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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.