However, the trend toward remote working has also brought new challenges. In particular, businesses who want to hire virtual workers need to be familiar with labor laws for remote employees.
Figuring Out Which Laws ApplyAs each state has its own labor laws, the first thing to do is figure out which apply to you. In most cases, these will be the labor laws of the state where the employee works (not lives). In some cases, both the labor laws where the employee works and where your headquarters are located apply.
This means that if you hire employees from all over the country, you’ll need to comply with different regulations for each worker.
Minimum Wage RequirementsFor remote employees who are non-exempt from the Fair Labor Standards Act (FLSA) — i.e. those who work on an hourly basis — you need to comply with the minimum wage requirements for the jurisdiction where the employee works. Bear in mind that some places have local minimum wages as well as a state minimum wage. If there is a difference between the two, the higher amount will apply to your employee.
Overtime RequirementsYou also need to comply with federal overtime requirements for non-exempt workers. This states that you must pay at least minimum wage for the first 40 hours in the workweek and 1.5 times the employees’ regular rate for subsequent hours.
It’s important that non-exempt employees keep track of the hours they work. This will mean tracking all the time they spend on work-related tasks, most likely by using a time-tracking tool. You should also implement a policy where employees request permission before working overtime.
Payroll RegulationsThere are a few different elements to payroll regulations. As well as the differences between states, some localities have their own payroll requirements. It’s important to be clear what applies to your employees.
- Tax — Filing deadlines and tax rates. This is in addition to federal tax laws for remote employees.
- Paystubs — What information appears on paystubs. For instance, you may need to include paid sick leave accruals.
- Payday — The frequency you are required to pay employees. This could be bi-weekly, weekly, semi-monthly, or monthly.
- Delivery — How you deliver the paycheck.
- Deductions — There may be mandatory payroll deductions for taxes, health insurance premiums, and expenses related to your job.
You may decide you’d prefer to use direct deposit to simplify the process of paying remote employees. However, you should be aware that most states require that employees voluntarily authorize direct deposits. You will be unable to require direct deposits for employees who work in any of these states.
Break RequirementsSome states require non-exempt employees to receive breaks for rest, meals, and lactation. Find out which laws apply to your employees and create a policy around the regulations. Then, make sure your employees are aware of your company policy.
The FLSA requires that you pay for any breaks lasting no longer than 20 minutes. Plus, employees must have at least a 30-minute break for a meal. Meal breaks must be free from interruptions and there cannot be a requirement that employees are available to work during this time. If a break is interrupted, you will need to pay for the full meal period or provide the employee with a subsequent meal break.
The above are just federal regulations. There may be additional state requirements on top of these.
Business ExpensesYou may need to reimburse employees for certain business expenses, such as internet access to perform their jobs from home. For non-exempt employees, the amount incurred on business expenses must not mean that pay falls below minimum wage. If this is the case, you’ll need to calculate how much of the expense relates to business activities (for instance, internet could also be for personal usage) and then reimburse employees at least that amount.
Health and Safety RequirementsEven though employees are working remotely, you are required to create a safe working environment. This means identifying any hazards and then taking measures to keep employees safe. You may need to create a health and safety policy, which should include training and lay out employees’ responsibilities to report issues and incidents. You may also need to provide employees with personal protective equipment (PPE).
Workers’ CompensationAny workers who suffer an injury or occupational illness due to employment while working remotely may be eligible for workers’ compensation benefits. The exception is workers in Texas, where there are no requirements for any employees. Defining in advance how many hours an employee typically works and what the job involves can help determine if a claim is indeed related to work.
Discrimination and Equal PayRemote employees are covered by all the same discrimination laws as in-person workers. You need to start thinking about discrimination as early as your job posts and interviews. For instance, some places require you to state compensation from the beginning to ensure equal pay.
Plus, it must be clear that you’re not discriminating against a protected class. For this reason, you need to refrain mentioning age, ethnicity, religion, gender, country of origin, disability, or pregnancy. If a candidate makes a mention of one of these topics during an interview, steer the conversation in a different direction.
In addition, it’s important to provide remote workers with the same opportunities as employees who work with you in person. Remote workers need to receive the same access to training and anything else that gives them an equal chance to pay raises and promotions.
Finally, if an employee has a disability and requests reasonable accommodations, you must meet these demands unless it would cause you undue hardship. This involves changing the work environment or procedures to allow the employee to undertake essential job functions.
Workplace PostingsTo comply with the US Department of Labor recommendations, you may need to share labor law postings with employees. Whether this is a necessity depends on how often employees visit your physical location.
If your employees come into the office at least three times a month, you just need to display a labor law posting with up-to-date information in a prominent position. However, if employees visit the office less often (including never), you need to send them postings. Options include via email or company intranet. In the case employees are at a remote worksite, you should mail them hard copies.
Again, you will encounter the issue of different labor laws according to employees’ locations. It’s best to send employees postings for both where they work and where your company is based. Make sure you keep records showing that you’ve sent postings to employees and let workers know whenever there are any updates.
Labor Laws for International EmployeesThere are different labor laws again if you’re hiring remote employees from other countries. You’ll need to do research for the specific country, although it’s worth familiarizing yourself with some key details, as this could influence where you’re willing to hire from.
- The European Union — In the EU, you can negotiate a contract with an employee for a fixed term. You’ll need to comply with laws to protect the employee’s personal data, prevent discrimination, and offer equal pay. Other laws vary according to country.
- India — Although labor laws are complex, only a few apply to contract workers, making India a top choice for international hires. Contract workers are protected from discrimination and unfair discrimination, but regulations don’t extend much further than this. Both the employer and worker are responsible for taxes.
- China — One of the easiest places to hire remote workers from is China, as labor law is minimal and has flexible requirements. Plus, workers are fully responsible for taxes. You just need to make sure that you follow procedure by filing a contract with the government.
Immigration LawsAnother possibility is that you hire a non-citizen who is living in the U.S. In this situation, you’ll need to ensure the new hire has authorization to work in the country. This involves completing a Form I-9 for employment eligibility verification. Some states also require that you use the web-based system E-Verify, whereas in other states this is optional.
Staying compliant with labor laws for remote employees can be tough, especially since laws differ according to where you’re hiring from and change over time. It’s essential you stay up to date with changing regulations and are always aware if one of your employees starts working in another state (or country) to keep your business legal.