Hiring Remote Workers? Here Are Four Compliance Issues to Prepare For

Although remote work once seemed like a temporary fix during the pandemic, it’s evident that it’s here to stay. While remote and hybrid offices were taking hold of the workforce, companies also began engaging more contingent and freelance workers. In a recent survey, large corporations in the US said that 28% of their workforces were contingent.

With so many different types of workers doing their jobs remotely now, it can be difficult to remain compliant with employer obligations, including overtime pay, health and safety rules, and more. Out of sight cannot mean out of mind.

Deciding What Type of Worker Is Best for You in a Remote Environment

When engaging talent remotely, you must ensure you are not only applying the correct classification to your workforce but also using the right type of contract for the individual or individuals in question. More specifically, consider whether the professional is deemed an employee, freelancer, temporary worker or LLC contractor (or other) according to the legislation of the country where they will actually be working. This will determine the term of the contract, the statutory benefits, the rights and protections of the individual and more.

To avoid any potential compliance infractions with remote talent, you should always seek legal advice regarding your contracts; that’s the safest way to guarantee your contractual clauses are enforceable in the state, province and/or country where your remote workers are engaged.

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Primary Risks With Contingent Remote Work Compliance

If you’ve embraced the remote (contingent or permanent) employee model, there are a few requirements to consider:

Immigration. It’s key to know where each worker is located so you can verify that they have the proper documentation to work wherever they happen to be. To avoid a potential breach of immigration and employment laws, ask a couple of questions when hiring:

  • What is your nationality or citizenship?
  • Do you have a visa to legally work in the country where you are?

Failing to check on this critical information can result in hefty fines for your business, so it’s not something you want to ignore.

Income tax and Social Security. More than likely, your remote workers — whether permanent or contingent — will be liable for income tax and Social Security contributions in the territory where they reside. Even if your entity does not have a presence in the same location where your workforce is, it is still your responsibility to ensure applicable employer and employee taxes and contributions are paid to the relevant authorities. If you are not sure how to handle this, there are many providers in the staffing industry that can help you address these compliance matters appropriately.

Health and safety. Health and safety are also important remote work requirements to consider, especially if you are working with people from a variety of locations. To illustrate, the Netherlands, like many European countries, has rules in place that ensure workers’ home offices are ergonomically sound and safe. An assessment must be carried out, and if the area is deemed unsafe, it is the employer’s responsibility to help make appropriate adjustments.

Equal treatment. It’s also critical to remember equal treatment for all employees, regardless of where they work or what kind of contract they’re in. Again, if you decide to work with remote workers from different countries, there might be laws that require you to treat them the same as full-time team members in terms of salary, benefits, working hours and paid leave. However, if you are engaging independent contractors, you will want to ensure you classify and treat them as such. For example, California has strict laws about using 1099 contractors. Treating them the same as employees could put your company at risk of misclassification penalties.

Remote work opens a world of opportunities both for permanent and contingent talent; however, if you’re unsure how to navigate the compliance challenges, you must take time to do the homework to avoid any pitfalls. With careful planning, you can reap the financial benefits of having the best talent — wherever they happen to be — while also protecting your business from any potential problems.

Helga Venturini Townend

Helga Venturini Townend
Helga Venturini Townend is the senior director of global operations at Innovative Employee Solutions.

Helga Venturini Townend

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