The Evolving Landscape of Remote Work Laws: What Employers and Employees Need to Know

Is Remote Work on the Rise in the U.S.?

Remote work was already on the rise before 2020, and the global pandemic significantly accelerated that trend. Pew Research Center reports that approximately three years after U.S. workplaces were shut down by the COVID-19 crisis, approximately 35% of workers with jobs that can be performed remotely worked from home. This represents a significant increase from 7% before the pandemic.

In addition to those who work from home all the time, many workers have hybrid schedules – working from home some days and from the workplace other days. Among these hybrid employees, 63% say their employers require them to work at the office or job site in person for a minimum number of days per week or month. Approximately 59% work from home three or more days per week, while 41% work remotely for two or fewer days per week.

Which Industries Have the Most Remote Workers?

By 2025, an estimated 32.6 million employees, approximately 22% of the workforce, will be working remotely, as reported by Forbes Advisor in an article entitled “Remote Work Statistics and Trends in 2024.” The leading industry for remote employees is the computer and IT sector. Other top remote worker industries include marketing, accounting and finance, project management, medical and health, HR and recruiting, and customer service. Common remote job postings include accountants, technical writers, executive assistants, graphic designers, recruiters, customer service reps, financial analysts, and project managers.

What Are the Demographics of Remote Workers Today?

A look at the demographics of remote workers nationwide can give employers insight into types of employees who are likely to embrace a remote work arrangement. Remote worker demographics include:

• Younger age range: Within the 24 to 35 age group, 39% work full-time remotely, and 25% work part-time remotely. This indicates that younger workers are more likely to value the autonomy and flexibility associated with remote work.
• Higher education: Workers with higher education levels are more likely to work remotely. Among full-time remote workers, 45% have advanced degrees, 40% have bachelor’s degrees, and 31% have associate degrees.
• Higher earnings: Remote workers earn an average of $74,000 a year. In comparison, the average annual salary for in-office workers is $55,000. This is a difference of $19,000 a year. Workers with hybrid work models (working from home some days and from the workplace other days) earn more than full-time remote workers, at an average of $80,000 annually.

What Are the Advantages of Remote Work for Employees?

Teleworking has one clear advantage for employees – it helps them maintain a work-life balance. Remote workers have more flexibility regarding when and how they start and end their workdays, allowing for more control over their personal lives and better balance with work schedules. Other benefits of working from home include:

• Less time and stress associated with commuting: Employees who spend more than half an hour a day commuting to and from work tend to have higher stress and anxiety levels, along with associated health issues, such as high blood sugar, high cholesterol, and an increased risk of depression.
• A wider range of job opportunities: Workers who can do their jobs from anywhere are not limited by geographic location as to what positions are available. Remote work allows employees to avoid major metropolitan areas with higher costs of living.
• Financial savings: Working from home enables employees to save a substantial sum every year on items such as gasoline, vehicle maintenance, parking, professional clothing, and lunches out.
• More comfortable work environment: When you work from home, you can set up your office or workspace any way you want. This may include a more comfortable chair, a more ergonomic workstation, better lighting, and coffee, drinks, and snacks to your liking.
• Increased productivity: With fewer interruptions, less noise, fewer or more efficient meetings, and less office politics, remote workers simply get more done. More time and fewer distractions mean increased productivity.

How Can Having Remote Workers Benefit a Business?

A remote work arrangement is a business strategy that benefits employers as well as employees. It can contribute to:

• Expanded talent pool: With remote work as an option, companies are better able to attract and retain top talent. It gives employers the option to hire from anywhere in the country, increasing diversity and expanding the applicant pool.
• Company resilience: Workers who are comfortable working remotely may be better able to navigate emergencies, such as cyberattacks, weather events, fires, and public health crises.
  Technology adoption: A remote work arrangement requires companies to adopt technology they might not have used otherwise. Embracing technology better equips a business to adapt to the ever-changing needs of consumers.
• Higher productivity levels: Remote work arrangements contribute to less stress, better employee health, better work-life balance, greater job satisfaction, reduced absenteeism, better employee retention, and higher levels of productivity.
• Workspace cost savings: When employees work from home, the company saves on the cost of providing workspaces. As reported by Employee Benefit News (EBN), companies that shift to remote work save approximately $10,600 per employee per year.

Do Employment and Labor Laws Apply to Remote Workers?

Federal and state employment laws have been enacted to protect the rights of employees. Employers must treat remote workers the same as in-office workers in matters such as wages, paid time off, breaks, and overtime. The following are examples of labor laws that apply to remote workers as well as to those who work in the office or on a job site.

Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) provides protections for employees in private and government sectors, including remote employees. For employees who are not exempt, the act:

• Sets the federal minimum wage: If the state has set a minimum wage, employees are entitled to whichever is higher. (As of January 1, 2024, the minimum wage for all except tipped workers in Missouri is from $12 to $12.30 per hour.) Companies with remote workers may be paying different wages to employees in different states.
• Requires overtime pay for hours worked over 40 hours per work week: Overtime must be paid at a rate of at least time and a half. Rules on how overtime pay is calculated can vary from one state to another.
• Defines “hours worked” to include all the time during which an employee is required to be on duty or at the prescribed workplace.
• Requires employers to maintain records for each employee, including information on time and pay.

Although employers are not required under federal law to provide employees with coffee breaks, they are required to include short breaks of five to 20 minutes in compensable work hours that apply toward an employee’s hours worked in a week.

Family and Medical Leave Act

Under the federal Family and Medical Leave Act (FMLA), eligible workers, including remote workers, have a right to take unpaid leave for family and medical reasons with job protection. In a 12-month period, a worker may be entitled to 12 work weeks of leave in any of the following situations:

• Birth of a child
• Adoption or foster care of a child
• Need to care for a spouse, child, or parent with a serious health condition
• Serious health condition that prevents an employee from performing essential functions of the job
• Any qualifying emergency due to covered active military duty of a spouse, child, or parent

Americans with Disabilities Act

Employers are prohibited from discriminating against individuals with disabilities under the federal Americans with Disabilities Act (ADA). They are also required to provide reasonable accommodations for employees with known disabilities, which may include modifications to the work environment. An employer that offers a remote work program must allow employees with disabilities to participate, even if it means waiving eligibility requirements that may apply to employees who are not disabled.

What Are the Legal Implications of Remote Work Arrangements?

The employment landscape is evolving with advancing technology and the increasing percentage of employees working from home. Key issues that have legal implications employers should consider include the following.

Remote Worker Employment Status

Like all workers, remote workers fall into one of three categories – employees, independent contractors, or freelancers. With each category, employers and employees have different rights and obligations. Employees are entitled to certain protections and benefits under state and federal labor laws. Independent contractors and freelancers have more flexible work arrangements, pay their own taxes, and are not entitled to employee benefits.

Wage and Hour Issues with Remote Workers

Companies that employ remote workers must comply with the Fair Labor Standards Act as well as state and local wage and hour laws. Wage and hour issues that may arise with remote workers include:

• Different minimum wage rates in different states: Employers are required to pay minimum wage in the state where the employee performs the work. When both state and federal minimum wage laws apply, employers must pay the higher rate, which can vary from one state to the next.
• Varying overtime pay requirements: Some state laws require overtime pay in excess of what federal law requires. Employers must comply with the law of the state where a remote employee works.
• Employee leave: Most states have adopted laws requiring paid sick leave, medical leave, and maternity and paternity leave. With remote workers, employers must ensure they abide by state laws and provide notices about the availability of leave.
• Rest and meal breaks: Employers with remote workers must establish a system to monitor compliance with different rules in different states regarding mealtimes and rest breaks for employees.
• Payroll: Different states have different requirements for payroll frequency, payment of accrued and unused vacation, information provided on paystubs, and payment upon employment separation. Employers of remote workers must also comply with state and local tax rates and filing deadlines.

Tax Issues with Remote Employees

Companies that employ remote workers in different states may incur tax obligations in those jurisdictions. In some cases, an employer with even one employee working in a state may be subject to business taxes and corporate registration requirements. Employers are required to withhold income, Social Security, Medicare, and other taxes from employees’ wages. Typically, taxes are withheld according to the physical location where the work is performed, and remote employees may need to pay taxes in that jurisdiction. State tax implications for employers may include payroll taxes and unemployment insurance. Professional guidance to ensure compliance may be advisable.

Security and Data Protection in Remote Work Arrangements

Data protection and security are essential when remote work involves personal information or sensitive data. Employers must comply with privacy laws and take all necessary steps to safeguard data, including:

• Ensuring compliance with data protection regulations by obtaining consent and implementing safeguards
• Implementing secure access for remote workers to company data and systems, such as encrypted connections, virtual private networks (VPNs), and proper protocols for backups and data storage
• Requiring remote workers to sign confidentiality agreements to protect trade secrets and proprietary information

Health and Safety Protections for Remote Workers

Employers have a duty to provide employees with a safe work environment, even if they are working from home. This includes a duty to address any work-related health risks or safety hazards.

