The pandemic forced many businesses to require their staff to work from home. Now that the economy is opening up, businesses are deciding whether to retain remote work arrangements. A PwC survey found that 55% of employees expect to continue working from home even after the pandemic passes. In making the decision, employers should keep the following factors in mind.
1. Productivity may be better
Many companies are concerned about whether employees who work from home are as productive as those who work at company headquarters, offices, or other locations. A 2-year study by Great Place to Work reported that most employees working remotely said they were at least or even more productive. It should be noted that productively was influenced by employer support of their workers (i.e., feeling loved by their companies).
2. Tax issues become very complex
If all employees live within the same state where the business is located, then permitting remote work arrangements does not impact payroll and income taxes. However, if employees live in a state that’s different from that of the employer, taxes get complicated. ADP has an extensive article explaining the complexity of this problem. Whether an employer is required to withhold state income tax in another state depends on how long the employee works there, whether the arrangement is required by the employer or merely chosen by the employee, and various state and local laws (there have been some temporary rule changes during COVID-19).
Having out-of-state workers may also affect other actions by a company, including:
Registering as an out-of-state business.
Paying state income taxes in multiple locations (the employees may create “nexus” to another state).
3. Workers’ comp may need to be expanded
Employers in all states (except Texas) are required to maintain workers’ compensation coverage for employees. This requirement isn’t waived merely because employees work from their own homes. A remote work arrangement raises 2 issues for workers’ compensation:
Whether an employer needs coverage in more than one state. Usually, a claim depends on the state in which the injury occurs. If the company is in one state and the employee is working from home in another state, the company may need coverage in both states (i.e., “extraterritorial coverage”).
Whether a worker’s injury at home is covered. Workers’ comp covers liability for injuries sustained by an employee in his or her own home if it’s considered to “arise out of and in the course of employment.”
4. OSHA isn’t a problem
If you allow or require your employees to work from their homes, you do not have to worry about OSHA inspections. The DOL said its Occupational Safety and Health Administration (OSHA) does not have any regulations regarding telework in home offices. The agency issued a directive in 2000 stating that it would not inspect employees’ home offices, would not hold employers liable for employees’ home offices, and did not expect employers to inspect the home offices of their employees.
5. Cybersecurity is a big concern
Protecting company data and systems from hacking, ransomware attacks, and other problems is important to all businesses. When employees work from home, there are potentially additional cybersecurity risks. Home offices may not have the same security protocols as company offices. For example, cyber criminals may use social media as a way into employees’ devices, potentially compromising company information.
Employers allowing remote work arrangements to continue should adopt policies to protect company data. This could include, for example, providing employees with devices to be used only on company business, educating employees about best practices for security, and helping them secure their networks.
It’s not going to be easy for all small businesses to decide on whether and to what extent they permit remote work arrangements. Many employees like this option and it may be an important way to attract and retain good workers in a tough labor market. If you decide to allow employees to work from home some or all of the time, be sure you address various issues to protect you and your employees.