Q&A: Out-of-state remote work raises compliance issues
Question: Due to the COVID-19 (coronavirus) pandemic, many of our workers are working remotely, and some are working out of state. Do we have to comply with laws in the states where they’re located?
Answer: It depends on the state where the remote worker is performing work. Generally, workers are governed by at least some of the laws of the state in which they’re physically located while performing remote work (i.e. telecommuting), regardless of the fact their employer is based in another state. More specifically, some agencies within a particular state may apply their rules to remote workers whose employers are in other states; or courts may decide (or already have decided) that their home-state laws apply to remote workers, even if the state statutes or agencies’ rules don’t explicitly say so. That could include not only rules and laws related to labor and employment, but also safety, payroll taxes, unemployment insurance, and workers’ compensation. However, some states whose laws would normally apply to remote workers based on their physical presence in those states have created exemptions for temporary remote-work arrangements caused by the COVID-19 pandemic.
Depending on the state where the remote worker is performing work, you as an employer may have to register as a business with various agencies in that state (e.g., register with the state treasury department in order to properly forward tax withholdings for that worker). On the other side of the coin, the laws of the state where your company typically operates may apply in tandem with the laws of the state where the remote worker is located (e.g., your worker may be able to file employment-related claims against you in either state, or your worker may be double-taxed on both states’ income taxes). In short, whether you as an employer have to comply with another state’s laws because of a remote working arrangement will depend on the facts of your individual situation.
In either case, if you’re considering remote working arrangements, Vigilant recommends setting out some guidelines with the remote worker(s) in writing. See our Model Form, Telecommuting Agreement. Your Vigilant Law Group employment attorney may be able to advise you on remote-work employment law issues in Vigilant’s operating states (California, Idaho, Montana, Oregon, and Washington). For other states, consult with a local attorney. For issues related to payroll taxes, unemployment insurance, and workers’ compensation, consult with specialists in those areas.
This website presents general information in nontechnical language. This information is not legal advice. Before applying this information to a specific management decision, consult legal counsel.