Is Remote Work Illegal?

Originally published by Laurel Farrer in Forbes.

It has been calculated that 63% of businesses are utilizing a virtual workforce in some way, but that number is likely an underestimation. With the constant connectivity of the modern workforce, even businesses that aren’t intentionally remote-friendly are operating with virtual infrastructure. Have you ever dialed-in to a conference call during your commute to the office? Or maybe you worked from home last month when you were sick? Then, you’re part of the new and growing remote work industry…and you might be breaking the law.

While some businesses are proudly and transparently distributed, most companies have accidentally become remote-friendly as the demand for offsite client meetings, email communication, video calls, and cloud-based project management have become the norm in modern business. This organic transition may have been convenient for your change management team, but it could also mean that your legal department is going to be doing overtime since over 50% of the 63% of businesses previously referred to don’t have a formal remote work policy.

Emma Heuston, Principal Lawyer at The Remote Expert in Australia warns, “When you engage a remote team member, or a team member who sometimes works remotely, you need to get the foundation documents correct. Determine the laws you must comply with and ensure that the employment contract and policy documentation reflects this. Think of these foundation documents as equivalent to an architect who draws up house plans, they need to be right so the whole house doesn’t come crashing down.”

Not outlining expectations may not sound like a legal liability to you, but without documentation of offsite guidelines, there are at least six ways that companies commonly (and unknowingly) don’t comply with legal requirements as employees start to go remote , including:  

1. Work Contract - Any agreement of services, whether it be for employment or contract work, is void if the scope of work outlined does not match what is listed in the document. So, if you didn’t update each team member’s contract to outline participation expectations or list a pre-approved mobile office location before they clocked in from a coffee shop, your employment contract may not protect you adequately.

2. Occupational Health And Safety Standards - From room temperature to tripping hazards to schedule breaks, office environments are carefully regulated by local health and safety policies for the protection of professionals. In home and mobile offices, workers are rarely aware of these hazards without regular trainings and reminders, which increases the risk of a “workplace” accident and puts your business at risk for a workers compensation claim. Internationally, laws differ and are vague on the protection of workers in home and mobile offices, so if you don’t know what your local restrictions are, you may be liable. 

3. Information Security - Lounging in a coworking space, sipping coffee, and casually jotting project notes sounds like liberating relief from structured corporate environments, and is a reality for remote workers around the world. Unfortunately, that scenario is also in noncompliance with several information security laws, including customer/patient privacy regulations, nondisclosure agreements, and server security, making your entire informational infrastructure susceptible to a breach.

4. Employment And Labor Laws - Most companies are aware of the regulations enforced in their local states and countries, but what about for the areas in which your remote employees are working? Are you only paying your employee in Ohio once a month? Or maybe you (illegally) fired a worker in Portugal. Noncompliance with local regulations may send a lawsuit your way over a law that you didn’t even know existed.

5. Tax Regulations - Financial regulations are designed for local infrastructures and rarely account for virtual operations. It's important to know the threshold for when working remotely may create an additional tax burden for the employee and/or the employer. This will vary based on jurisdiction, tax treaties, local laws, length of time spent working remotely from a given place, the level of permanence of the remote worker, and other factors. For example, nexus in the United States requires that sales tax be paid for each state in which company goods were produced. So, the more regions your team is in, the more you owe.

6. Immigration Laws - Many countries’ immigration laws don't address remote work directly. Some allow for remote work activities on a tourist visa, some require work authorization for any type of work (remote or local), and others just haven't taken a stance on the issue. This isn't currently an issue for most remote workers due to lack of enforcement, but when governments get savvy, your team members may be turned away at the border or liable for retroactive consequences.

Infraction of any of these laws could put your business in severe danger for discrimination lawsuits, fair work violations, exposure to prosecution for non-compliance, lack of defense in the case of a filing, or financial burdens like overpayment of taxes and fines.

So, how can you ensure that your company is going remote in a safe and legal way? The key to protection is accurate documentation. More specifically, your company should depend on the following files and strategies to protect your company, your workforce, and your brand both onsite and offsite:

• Write A Remote Work Policy - You’ve probably considered writing a remote work policy before, but may have considered it an unnecessary formality. This document is so much more than a checklist of expectations and guidelines - it’s a consistent and careful HR agreement that can protect your company from breaches of employment and equal opportunities legislation. Taking the time to design regulations about what “remote work” looks like in your operational model and culture is how you ensure your team is just as compliant around the world as they would be in the office.

• Regularly Update Contracts - Regardless of the work contract being for an employee or an independent contractor, the scope of work (including services to be provided and not to be provided), limit of time and compensation, location and details of the offsite workspace, and performance guidelines should always be updated any time there is an adjustment in the worker’s expectations or responsibilities. But don’t worry, new paperwork doesn’t have to be drafted from scratch each time. A variation of contract by letter or short agreement is sometimes all that is needed.

• Hire A Compliance Expert - Tracking the labor, tax and immigration laws of every single state, province and country that your distributed workforces lives in and travels to can be an enormous challenge, especially for HR and Operations Directors that are new to remote work. Instead, rely on the processes and resources of full-time experts by hiring an internal compliance specialist, or contracting with a Professional Employment Organization (PEO).

• Seek Coaching From Experts - The standards of distributed operations are still relatively young, so the best methods of protection aren’t yet widely available. The most updated templates that we have are the strategies that have been tested by existing remote-friendly employers. Virtual operations consultants and industry associations can connect you with peers and practices that have been refined over the past decade of telecommuting policy evolution.

The moral of the story is if you or anyone at your company ever engages with work anywhere outside of your office, you have some writing to do. Tara Vasdani, Litigator in Canada, warns, “Employers who informally allow employees to work remotely but fail to establish a structured remote work policy, are susceptible to finding themselves before the courts for all types of claims - from constructive dismissal, discrimination, and human rights lawsuits, to reprisal for failing to comply with Occupational Health and Safety requirements. Despite working remotely, and sometimes not coming into “work” at all, employees in these arrangements are still workers under the relevant laws. A ‘foolproof,’ so to speak, remote work policy should contemplate when and how a remote work arrangement is permitted or can be amended; any requirements for the physical workspace of the employee, to bring it into compliance with the right legislation; and clearly delineate the limits, and leniency of the arrangement."

Getting your company’s remote work policy polished up asap may just be the difference between your summer being spent in a swimsuit or a lawsuit.

Disclaimer: The content of this article is not to be considered legal advice.