The world is firmly in the midst of a massive shift toward remote work. According to a McKinsey survey, 58% of workers today have the option to work remotely, with 35% of workers offered the option to work remotely full-time.
One of the chief benefits of this revolution is that employees may live anywhere they please while employers have access to a global talent pool that isn’t dependent on relocation. However, it’s not all positive for HR teams and hiring managers. Digital job openings that are accessible by out-of-state workers may raise unexpected legal issues and complications.
Remote hiring, however, isn’t likely to disappear any time soon. There are too many benefits. But that’s why HR teams need to consider the risks involved with digital job accessibility.
Remote hiring has legal risks
Corporations register in a single state but remote employees may be located anywhere. Say, for instance, a New York-based company hires an employee based in Oregon. This may be a mutually beneficial partnership – but the law isn’t exactly clear how this relationship is governed.
By virtue of the New York firm employing an Oregonian, the state of Oregon may view the New York company as subject to Oregon state law and taxation. Not only is the employee subject to Oregon’s taxes, but the state may compel the company to pay employment taxes or register for business in Oregon.
It becomes even more complicated when you consider addendums like overtime, PTO carryover, family leave rights, unemployment and workers’ compensation, licensure requirements, and more.
Early in the COVID-19 pandemic, some states adopted interim policies not to enforce certain tax obligations on temporary remote workers. Many of those policies are expired or removed. HR departments must aggressively monitor these situations and ensure their companies are compliant.
It’s crucial to contact both the IRS and a state’s local taxing authority before hiring someone out of state to make sure you understand the consequences. Likewise, different states have different rules about paid leave, anti-discrimination, and workers’ rights.
Worker rights risks
Additionally, remote work makes complying with certain federal regulations more complicated. Organizations must comply with requirements to make certain employment notices available in a remote environment. Notifications for federal policies like the Family and Medical Leave Act, the Fair Labor Standards Act, the Employee Polygraph Protection Act, and the Uniformed Services Employment and Re-employment Rights Act must be readily available for both remote applicants and employees.
Additionally, states have their own regulations that HR departments must abide by. For instance, if you’re posting for jobs or interviewing employees in Massachusetts, you must state compensation figures up front and you may not ask applicants about previous salaries.
The remote working world has prioritized convenience, but HR teams must remain aware of the liability risks of remote hiring. Digital job openings present legal risks in job postings and video interviewing and remote employees may open a company up to new tax and legal liability. Don’t adopt a comprehensive remote hiring strategy without fully researching the risks.