Key takeaways:

• Laws for remote employees:
  • Fair Labor Standards Act (FLSA)
  • Family Medical Leave Act (FMLA)
  • Workers’ compensation laws
• What about out-of-state employees? State labor and taxation laws apply to the state where an employee lives. . Employers may have to deal with multi-state tax requirements and insurance coverages if remote employees work in another state.

There are many people that work remotely today since the COVID-19 pandemic accelerated the shift. The U.S. Census Bureau found that between 2019 and 2021, the number of remote workers tripled from 5.7% to 17.9%, meaning 27.6 million people were working from home.

Many employers may not realize that remote work can bring new risks and compliance concerns to their company, however. Federal and state labor laws must still be followed for work-from-home employees, and compliance can become tricky if workers are telecommuting from another state.

How do you effectively plan for these changes? This is your guide to labor laws for remote employees.

It is first important to understand that remote employees are covered by all of the same laws as in-office workers. Here is an overview of a few important labor laws to know:

Fair Labor Standards Act (FLSA)

The Fair Labor Standards Act (FLSA) created rights for employees, no matter where they work. Here are the key components of the FLSA:

• Minimum wage: The federal minimum wage is the minimum that employers can pay their workers as an hourly rate (currently $7.50). There are also state minimum wage requirements, and if your state is different from the federal minimum, you have to pay whichever is higher.
• Overtime pay: Overtime is considered any hours worked over 40 hours in one workweek. When employees work over 40 hours, they must be paid at wage and a half their normal wage.
• Taking breaks: The FLSA outlines break requirements for workers, including allotted meal breaks and rest breaks, though states can decide whether or not to enforce these required rest periods.
• Exempt versus nonexempt: If employees make a fixed salary of more than $684 per week, they are “exempt,” meaning they are exempt from certain FLSA protections, like overtime and breaks. All other employees are considered “nonexempt” under the FLSA. Typically, exempt workers are salaried and nonexempt workers are paid hourly.

All of these protections and rights apply to remote workers and in-office workers alike.

Family and Medical Leave Act (FMLA) and sick leave

Another law employers need to know is the Family and Medical Leave Act (FMLA). This legislation outlines requirements for leave should employees experience certain medical or family issues. Here are the basics:

• Employees can have up to 12 weeks of unpaid leave with job protection for:
  • A family or medical reason including having a baby, adopting a child, caring for a family member with a serious health condition or getting a serious health condition that impacts their ability to perform their job.
• Employees can have up to 26 weeks of unpaid leave per year to care for a family servicemember with a serious injury or illness.
• To qualify for these benefits, employees must have worked for more than a year for the employer, worked at least 1,250 hours over that year and worked at a location where there are 50 or more employees within 75 miles.

As long as remote workers meet these requirements, they are covered by the FMLA.

In addition, almost half of state governments have laws in place to accommodate paid sick leave, which also applies to remote workers. SHRM compiled a full list of each state’s paid sick leave laws.

Some of these federal laws require that employers post notices about their rights where employees can see them. Since remote employees may not travel to a central office for work, these notices may be posted on a wiki for the company so employees can have immediate access to these notices. In some cases, companies may send out hard copies of the notices through the mail.

Workers’ compensation laws also apply to remote workers. This insurance covers injuries sustained by employees in the course of their employment, so if they’re doing work-related tasks remotely and they get injured, you may have to submit a workers’ compensation claim. Workers’ comp carriers have a specific code for “work from home” employees.

For more details, research how remote work and insurance workers in your state since laws vary.

There is a common remote-work situation that complicates things: a remote employee working from a different state. For instance, each state’s minimum wage laws will apply to workers who physically work in that state. If the company is located in one state and a worker telecommutes from another, the employer must be careful to follow that other state’s laws, too. These situations are usually dictated by wherever the employee is actually performing the work.

In addition, states usually require that an employer gets workers’ compensation and unemployment insurance in whatever state the employee is working in, so you may have to get those coverages in the other state as well as where the business is located. You may also have to start withholding state income taxes for your remote employees in the other state and even filing and paying taxes there.

Remote workers can be a risk for employers. For instance, say you are unaware that one of your employees is working in another state for part of the year, perhaps at a vacation home. If they file a claim to receive disability or unemployment benefits in that state, the state government will be alerted that they’re working there and may see that you didn’t report their wages for tax purposes. You then may be subject to fines if you didn’t withhold in that state.

To avoid this risk, create a company policy that requires workers to notify you if they’ll be working anywhere new. Let them know why it’s important and how it can also create issues for their personal tax situation. If an employee is going to move states and has your approval to do so, get to know all applicable employment laws for that state to make sure you stay in compliance.

These considerations need your consistent attention to ensure you understand any changes to laws and compliance requirements. Working with a professional employer organization (PEO) is an effective way to manage your policies and ensure you are always handling remote work properly.

The team at StaffLink is experienced in compliance and HR management to empower you to focus more on your business. We work alongside your in-house team to establish compliance best practices and stay on top of any changing state and federal regulations. We carve out the services you need and provide lots of flexibility in service delivery.

Request a proposal or contact us at (954) 423-8262 for more information.