27% of U.S. employees work remotely as of 2023, according to a new US Census study.
16% of U.S. companies are fully remote in 2023.
15% of work opportunities in the US are categorized as “remote jobs.”
From 2018 to 2021, the number of fully remote workers grew 4x larger [2018 saw 6% of employees being fully remote, which increased to 26.7% in 2021].
36.2 million American employees are projected to be working remotely by 2025.

HR Compliance Issues with Remote Workers

As a result of employees working remotely or in hybrid situations, HR policies and labor laws are quickly becoming complicated. Just because you don’t have workers in an office doesn’t mean your liability is reduced—in fact, it can increase. Employers need a comprehensive work policy that covers specific company practices regarding remote/hybrid workers in the following areas:  

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

Common HR Compliance Issues with Remote/Hybrid Workers

Wage and Hour Compliance Issues  

The Issue

While federal law and the Fair Labor Standards Act set a basic minimum wage, 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, tracking employee locations and wage requirements can become more difficult. 

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

The Solution

Have a payroll platform or tool that includes timekeeping technology 
Make sure employees are correctly 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.

Workplace Safety Issues

The Issue

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. 

The Solution

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 specific to workplace safety in a remote, home-based environment. 
Consider providing employees with stipends to help them set up an appropriate workspace.

Harassment and Discrimination Issues

The Issue

Many people think 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, complaints about coworkers in a video conference meeting—wearing inappropriate clothing or displaying objects that others find offensive are 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 make employees feel they are not receiving the same treatment or “flexibility” as others. 

The Solution  

To avoid a difference in treatment becoming an issue of discrimination, 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 current and future employees know 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 preventing harassment and discrimination and the steps to take should a complaint arise.

Multi-State HR Compliance Issues

The Issue

HR compliance becomes more complex in a geographically diverse remote workforce. Your legal obligations can double the second you allow one worker to live in a state different from your primary business location. Payroll, taxation, benefits, wage and hour, and discrimination and harassment laws vary from state to state. Companies wishing to take full advantage of remote work and allow workers to live in other states need to take additional steps to ensure compliance. 

The Solution

Follow the Department of Labor’s “Localization of Work Provisions” documents to determine the appropriate location for filing unemployment benefits and gather relevant information concerning applicable laws.
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. Choose a provider with a multi-state plan or offer different plans in each state where employees reside, in addition to complying with the Affordable Care Act’s and state laws’ provisions.
Research local and state labor laws in every location where employees reside and create a comprehensive guide to benefits, wages, and leave. Include documentation about specific states in a handbook addendum to maintain compliance and alert employees to expectations.

Family and Medical Leave Act (FMLA)

The Issue

The Department of Labor [DOL] recognized the increase in the number of remote workers hired by employers over the past several years and 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 DOL guidance addresses how employers can correctly apply the Family and Medical Leave Act (FMLA) eligibility criteria to employees who work remotely. To be eligible for FMLA, remote 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
Worked 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) 
Effective February 8, 2023: If employees are hired outside of a 75-mile radius, employers should not consider an employee’s remote home address as the primary worksite location. Instead, the worksite is determined to be the location to which the employee reports or from which their assignments are made. If 50 or more employees are 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.

The Solution

To ensure HR compliance with all FMLA requirements, 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. Due diligence and updated employee information are necessary to avoid additional compliance challenges.

Cardinal Services is here to help!

Thankfully, tackling HR compliance on your own isn’t a burden you have to deal with. Cardinal Services can keep you informed of all state and federal labor law changes and offer solutions that keep you compliant. We can customize your Employee Handbook to accommodate your remote/hybrid staff, or you can even outsource your HR Department to us! We’re here to answer questions, advise on best practices, and help you strategize and plan.