Legal Implications of Hiring Remote Workers

With companies increasingly hiring remote workers, employers are reexamining their processes, taking a deep dive into the legal issues with remote workforces, and changing things up as needed.

What are the legal issues?

Accountability, security, and safety are three issues that are top of mind for clients of Marc Sugerman, shareholder and attorney at Allen Norton & Blue. Policies and procedures that worked for in-house employees now must be updated to reflect the new work situation.

"Employees need to understand when they're expected to 'be at work,' when they're expected to be available, and how to use their equipment," Sugerman says. "You need a system of communication so supervisors can track productivity. You need a way to set clear expectations for workplace responsibilities and follow up on that." Put those in place before you make your first remote hire.

How to prevent issues

The best way to head off potential concerns, according to Joe Wilson, senior career adviser at MintResume, is to "go over your company policies and update your company handbook. Add and/or edit policies and tailor them to the current working situation."

Make your policy and procedure handbooks electronic and available in the cloud or intranet. It also doesn't hurt to send along a hard copy to each remote employee for easy reference. Make sure they acknowledge they have received it.

Having—and following—the employee handbook will provide added protection from liability. Communicating productivity expectations, following up when they are not met, and documenting follow-ups will protect wrongful terminations.

Advice from CEOs

In Smooth Waters' CEO, Jacob Pinkham, whose employees have always worked remotely, suggests these additional steps:

• Have employees living abroad fill out a W-8BEN form for withholding taxes.
• Continue to monitor health and safety needs. "Ensure you connect regularly with your staff; ask them how their working conditions are and if you can help," Pinkham says.
• Update contracts to restrict employees from working on a public Wi-Fi connection.
• Update nondisclosure agreements to restrict employees from sharing passwords, logins, and other cyber-sensitive company information.

On cybersecurity

Brian Dechesare—founder and CEO of Mergers & Inquisitions, who also leads a completely remote team—expands on Pinkham's security concerns.

"With teams operating remotely on unmonitored devices, mistakes are more likely to happen," he says. "Sensitive information can find itself on untrusted devices, which can compromise nondisclosure agreements and create significant data breaches."

"There's no way to completely monitor every device your employees use," DeChesare says. "It requires some level of vigilance and responsibility on the part of the employee, but one way to prevent technical mishaps is through data encryption."

He advises employers to update the company handbook so that new hires know they will need to encrypt data on their mobile device, PC, and/or laptop and be careful about where they access data. Particularly sensitive information should be inaccessible on mobile and portable devices, making them more liable to remote access, loss, or theft.

"In some cases," DeChesare warns, "even crossing a border can disqualify information from data protection. It pays to be conscious of the devices you use to access sensitive data. Encrypt and secure accordingly."

On payroll

Marvin Magusara, founder of WhatStorage, reminds employers they also need to be diligent about payroll.

"Companies that hire remote workers across the globe," he says, "should ensure they respect [state and country] laws. Business owners should ensure they comply with the minimum wage in the employee's state, that they respect the payday frequency and deduction requirements as well as overtime calculation. To solve these problems, it's always smart to hire a specialized agency since they're familiar with legislations to keep themselves up to date with law changes."

On legal notices

Don't forget to ensure all remote employees will have access to legal notices. Working onsite, employees see these federal, state, and local notices in common areas, but remote employees still need to know these regulations.

"In the traditional way of working at a place of employment, most states have written in law that all labor notices should be displayed explaining employees' rights," says Joe Flanagan, employment adviser at VelvetJobs. "When hiring a remote worker, I recommend including all labor rights documents on the organization's intranet."

When managing a remote workforce, update and make use of electronic policy and procedure manuals. Ensure you have clearly communicated productivity, safety, and security issues.

"Treat employees equally, and try not to make exceptions for employees unless you can clearly articulate the reason why you are making those exceptions," Sugerman advises. "Then you can avoid legal troubles."