Posted in Blog | Compliance

Hiring Remote Workers in Another State? Don’t Trip on These Compliance Risks.

Remote work is becoming the norm for many employees. Job hunters continue seeking out jobs offering entirely remote or hybrid accommodations. On one hand, this provides an excellent opportunity for employers to bring on top talent without employee relocation. But hiring remote workers living in a different state could increase the risk of the company falling out of compliance with labor laws. In some cases, they may not know they’re out of compliance until it’s too late.

If you have or are planning to hire remote workers from a different state, here are some important compliance sticking points to be aware of.

Tracking Remote Lunch Breaks

For most businesses — especially those with salaried employees — tracking exactly when employees take lunch breaks isn’t a top priority. But depending on where the remote worker lives, the rules may vary. This can lead to a lack of compliance on the employer’s behalf. The US Department of Labor website has some great resources for checking these kinds of rules from one state to the next.

Tracking and Paying For Remote “Down Time”

Not dissimilar to lunch breaks, some states also require employers to track the short breaks remote employees take throughout the work day. Federally, employers are required to pay employees for breaks that are 20 minutes or less. They’re also required to count those short breaks towards an employee’s total time worked, overflowing into overtime.

The maximum amount of time employees can work without a break is also dependent on the state. For example, California requires a minimum 10-minute break for every four hours of work. Certain circumstances require more frequent breaks. As previously mentioned, because these breaks are shorter than 20 minutes, employers must pay for them as worked time.

Reimbursing Personal Expenses

Internet. Phone bills. Software. Subscriptions. These are just a few items that employers may need to reimburse remote employees for, depending on their state of residence. Section 2802 of California’s labor code states that employers “shall indemnify his or her employee for all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties.”

So, in normal English: in California, if an employee has to pay for something as a direct result of their job, the employer is required to compensate them for those expenses. There are plenty of areas where this doesn’t apply, though. Companies don’t need to reimburse employees for technology, softwares and company phones already handled on the company’s dime. This also isn’t applicable for employees that can reasonably work in the office, but still elect to work remotely.

As one might expect, these rules also vary between states.

Rules Around Time Off

Most companies are incredibly well-versed in their own state’s laws, rules and regulations surrounding paid and unpaid time off work. Hiring remote workers from other states adds a whole new level of complexity to determining employee benefits, including time off.

States have different rules surrounding how quickly employees accrue paid time off (PTO) and how they categorize this time (i.e. vacation, sick time, or general PTO). In some cases, these rules can change even on a city-by-city basis within the same state. Understanding these rules is crucial to ensuring labor compliance with remote employees.

Awareness is Key to Mitigating Risk

Whether you currently have remote employees working in different states or plan to hire some in the future, assessing your risk as soon as possible is in your best interest. Understanding the full breadth of applicable laws and regulations is the best way to ensure fairness for both employees and employers, with no unpleasant surprises or animosity later.

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