Central Planning vs. Remote Work

Thursday, November 17, 2022

In her Ask a Boss column, Alison Green replies to a question from an established remote worker whose proposed change of state residence was suddenly and mysteriously shot down by previously-supportive management.

Regulars here might guess that the proposed state was California, and that its ban on contracting were to blame. They would be correct by coincidence on the first matter and seeing only the tip of the iceberg on the latter.

Government meddling with the workplace is both more pervasive and worse than you might think:

If only the business environment matched its natural beauty... (Image by Iris Papillon, via Unsplash, license.)
Here's the reason, which a lot of people aren't aware of: If an employer lets employees work from a different state, it creates what's called nexus in the new state, and it may be required to pay taxes, set up workers'-comp insurance (which isn't cheap), and even charge customers sales tax in that state. Those can be really significant expenses.

On top of that, the company will be required to follow the employment laws of that state. It can be a not-insignificant burden to monitor and comply with an additional state's employment laws, particularly if they're very different from the laws where the business is headquartered. California's laws in particular happen to be a lot more complex and employee-friendly [sic] than many other states'. For example, if your job is classified as nonexempt (the government classifies every job in the U.S. as exempt or nonexempt), you're required by law to be paid overtime when you work more than 40 hours in a week. In most states, that's the end of the requirement. But in California, you also need to be paid overtime for any hours over eight that you work in a day -- so there's a whole different tracking requirement and a whole additional pay requirement. Moreover, if you're exempt from overtime currently, you might not qualify to keep that exemption in California, which has more restrictive standards for that than federal law does. So your company could end up needing to track and pay your overtime when it doesn't currently. California also treats vacation accrual and payout differently than many other states and requires that different information be provided on your pay stub (with monetary penalties for not complying) and a whole host of other differences. [bold added]
California's laws are particularly onerous, but Green elaborates that any new state presents a can of worms to an employer not already present there. (Perhaps the example of California is fortuitous for helping show just how many worms there can be...) Furthermore, as if each state presenting its own unique problems weren't enough, the federal government contributes to the problem.

Green also discusses how difficult government regulations on contracting make that possibility -- which many would regard as an obvious solution.

-- CAV

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