Most employers are required to carry workers’ compensation insurance. Employers with workers in more than one state may need policy add-ons or multiple policies. Some states impose heavy fines on employers without workers’ comp coverage. Workers’ compensation laws in the state where the work is performed apply, and they may vary as to how a work-related injury is defined.

Remote Employee Protection from Harassment and Discrimination

Remote workers have the same protections as other employees from discrimination or harassment on the basis of sex, age, race, disability, and other protected characteristics. Discrimination is prohibited in every aspect of employment, including recruitment, application, hiring, background checks, benefits and pay, training and apprenticeship, discipline, and discharge. Protected traits under federal law include sex, race, national origin, religion, age, color, genetic information, and disability.

Some state laws provide more protections than federal laws, and employers must address these issues in alignment with the laws of the state where the work is performed. For example, New York State prohibits discrimination on the basis of familial status, marital status, employment status, caregiver status, weight, height, and arrest or conviction record. None of these characteristics are protected under federal law.

Privacy Protection Restrictions on Employers

Many jurisdictions have adopted laws regulating the background check process. As stated in a Reuters article, “ban the box” or “fair chance” laws have been enacted in at least 37 states and 150 cities in the U.S. These laws prohibit employers from inquiring about a job applicant’s criminal arrest or conviction record until the company has extended a conditional offer of employment to the applicant. Several jurisdictions have passed laws prohibiting employers from investigating credit scores or credit histories of job applicants. Companies recruiting remote employees in different locations must comply with all applicable applicant screening laws.

FAQs About Remote Work Arrangements

We have provided general answers for employers and employees to frequently asked questions about remote work arrangements.

How Do Employers Monitor Remote Employees?

According to the Reuters article, 60% of companies use monitoring software to track remote workers. This type of tracking software can capture all types of user activity, including Zoom sessions, keystrokes, emails, screen recordings, and live views of workers. Although this software is designed as an aid to accountability and productivity, it also poses privacy issues. Consent and transparency are important considerations for employers who use it.

Do Remote Workers Present a Greater Security Risk?

As stated on Reuters, 73% of executives believe they do. Cyber attacks have become a major concern for all businesses. Companies that employ remote workers need robust security protocols and employee education on safe practices in remote work environments.

How Important Is the Option to Work Remotely to Employees?

Among hybrid employees, who only spend a portion of their work time working remotely, 32% stated they would consider a cut in pay if they could work remotely full-time. This illustrates the high-value employees place on the option to work remotely.

How Does Working from Home Benefit Employee Health?

Working from home allows employees to eat healthier, experience less stress, and lower blood pressure. It reduces the risk of elevated blood sugar levels and depression. Without a morning commute, remote employees may be able to get more sleep, spend time with the family, and have a healthy breakfast. Remote workers have greater flexibility for annual checkups and doctor visits. They have more balanced social lives and more opportunities for regular exercise. In addition, people who work from home instead of an office are exposed to fewer germs that can lead to infections.

How Can Employing Remote Workers Help Companies Save Money?

Employers that have remote work arrangements with employees can save more than $10,000 a year for each remote worker. Savings from overhead, real estate costs, and other expenses can add up to a substantial sum. With a remote workforce, companies do not have to provide office space, utilities, office supplies, and other items for employees. Some employers may be able to offer less costly benefits and still attract and retain valuable employees with a remote work arrangement.

Do Employers Trust Remote Workers to Get Their Work Done?

According to a Pew Research Center survey, 79% of employees who work from home all the time say their bosses trust them to get their work done. Among hybrid workers, 64% say their employers trust them when they are working from home, and 68% say their bosses trust them when they are not working from home. Most adults (71%) who work remotely at least part of the time say their managers or supervisors have a high level of trust that they will get their work done. Among adults working remotely full-time, 79% feel they have a great deal of trust from their employers.

Is There a Limit on the Number of Company Employees Who Can Work Remotely?

There is no limit on the number of remote workers a company, office, or division can employ. Eligibility for remote work is determined by the nature of the work, the portability of the employee’s responsibilities, and other factors, as specified by the employer. Companies must assess eligibility for a remote work arrangement against the organization’s business needs.

Do You Need an Employment Law Attorney for a Remote Work Arrangement?

Employing remote workers gives rise to a variety of legal implications. The best way to protect your company is to seek counsel from an experienced employment law attorney. Remote employees or job applicants who have disputes with employers need experienced legal representation for the best chance of resolving the matter favorably.

Employment law is an ever-changing field with a myriad of traps and loopholes. Our legal team at Riggan Law Firm has more than 30 years of combined experience in employment litigation. We offer attentive communication and client-oriented service to employers and employees. Contact us today at (314) 528-9661 to learn more about what we can do for you.