Thanks to the pandemic, employers and employees have both embraced the advantages of remote work.
Even IBM, which got a lot of attention several years ago when it ended its remote work programs, is now embracing remote work.
But the surge in remote work has spotlighted a potential set of problems for both remote workers and their employers.
It turns out that U.S. labor and tax laws are not designed for, or very accommodating to, remote work.
Recode's Did you work remotely last year? A surprise tax might be waiting for you nicely covers the various tax issues workers face when they live work remotely.
A quick summary of the article is if you're working remotely, it can be pretty complicated and potentially expensive from a tax perspective.
But remote work is even more legally challenging for employers.
The large corporate labor and employment law firm Littler recently released its first Global Transformation Initiative report (warning - it's long and written by lawyers for lawyers).
The report covers the various ways "wandering workers" - Littler's term for remote workers - can get their employers into legal trouble.
Key quote from the report's landing page:
The Wandering Worker phenomenon raises a host of employment considerations:
- Recruiting, hiring, onboarding, managing, and firing employees is going virtual.
- Employment taxes and withholding become increasingly complex when the employer and Wandering Worker do not work in the same location.
- Determining which state and local benefits apply is particularly tricky.
- Employers are struggling to implement systems for tracking and compensating working and travel time for non-exempt employees, among other wage and hour concerns.
- Privacy and data security issues emerge, particularly as the trend towards global workforces accelerates.
- Union organizing is rapidly adapting to the new work regime.
In all these areas, there are potential legal landmines remote workers could easily trigger that would create legal problems for their employer.
Our work with MBO Partners has found that the number of digital nomads substantially grew in 2020 as more workers found themselves untethered from the office due to the pandemic.
As the MBO Partners report chart below shows, this growth was mostly driven by digital nomads with traditional jobs.
We expect these numbers to grow again in 2021.
As Littler points out, digital nomads expose their employers to tax and legal risk, with traditional employee digital nomads being much riskier for their employer than digital nomads who are independent workers.
But all digital nomads and those employing them need to be aware of these issues.
