Many employers have continued to permit remote work as the pandemic drags on. However, these employers would be wise to continue to pay attention to where their remote workers are telecommuting from. When these employees are working from out of state, it may create considerable extra-legal liabilities.
When an employee is a resident of the employer’s home state and works in the office, it is clear what state law they and the employer are subject to. However, in cases where the employer is based in one state, but the employee is working exclusively from another, a court may find that the employer is subject to the law of the state the employee is working from.
When an employee is working remotely from a state outside of the employer’s own office, this can result in the employer becoming responsible for sales, income, and gross receipts taxes that they were formerly not subject to. In these cases, the employer should consider whether or not they believe they would be subject to these taxes and then discuss the situation with the local taxation authority.
However, there is more than simply tax issues to worry about. Overtime requirements, the enforceability of restrictive covenants, paid time off requirements, workers’ comp, unemployment compensation, licensure rules, anti-discrimination laws, and many other employment-related laws will completely change depending on the applicable state’s laws. This often will particularly affect notice and posting requirements. This can...
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