I foresee, based on several conversations in the last day or so, a new flood of legal issues between employee, employer and the government. Employment lawyers and General Counsel’s will have a lot of work to sort out these issues. The problems exist because many employees have assumptions of what is and isn’t a right under employment law. These concepts are based on a complete lack of knowledge, just a tremendous amount of hubris.
Remote Work
Remote work, contrary to popular belief and unfortunately supported by too many in the HR field, is not a “right”.
Just as your Driver’s License is not a right, that license is a privilege. The State can giveth and or taketh away based on your driving behaviors.
Let’s define “right”, so there is no misunderstanding. A “right” has a legal justification. It is a right given in either our US or State Constitutions or promulgated in laws, rules, or polices enacted on any level of government (Federal, State, Local, Tribal).
The concept of remote work is solely up to the Employer. The Employee can request remote work but can’t demand such work. Individuals being offered remote work is a privilege given by your Employer, not an inherent right.
I’ll repeat, remote work IS NOT A RIGHT. Now of course if you can’t negotiate remote work, you can leave the employer and seek new remote work. But do you really think that there are so many numerous remote jobs just waiting for you, especially when everyone starts to really look at the downside related to aforementioned issues?
How long will this new-fangled working dynamic exist is anyone’s guess? My crystal ball is on the fritz, so I have no clue.
Remote Work has impact on Culture
As I mentioned, many in the HR sphere believe that remote work is a right; but they are also the same people who are all about corporate culture.
Not every business can be fully remote. Software developers are examples of businesses that can be almost entirely remote. A distributorship can’t, because you need people in at least the warehouse and shipping areas actually touching product. As many different types of companies are the different levels of remote work that may or may not be available.
CEO’s or Owners may not have the skillsets to manage remote workers, and from their point of view, it won’t be offered. Not offering remote may hurt your business, or so the Talent Acquisition “professionals” state, because you limit your available labor pool, but that is a management decision.
Most businesses need to have some percent of its employees in an office, day in and day out. These mandated office workers (as opposed to those who just like to work in an office) become the 2nd class citizens in a corporate environment who permits these two classes.
It is a new twist on the old “have and have-not” syndrome, first proposed by Karl Marx. The Haves while not having the means of production, don’t commute to work, saving time that they are at liberty to spend as they please. The Have-Nots, who were never able to obtain the means for production, need to travel into the office.
The Haves have saved on transportation costs, where the Have-Nots incur sometimes hefty expenses. As an example of hefty expenses, the cost of gas in and around Los Angeles was reaching $5+.
The Haves are free to move around, and in fact many have moved to areas of the country that have a lower cost of living (we’ll get back to this shortly). The Have-Nots, need to be in the zone of commuting and their own tolerance for the time and cost.
Compensation for Remote Workers
You don’t see these same remote workers willing to give up any compensation for the privilege of working from home, assuming they are at home.
Maybe Employers should taketh from the Remote work and giveth to the mandated office workers money to cover the cost of transportation? (I’m thinking tax free transportation benefits -see page 20 of the IRS publication linked).
Not a perfect solution, but a step in the right direction.
The biggest hurdle is that people believe they now have an inalienable right to work remotely. They are sadly misinformed. Remote work may be beneficial to the company, but there are downsides that most remote workers are unaware. Believe it or not, not everyone has the maturity to work remotely. Some people prefer to be in the office or to have some type of hybrid model. Some people can’t as I said work remotely due to their job function.
It will take time, legislation at multiple governmental levels and experimentation to work out all the kinks.
Are they working from home?
Remote workers by theory are working from home. But what if they “moved” their home in New York where they and company were located to Florida? Most of you are saying “big deal, they are still working from home.” Well in one sense they are, but in another sense they didn’t tell their employer they were moving. Let’s say the employer has one office/warehouse located in Brooklyn, NY. Before the pandemic, everyone, regardless of where they lived, came into the office every day.
The Employer claimed “employer status” in NY and paid employment taxes, collected Sales taxes, and paid corporate income taxes. Individuals paid their taxes, based on where they lived. In a perfect world, the employee deducted enough in taxes not to have penalties assessed by the IRS/States.
Now a ½ dozen remote workers moved to multiple states, they’ve been there for 18 months. The employees have created for the employer nexus in those states. The employer is now required to pay employment taxes, income taxes, sales taxes, have business licenses and the list goes on. That is a hefty increase in expense. The employees may have their own tax issues (which is outside my wheelhouse).
We shouldn’t forget different HR laws in different localities/states. This can be another large headache for the employer.
How will the company get caught?
Here is one simple scenario Lisa Kennedy Crooke of Silicon Valley CFO postulated: ”
Company prior to COVID was based in State “A”, employee worked in State “A” office. When office closed, employee moved to another state. Company did not adjust location for employee in payroll system so State “A” taxes continued to be withheld/paid. Company terminated employment for this individual. Individual filed with remote state for unemployment. Remote state sent Company a notice – we have never heard of you….. opened up a giant can of worms….”
Talent Acquisition arguments
HR types claim that you must offer remote work to find and keep quality talent. Without offering to current and potential candidates the company will not be able to compete. That is an amazing statement given two years ago remote work was of limited use. Every day large and small corporations as COVID has subsided have rescinded their remote working privileges. Remote workers are start the old daily trek back into the office.
Will all those workers just quit their jobs because they need to leave their home to work? Somehow, I doubt it.
The Talent Acquisition/HR community have no conception of the laws that companies work under and the costs inherent in opening a second location in a different state. Opening a second location in a different city, same state also has added costs. Fortunately, these costs are somewhat limited in nature, such as a business license, and local income tax.
Rick Houck published an article in his newsletter “Leadership Success Strategies” entitled “Do Your Employees Have Any Idea How The Money Works In Your Business?” where he pointed out that most employees have no concept about cash flow, salary bands, and why the CEO or Owner are paid what they are paid. This lack of knowledge is fueling this theory that remote work is a right.
Protecting the Employer
One way of protecting the Employer is offer letters or other contractual arrangements. This would limit the employee’s ability to move if they work remotely.
“We are making sure that offer letters make clear the location the employee is being hired to work in and saying that if the employee moves there’s no guarantee employment will be continued. During COVID, many employees moved out of state, sometimes without telling anyone at work, and just presumed they could work remotely from anywhere”.
Wrote Devora L. Lindeman, Esq, a Partner at Greenwald Doherty, LLP where she specializes in Employment Law.
Even with offer letters or agreements in place, States don’t care, they will have an excuse to fine the company for failure to file. And since State & Local income coffers suffered during COVID, you can be sure they are seeking ways to obtain more revenue.
Multi-state companies are not exempt
Just because the company already has a nexus in a particular state, doesn’t make them entirely protected from the taxing authorities. Employment taxes and Labor laws coalesce around head count. If your headcount is wrong, you can be sure the State will fine you. Don’t forget that all the different agencies will join the fray; Unemployment, Workers Comp, as mentioned the towns, cities and counties for business licenses and revenue.
This will not be pretty.
For Transparency
For those who don’t know me, I have been working remotely for over 10 years, have acted as the CFO of several companies around the States and in Asia, all remotely. The difference is I own my company SBA * Consulting LTD and am not an employee of the companies where I’ve been the CFO.
I have and do believe face to face time is important and usually (not during COVID) went to these clients every 4 – 6 weeks for multiple days.
So maybe I should say I work in a hybrid situation most times.
And thus, I am not anti-remote, but it has its advantages and disadvantages for both the company and the individual.
