Every new COVID surge comes with more cases, increased transmissibility, and even more questions. For that reason, many companies are considering whether a permanent flexible office schedule is right for them. After all, it keeps their people safe and keeps the business moving. In fact, 70 percent of employers who currently have a flexible work model plan to solidify this as their permanent policy. An additional 10 percent plan to stay exclusively remote.
Allowing your people to work where they like may seem as simple as sending a company announcement. The reality is that there’s a lot to consider compliance-wise before making that decision. Let’s look at three remote work compliance policies you should consider before moving forward.
Onboarding documentation requirements
Prior to COVID-19, onboarding forms such as Form I-9 required a physical inspection of the document. This included inspecting supplemental forms of identity to ensure accuracy. As of April 28, 2022, the Department of Homeland Security announced that they are continuing the practice of allowing e-filing. Employers can skip the in-person inspection and turn in the forms electronically through October 2022. This does not, however, apply to employees who physically report to a company location. Once this temporary lift is either canceled, or your new employee begins reporting to a physical office space, these forms must be physically inspected and refiled.
Keep in mind that this extends only to those hired on or after April 1, 2021. It does not extend to March 2020. Those hired from March 2020 to March 31, 2021 will be evaluated on a case-by-case basis.
During COVID-19 lockdowns in 2020, employers were permitted to accept expired forms of identification that appear in list B on the Form I-9. Beginning May 1, 2022 employers will no longer be able to accept these. They’ll also need to go back and update forms for all those hired between May 1, 2020 and April 30, 2022 with valid forms of identification. If you choose to have a hybrid model, utilizing HR technology to keep track of this will be key to ensuring a smooth transition.
State income tax compliance
Over the course of 2020, businesses were concerned about employees moving without telling anyone. It’s important to know exactly where your employees are residing to ensure their pay is being calculated accordingly. While federal taxes are consistent and only depend on where employees are located, state taxes can be more complicated. Not tracking this information can lead to incorrect paychecks and the risk of costly errors.
While things were a little more fluid in the early days of the pandemic, state and federal tax regulations have caught up. Below are a few scenarios to help you get an idea of what may apply at your organization based on where your people are working.
- If your employees are working in the same state as the business, your tax withholding will not change. Once they move across state lines, however, you’ll need to begin withholding state employment taxes based on the state where they reside. You’ll also need to register with that state’s tax board. Familiarize yourself with the tax filing schedule for tax returns to ensure complete compliance with each paycheck.
- In states that acknowledge “convenience of the employer” rules, employees are required to pay taxes based on where the company is, not where they reside. This means they will also need to file a nonresident income tax return and a resident tax return for their state. A payroll solution to automate the calculations can be very helpful here. Make sure you provide your people with information about the tax laws. This should start during onboarding and include periodic reminders throughout the year.
Workday requirements by state
Depending on the state where your people live, you’ll need to reevaluate your policies around overtime, meal and rest breaks, and sick time. According to the UKG State Compliance Guide, Alaska, California, and Colorado have daily overtime regulations in place. Oregon, New York, and Massachusetts have industry-specific overtime regulations. All other states recognize the federal rules set by the Fair Labor Standards Act.
When you are not aware of these rules and regulations by state, you run the risk of fines, fees, and penalties for noncompliance. Your team will need to evaluate whether overtime will be allowed. You’ll also need to decide how that time will be compensated based on the requirements by state. Sick time can also be a complex policy to implement depending on which states your people reside in. Time worked, accruals, and how much is permitted to be used at a time vary state by state and even city by city.
Make sure your HR technology can keep track of all time and documentation. This includes allowing you to set up attestations through the timekeeping system to remind employees of breaks. Clear, transparent communication about the policies can also help mitigate the risks we just talked about. Keep your people informed about what rules they’re required to follow. Staying updated as rules and regulations change will be important to ensure compliance across your entire organization.
