A Guide to Remote Work and Compliance Issues for HR Leaders

Three years into allowing employees to work remotely and many businesses are choosing to stick with it permanently. There are many benefits of remote work, but one of the drawbacks can be the impact it has on HR compliance issues. 

Overall, employee claims against businesses are increasing. Just because you don’t have workers in an office, doesn’t mean your liability is reduced—in fact, it can increase. The same litigation claims businesses are used to seeing are increasing but approached from a different angle because of remote work. 

As a result, remote work and human resource compliance can get pretty complicated. Here are the most common HR compliance issues you may be up against if you have remote workers—and how you can protect your business from them. 

The HR Compliance Checklist for Remote Work

1 – Wage and Hour Compliance Issues  

While a basic minimum wage is set by federal law and the Fair Labor Standards Act, wage and hour laws vary significantly by state. In some cases, even certain cities will have different minimum wage standards, meaning there are already federal, state, and local laws to contend with. As you hire remote workers, it can become more difficult to track employee locations and wage requirements. 

Full or part-time employee classification also becomes more important with remote workers. If a non-exempt employee is working from home, accurately tracking time can be difficult to do. But even if a worker is remote, they are still entitled to pay for all hours worked—including overtime.

What Can HR Do?

Take the following steps to remain compliant with wage and hour laws for remote workers.

• Have a payroll platform or tool that includes timekeeping technology 
• Make sure employees are properly classified as either full- or part-time as defined in your HR policies or employment handbook.
• Maintain accurate records of home/worksite addresses for remote workers to ensure compliance with local minimum wage requirements.

2 – Workplace Safety Issues

Most workers’ compensation cases have proven that employers are liable to provide workers’ compensation for an employee’s injury while working from home. The way “work environment” is currently defined under the Occupational Safety and Health Administration includes remote employees’ environments. However, this can be subject to interpretation. 

What Can HR Do?

To limit confusion and interpretation of workers’ compensation laws, employers should: 

• Regularly update job descriptions and expectations to cover work-related activities and the definition of a safe work environment. This may be done via the employee handbook or other accessible, related documentation.
• Educate employees about their role in creating a healthy and safe work environment. Include training that is specific to workplace safety in a remote, home-based environment. 
• Consider providing employees with stipends to help them set up an appropriate workspace.

3 – Harassment and Discrimination Issues

A lot of people think that harassment and discrimination are less of a problem when employees work from home. That’s not necessarily the case. Employees feel the effects of harassment and discrimination virtually, just as a person experiencing cyberbullying feels them.

For example, coworkers wearing inappropriate clothing or displaying objects that others find offensive is considered harassment. Discriminatory language and comments can still be shared over web meetings and chat, too. Even having fully remote vs in-office or hybrid employees could lead to employees feeling as though they are not receiving the same treatment or “flexibility” as others. 

What Can HR Do?  

To avoid a difference in treatment becoming an issue of discrimination, take the following steps.

• Don’t offer different benefits or terms of employment to different groups based on discriminatory criteria. Your remote work policy and employee handbook should define telecommuting options based on the type of work performed, employee classification, and location of the employee or office.
• Institute harassment prevention training as you hire employees. This ensures that both current and future employees are aware of their responsibility to create a safe and comfortable working environment for co-workers. 
• Illegal harassment and discrimination are defined under federal (and some state) laws. Protections are granted to employees to prevent mistreatment during employment. Employees, supervisors, and HR professionals must be trained to understand their role in the prevention of harassment and discrimination, and the steps to take should a complaint arise.

4 – Multi-State HR Compliance Issues

Human resource compliance becomes more complex for a remote workforce, but even more so for a geographically diverse remote workforce. Your legal obligations can more than double the second you allow one worker to live in a state different from your primary location of business. 

Payroll, taxation, benefits, wage and hour, and discrimination and harassment laws vary from state to state. The HR compliance issues above can quickly become more challenging to follow, but they’re not impossible. Companies wishing to take full advantage of remote work and allow workers to live in other states just need to take some additional steps to ensure compliance. 

Multi-state hiring policies involve all of the above-mentioned issues, as well as issues specific to just multi-state hiring. These include (but aren’t necessarily limited to) the following.

