Keys to paying remote workers correctly for their shifts
Telecommuting has been become an attractive perk for employees.
According to a recent survey from Robert Half, 77% of workers said the ability to telecommute at least some of the time would increase their chances of taking a job offer.
Nonexempt workers
Although many are interested in telecommuting, there are several challenges to consider.
For Payroll, telecommuting can make paying workers tricky, as discussed in a recent presentation during the 2019 American Payroll Association (APA) Congress.
Telecommuting gets especially complicated with nonexempt employees. Tracking their hours worked is critical to paying them correctly and staying in compliance with the Fair Labor Standards Act and various state and local laws.
It ca be tough to monitor the hours of nonexempt employees who telecommute, since they aren’t on site to clock in each workday.
Mobile time-tracking solutions can help, since they’re user-friendly for most workers who have smartphones. Web-based cloud systems are another good option for accurate timekeeping.
State taxes
Here’s another area to watch when workers telecommute: state tax laws.
In all states, if an employee works permanently from home, their home may be considered a worksite for state income and unemployment tax purposes. If there’s no other physical work location in that state for the company, the employee’s home office address will serve as the main business “headquarters” in that state, and this could impact a company’s tax liability.
A few states, such as New York, Nebraska and Pennsylvania, have laws saying that all wages a worker earns from state-based employers must be taxed by that state, even if the employee works remotely from a different one.
The only exception is if an employee is telecommuting from out-of-state due to necessity.
When employees work remotely in a different state than your company, be sure to review tax laws in both states to make sure nothing crucial is missed.
Cite: Telecommuting: Wage and Hour/Taxation Issues, presented by Bill Schmalle, CPP, at the 2018 APA Congress, National Harbor, MD
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