The past year has witnessed a huge remote working experiment for many of the world’s businesses and their employees as a result of Covid-19. And, for many, these new working practices have become hugely complex depending on where in the world business owners and employees have suddenly found themselves. Almost overnight, people are in uncertain territory regarding issues involving employment law, tax, social security and pensions, to name just a few.The past year has witnessed a huge remote working experiment for many of the world’s businesses and their employees as a result of Covid-19. And, for many, these new working practices have become hugely complex depending on where in the world business owners and employees have suddenly found themselves. Almost overnight, people are in uncertain territory regarding issues involving employment law, tax, social security and pensions, to name just a few.
FOREWORD BY EDITOR, ANDREW CHILVERS
What are the consequences for a business when an employee works from home on a semi-permanent basis, transferring their residence to another country?
I would echo many of the themes that each of you has mentioned in terms of taxation, payroll taxes and benefits in the US. We’ve had a dual or sometimes triple layer of taxation for a long time because, as you know, the US has both federal, state and local laws that are not coordinated but rather overlapping. The general rule is that anyone working in the US, whatever their citizenship, US law will apply to them. That was true before the pandemic and continues to be true even with disrupted working patterns. Employers must comply with federal regulations relating to employee benefits, health care and retirement plans, and also with state and federal taxes. The dual system relates, of course to employment taxes, income tax withholdings, worker classifications and other nitty gritty details like minimum hourly wages and and minimum salaries permitting an exemption from minimum wage. And then on top of this, a number of metropolitan areas have instituted local requirements impacting workers performing services in that city. It is only if a person is an alien and working in the US, not a resident or a citizen, then they would not be not subject to these laws. In my experience many companies that have personnel working temporarily in the United States or for shorter periods of time, may take the liberty to classify the workers as independent contractors to avoid the complication and expense of compliance, including the laws relating to taxation and payroll taxes and social benefits. And sometimes the businesses who are simply seeking to avoid the complications of compliance with the tax and the payroll requirements in the US, could end up with a larger, more costly set of problems by classifying workers as independent contractors. For that reason, it is important to get thoughtful assistance when workers are working while living in the US for a business located elsewhere.
Are there specific rules applicable to remote working in your country? How do they apply to domestic and foreign companies?
The US is very much like the UK and India, as Shilpen and Aliff have described, in terms of there being really no laws specifically relating to virtual or remote work. The only ones we’ve seen are those relating to shelter-in-place requirements resulting from the pandemic, which has forced so many people to work from home on a regular basis for the first time in their working lives. Before the pandemic, it was an anomaly and considered a privilege in the US to work from home. For the most part, employees had to demonstrate that they earned the right to work independently with little visual supervision, and that they could be trusted to focus on the work at hand, record their time as appropriate and maintain a safe work home environment. And employers were reluctant to take on the challenges of sorting out the issues except in exceptional circumstances. What has been interesting to see happen so quickly over the past year is that many businesses and individuals working remotely have embraced and worked the kinks out of their work at home arrangement. Both have been forced to address and solve these puzzles in the current crisis as a matter of survival. The conclusion many enterprises have reached is that it’s really not that difficult, that they can come up with ways to supervise the people on their team, and even use technology to monitor working time in a productive, non-invasive manner. By way of example, some use software that measure keyboard clicks and virtual meetings to check whether there are gaps of time when employees should be working but may not be diligently working. Those activity gaps also can confirm when employees may be taking the requisite break and meal periods whether or not those critical breaks are reported. A significant pre-pandemic concern involved data security when using home equipment. Many employers considered it an unneces-sary expense to have to provide the needed equipment, software, cell and Internet access to work securely from home. I see many employers who have reversed their policies this past year to ena-ble people to work remotely while providing the same protections afforded in the traditional office workplace.
Will companies have to provide new policies for remote working? Will this include providing employees with the necessary equipment and reimbursing costs related to remote work?
I don’t expect in California or the US as a whole there will be new
laws pertaining specifically to remote working. Instead, employers
will fill the gaps with a network of policies structuring virtual work.
This is an area where success will follow agility. Companies that
embrace the shift to virtual work, making adjustments in a positive,
forward-looking way will likely be the businesses that succeed both
in terms of productivity and, I think, a positive workplace culture.
One of the most significant challenges that businesses are
grappling with is not just compliance with the laws, but how do
they make their company work when their people aren’t gathered
together in the same physical space? This impacts productively
and also development of a culture that encourages loyalty and the
ability to perform at the highest levels in a creative and collaborative way. Policies can provide the structure, although it may be trial
and error to find what practices work best in a particular context.