• Unemployment Benefits – Unemployment insurance and benefits get complicated when multiple states are involved. HR leaders must not only evaluate the claims themselves but they must be filed in the appropriate state.
• Local Laws – Local laws may include regulations surrounding employee benefits (like leave laws), medical laws, wage laws, state disability programs, and more. In addition to ensuring compliance with well-known federal laws, such as the Fair Labor Standards Act, the Civil Rights Act of 1964, and the Americans with Disabilities Act of 1990, to name a few, employers must do their due diligence to comply with local laws, too.
• Health Insurance – Many health insurance companies contract with networks of medical providers within certain geographic areas. When hiring a remote employee, it should not be assumed that the company’s health insurance plan provides sufficient network coverage in the new geographic area.

What Can HR Do?

While the above is by no means an extensive list of the hurdles associated with multi-state companies, especially with remote workers, there are a few concrete steps to take toward compliance.

• Follow the Department of Labor’s “Localization of Work Provisions” documents to determine the appropriate location for filing unemployment benefits and gathering other relevant information concerning applicable laws.
• When choosing health insurance, any insurance policy will need to comply with the provisions of the Affordable Care Act, state government agencies and laws, and provide adequate coverage to ensure HR compliance. Choose a provider with a multi-state plan or offer different plans in each state where employees reside.
• Research local and state labor laws in every location where employees reside, and create a comprehensive guide to benefits, wages, leave, and so forth. Include documentation about specific states as necessary in a handbook addendum, both to maintain compliance and alert employees to expectations.

5 – Family and Medical Leave Act (FMLA)

The Department of Labor recently issued guidelines concerning remote employees and FMLA eligibility. In short, remote workers are eligible for FMLA on the same basis as in-office workers. The employee must be employed with the employer for at least 12 months and complete 1250 working hours.

Additionally, the employee must work for a company or employer that employs a minimum of 50 employees within a 75-mile radius of the official on-site location. 

Earlier this year, the Department of Labor (DOL) released guidance for employers about how to correctly apply the eligibility criteria for the Family and Medical Leave Act (FMLA) to employees who work remotely.

In order to be eligible for FMLA, employees must:

• Have worked for a covered employer for at least 12 months
• Have worked at least 1,250 hours over 12 months preceding the leave
• Work for an employer at a worksite that employs 50 or more employees within a 75-mile radius (the employer is covered if it employs 50 or more employees in 20 or more workweeks in the current or previous calendar year) 

When an employer hires a remote employee, that employee’s physical work location may fall outside the 75-mile radius required for eligibility. The DOL recognized the increase in the number of remote workers hired by employers over the past several years and decided to address issues surrounding the geographic eligibility issues that arose.

Effective February 8, 2023, employers should not consider an employee’s remote home address as the primary worksite location. Instead, the worksite is the location to which the employee reports or from which their assignments are made. If there are 50 or more employees within a 75-mile radius of that worksite, and the other eligibility criteria are also met, then the remote worker has met the FMLA eligibility criteria.

What Can HR Do?

To ensure HR compliance with all FMLA requirements, take the following actions.

• Keep a comprehensive account of all employee information, including working locations, to best determine FMLA eligibility. If the employee meets all of the standard FMLA requirements and the new location-based guidance, you must treat the filing according to the typical standards.
• The Equal Employment Opportunity Commission has the right to review any relevant materials when FMLA eligibility intersects with the ADA. To avoid additional compliance challenges, due diligence and updated employee information are necessary.

How to Get HR Compliant 

A comprehensive remote work policy that covers each of the areas above will help you maintain HR compliance with a remote workforce. Namely, make sure your policies cover the following areas in depth:  

• Work schedules and timekeeping
• Definitions of the work environment
• Workplace safety requirements and how to report personal injuries 
• Employee classification 
• Virtual behavior standards and ethics 
• Anti-harassment and discrimination guidelines 

Thankfully, tackling HR compliance on your own isn’t a burden you have to deal with. Obsidian HR can keep you informed of changes and be a resource for how to get compliant. We’re here to answer questions, advise on best practices, and help you strategize and plan. We’ll even conduct regular reviews and audits of your HR policies and procedures, or help you create them from the ground up. Reach out to us to learn more or download our guide below! 

Summing It Up

Remote work has many benefits for employees and employers. While it does present certain challenges for Human Resources, they’re navigable with proper documentation, thorough record-keeping and training. This article touched upon five major compliance issues, but HR professionals may come across others as remote work becomes the norm. Many potential issues may still be mitigated by leveraging the strategies above and by keeping reliable, updated records.