Remote Workers: HR Management Put to the Test to Consider State Leave Laws, Handbooks, Policies and Taxes

Even before COVID-19, many businesses had employees residing in states other than where the company may have its corporate headquarters or larger facilities with a dedicated human resources team. Certainly, a trend exacerbated by COVID-19 is for employees to work remotely in other states, from vacation properties or long-term rentals. As we recently reported, remote workers raise certain state tax issues because each state has particular tax withholding obligations. Continuing to withhold employment taxes in a state where the employee is no longer residing also could pose tax refund challenges. This requires employers to be vigilant as to where employees are residing and coordinate with their attorneys and accountants regarding income tax withholding issues for remote employees.

However, remote employees pose other unique challenges for employers. For example, a remote employee may be entitled to receive paid sick leave under a state or municipality’s laws. For instance, in California, an employee who has resided in the state for at least 30 days is covered by California’s paid sick leave law, under which an employee accrues paid time off to use for various reasons, including his/her own illness, to care for a family member, preventive care, treatment and safety planning for domestic violence, sexual assault, and stalking.

California law requires 24 hours (or three days) of paid sick leave time per 12-month period for full-time employees, and employees earn a minimum of one hour of sick leave for every 30 hours worked. In addition, even after an employee exhausts his/her paid sick leave, the employee’s job may still be protected even if he or she is not receiving pay if the employee exercises leave for one of the reasons protected under state law. These requirements are employee-friendly and are not necessarily the same in other states.

Various state-specific requirements exist in other employment law areas as well, such as obligations regarding sexual harassment compliance. An employee residing in New York, for example, must be provided additional information regarding the prevention of sexual harassment in the workplace. The employer must adopt a sexual harassment policy that includes a complaint form for employees to report alleged incidents of sexual harassment. New York City and New York State also require that employees receive annual sexual harassment training. Thus, an employer with remote employees residing and working in New York likely could be subject to these additional requirements.

In addition to the issues discussed above, states also differ regarding several other human resources-related issues. In some states, like Michigan, an employee has the right to review his/her employment personnel file at any time during or after employment. This is not a universal requirement in all states. Likewise, there could be state law differences regarding overtime and pay issues, noncompete laws, and whether employees can carry weapons in employer-operated facilities, among others.

While employers do not necessarily need to have a separate employee handbook for all states where their employees reside and work, the handbook should consider the most significant state law distinctions that will minimize potential liability. Employers are well-advised to consider policies or supplements that may be specific to a particular state. Employers should determine where their employees are physically residing and consult with an employment law attorney to review employment law obligations in those states and cities.