Remote Work: Laws NY Employers with Out-of-State Workers Must Consider
Remote work is here to stay. According to Forbes, 61% of employees preferred working in a fully remote setting. 97% of employees also preferred to maintain flexibility between remote and office work (Click here, to read the article). The modern employee can work from nearly anywhere for a company across the country or on the other side of the world. This has led some companies to experiment with hybrid work arrangements or forego the office completely. As remote work and related laws continue to be normalized, New York employers with out-of-state employees must remember that they may be subject to laws beyond the Empire State. Here are several variables they must consider.
Employment Laws
Employers may be required to comply with the employment laws of the State or city from which a remote employee works if that employee is either not working in New York or is regularly assigned to work from a location outside of New York. Of course, employees who are temporarily assigned to work from a non-New York location (e.g., a contiguous State) as an accommodation to that employee for health or personal reasons (e.g., childcare) would most likely be subject to NY employment laws. Otherwise, considerations should be taken for the family, medical, pregnancy, and sick laws of the State in which the remote employee is regularly assigned to work outside of NY. More specifically, New York’s wage and hour laws may come into effect when paying wages and overtime to non-exempt remote employees working in another State which offer employees less favorable minimum wage and overtime provisions. The determination of which laws apply to remote employees is therefore factspecific and requires legal review and analysis.
Tax Laws
If a remote worker is employed in a location other than the employer’s state, it creates a tax nexus for the company in terms of income tax withholdings. This can be an obstacle as companies become subject to taxation in another State, even if only one employee works there. In general, employers should withhold applicable state and local income taxes based on where an employee primarily performs services – meaning their physical location. Some states have reciprocity agreements which permit withholding in a single state. However, New York does not have a reciprocity with either Connecticut or New Jersey.
Wages
Remote work has complicated wage and hour compliance for some employers. Organizations must monitor a state’s minimum wage and overtime requirements to adequately compensate a remote employee. Business expenses also must be properly compensated per each state’s laws. For example, California state law requires that employees be reimbursed for work-related expenses. It creates a gray area for employers attempting to determine whether an expense was a matter of convenience or essential to performing job duties.
Accommodations
Employers are still obligated to comply with anti-discrimination and anti-harassment laws regardless of an employee working remotely. These include protections such as tthe Americans with Disabilities Act, Title VII of the Civil Rights Act, and the Age Discrimination in Employment Act.
Monitoring
As remote work continues, employers have begun to increase monitoring practices, whether to monitor productivity or to maintain security. A recent New York law went into effect on May 7, 2022, requiring employers to notify employees of electronic monitoring practices, the legalities of which can vary by state. Texas considers electronic communication monitoring an invasion of privacy but allows supervision of phone systems for appropriate use after the employee is informed. The laws of some states don’t address employee monitoring but have recording laws that create speculation over what constitutes a violation of privacy.
Conclusion
Coordinating work policies with multiple state laws puts companies at risk of excessive fines and unnecessary litigation. Employers should make note of local, state, and federal labor laws to remain compliant with emerging remote work policies. It is strongly recommended that employers seek legal guidance while developing policies in compliance with all relevant laws.
The employment law attorneys of our Labor and Employment Practice Group are available for consultation, if you have any questions regarding establishing new policies. Contact us today at (914) 287-6144, or click here to learn more about how our expertise can help you stay on the right side of the law.