The COVID-19 pandemic impacted the workplace worldwide when employers were faced with how to keep the lights on if employees were not allowed to physically be in the office. Employees who “work from home” or “work remotely” became the new normal.

Now that the pandemic is (hopefully) coming to an end, many employers are faced with determining the legal implications if employees continue to work from home or remotely.

Below are only some of the legal issues that may arise when employees work from home or work remotely.

Tracking Hours Worked and Properly Classifying Employees if Non-Exempt

Employers must continue to accurately track non-exempt employee hours to ensure such employees are paid for all hours worked, including overtime. Employers should continue to follow all record keeping requirements when tracking hours worked for non-exempt remote employees or employees who work from home.

New York State Wage and Hour class action lawsuits are a huge risk to employers who misclassify remote employees or those who work from home.  Employers should review both State and Federal factors involved in determining whether an employer is exempt or nonexempt from being paid overtime.

Non-exempt employees’ hours are required to be tracked, even when working from home or remotely, which means employers may want to take a look at the software or processes in place to make sure hours are properly tracked when employees are not physically working in the office.

Meal Break Requirements

Employers in New York State must provide all employees time off for meals, after working a certain number of hours, regardless of whether an employee works from home or remotely. The New York State Department of Labor provides FAQs that outline Meal Period Guidelines and can be found here: DOL

Employers who allow non-exempt employees to work from home or remotely should have a policy in place that addresses meal breaks. Employers should carefully track when meal breaks are taken or not taken to ensure that non-exempt employees who do not take such breaks are properly paid for their time.

Tax implications of Working Remotely Outside New York

Typically, an employer withholds and pays taxes in the state where its employees work. However, there are certain tax implications that apply if an employee works from a location outside New York State.

  • Convenience of the Employer Test

In New York State, an employee is considered to be working in the state for tax purposes based on the “convenience of the employer test.”  This means that unless the employer establishes a bona fide office at the out of state location where the employee works, then the days worked out of state during the COVID-19 pandemic are considered days worked in New York.

This can result in double tax for an out of state employee whose state of residence does not provide any credit paid for services performed out of state working remotely or from home. More information can be found in the Tax Department’s Fact Sheet here: FAQ

  • New York’s Factor Based Test

New York State requires a strict factor-based test be used to determine whether an employer may establish the out of state employee’s home office as a bone fide employer office to count days worked as non-New York days. The factors are explained here: Tax Info

Notably, other states may not enforce the tax requirements if the employee temporarily moves due to COVID-19.  Therefore, employers should monitor the requirements of each state that an employee relocates in order to determine if there are any enforceable tax implications in other states during the pandemic.

This article is intended for general information and educational purposes only and should not be considered legal advice or counsel. The substance of this article is not intended to cover all legal issues or developments regarding the matter. Please consult with an attorney to ascertain how these new developments may relate to you or your business. © 2021 Regina Sarkis, Esq.