resolutions are like personal resolutions. Where you are resolved to accomplish something, like eat better or exercise more, a corporation is resolved to take out a loan or buy a piece of property.

For more information on corporate resolutions download and read the following One-Sheet. It is meant to answer the basic questions of corporate resolutions: ONE-SHEET: WHAT ARE CORPORATE RESOLUTIONS?

Many corporations spend a lot of money on their corporate formalities and governance items, such as:

  1. Proper notice and running of meetings;
  2. Timely annual filings and tax returns;
  3. Well-draft resolutions and minutes; and
  4. Documenting decision-making processes.

With so many stakeholders interested in corporate actions, such as shareholders, directors, officers, executives, IRS agents, licensing boards, regulators, environmentalists, and social activists corporate resolutions are just one of the many records that need to be maintained.

Resolutions Used in Other Organizations

Other organizations also use resolutions.

A variety of organizations and associations also use resolutions. They just do not call theirs “corporate resolutions”.

Finally, realize that for-profit corporations’ boards are not the only boards that should be documenting their actions and decision-making. That is resolutions are not only for them. Consider these situations:

  1. legislative bodies, their committees, and boards/agencies showing how they met and discussed the passing of laws or changing of regulations;
  2. nonprofit boards should avoid self-dealing, conflicts of interests, and the like as certain actions may be perceived abusing their charitable and tax exemption status for 501(c)(3) corporations, thus answering inquiries by the IRS and state regulators;
  3. homeowners’ and condo association boards where the decision to implement house rules, policies, and/or improvements could be challenged by owners or by injured parties for liability purposes; and
  4. yes, even LLCs and partnerships may use resolutions, they just do not call them “corporate resolutions”.

Resolutions in general are just a document of an action to be taken. Whether they pass or not a corporate board is something else. Corporate resolutions is just one of the tools in the corporate governance and compliance process. So anyone forming a corporation, serving as an officer/director, or becoming a shareholder should familiarize themselves with corporate records.  If your new to proper corporate governance and drafting of resolutions, then you may want to consider a lawyer’s help.

Finally, for your personal resolutions good luck!

-RKH

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.

Please check out my contributor article about how we can better serve justice in Hawaii and also follow Civil Beat.  They are a great civic investigative forum of news and insight into the daily beat of Hawaii.
The Links:

My article

Civil Beat Main Page

LATEST UPDATE (5/5/11 @ 5:01PM):

KHON2 also posted a little blip from me about Wrongful Termination and Actionline.  Click here to check it out.  I will be doing a post on a legislative update about some of the changes to employment law in a couple of days.  Notably, the protection of gender expression protection, labor trafficking, and domestic violence as a protected class.  HR you might want to take a peak!

In the meantime, prepare those landlord-tenant questions for tomorrow’s last day on Actionline from 11AM – 1PM.  Finally, if you did not get a chance to call in by topics remember the Young Lawyers Division will be putting up free legal clinics on Saturday from 10AM – 2PM.  For further information please check out this link.