More than ever, small and growing businesses are adopting remote work programs. But there are safety and compliance dangers that spring out of remote work—and business leaders don’t always recognize them until it’s too late. If you own a business that offers remote work, you need to proactively plan to ensure employees are safe and you’re upholding your duty of care responsibilities.
Remote work exposes businesses to additional risk, and this article outlines three methods to protect employees working remotely as mobile work continues to expand.
Understanding the Rise in Remote Employee Risks
Remote work has exploded in the last few years, and this work style is more popular than ever. In fact, according to a survey conducted by McKinsey, 87 percent of workers would work in a flexible environment if they had the chance. However, many business leaders don’t realize that remote work raises risks for both employees and companies.
Many companies adopted remote work programs in a hurry during the pandemic or launched their mobile work models without carving out thorough approval processes first. Now, many of these businesses have employees scattered across international or domestic borders with no way to track them. This opens the company up to a range of potential problems.
Here are a few reasons why not knowing where your employees are working is dangerous:
Remote work makes duty of care difficult.
Simply put, if you don’t know where your employees are, you can’t keep them safe. For instance, imagine one of your employees recently moved to a new country—unbeknownst to the business—where an emergency, natural disaster, or political unrest strikes. That employee could be left to fend for themselves, and the company could be exposed to liability.
Companies and employees risk tax violations.
In an all-too-common situation, remote employees will work from multiple states or countries without alerting HR or payroll. In turn, the employee may end up owing extra taxes in multiple jurisdictions, or the company may misreport taxes. In a recent case, one remote employee may end up costing a company an estimated $500,000 because the worker didn’t disclose their working situation in Texas and California.
Employees could lose benefits.
If remote employees work across borders freely, they may risk losing benefits. For example, a remote employee will often move to a new state without informing their employer. As a result, they may end up working in an area outside of their healthcare coverage network.
In another common scenario, employees will move between international destinations for work. If the company offers equity compensation, those rewards may end up maturing within different jurisdictions—and they may trigger a higher tax bill than the employee expected. In all cases, lost benefits can frustrate employees and end up hurting employee retention.
How to Protect Your Remote Employees
By getting ahead of potential risks right away, small and growing businesses can protect remote employees—and the company. Here’s how:
1. Start tracking employee whereabouts.
To protect out-of-office employees and avoid company damage, leaders need to keep track of workers’ whereabouts. Different states, countries, and jurisdictions have different laws and risks. The only way to make sure employees are avoiding violations, lost benefits, and dangerous situations is to monitor where they’re working and how long they will be working there.
The best method for keeping track of employees varies from one company to the next. But businesses have used everything from software or calendar location sharing to routine manager check-ins to report remote employees’ work locations. No matter how you do it, it’s important to make sure you know where employees are working—and that they’re working from an approved location.
2. Revisit your remote work policies.
Too many companies reset their remote work offerings during the pandemic without upgrading their official business travel or remote work policies. To keep employees safe, be sure to update your remote work policies.
Make sure your policies clearly:
- Explain where employees can and cannot work, along with your approval process.
- Lay out how often employees should be reporting their whereabouts.
- Define what your company considers remote work, hybrid work, or business travel.
3. Build out cross-departmental processes.
Especially if your employees are working internationally, managing remote work will require cooperation from across your organization. You may need input from everyone from immigration, benefits, and payroll departments to corporate tax professionals. That’s why it’s important to gather feedback from across departments and include them in your remote work processes.
Pro tip: If you start building out processes and find there are resource gaps within your team, consider picking up technology or third-party support to fill in those weak spots.
Build a Proactive Plan Now to Avoid Remote Employee Nightmares
As remote work continues to grow, it’s catching many small and growing companies off guard. By letting remote employees work freely across borders, businesses could be exposing themselves to tax violations, duty of care mishaps, and noncompliance. But it is possible to protect employees as the modern work environment shifts. By adopting a proactive stance to employee safety and compliance now, businesses can protect employees long into the future.
Jennifer Stein has more than 25 years of experience in expat and foreign national tax preparation and consulting. She joined Global Tax Network in 2011 and serves as managing director. While clients’ projects may look similar on paper, she understands that every employee’s situation is unique. She coaches clients to understand the complexities of sending employees across borders and helps them work through the many requirements of home and host reporting.
