Remote and Hybrid Work: New Flexibility, New Legal Risks
What started as a temporary solution during the pandemic has become a permanent fixture of the American workplace. But while employees have embraced the flexibility of working from home — or anywhere — employers are still navigating the legal consequences.
Remote and hybrid work can trigger wage and hour concerns, workers’ compensation claims, tax complications, and data security issues—often across multiple jurisdictions. And as more employees shift out of the office, these legal gray areas are only getting more complex.
The Workplace Has Changed, But the Law Hasn’t
Employers are still expected to comply with a wide range of state and federal laws, many of which were written for a traditional office setting. As a result, businesses are facing increased scrutiny and legal exposure in areas like wage compliance, state tax obligations, and workplace safety.
If your policies haven’t been updated since 2019, your company may be more vulnerable than you think.
Clocking In From Anywhere
The Fair Labor Standards Act (FLSA) still governs how non-exempt employees must be paid, including minimum wage and overtime. But in a remote environment, ensuring compliance gets more complicated. Employees may be working across time zones, logging hours outside traditional schedules, and lacking oversight when it comes to taking breaks or responding to after-hours emails.
Layer in state-specific wage laws—like California’s strict overtime rules and mandatory rest breaks—and the risk of wage claims multiplies. Employers should ensure they have clear policies and reliable timekeeping practices in place, especially for employees who work partially or fully remote.
A single wage claim based on missed breaks or unpaid overtime can lead to costly penalties—and, potentially, class action exposure if policies aren’t consistent across remote teams.
When Work Injuries Happen at Home
Workplace safety doesn’t end at the office. If an injury occurs during the course of performing job duties at a remote location, employers may still be liable. That might include tripping over a computer cord or developing repetitive strain from an inadequate desk setup. States vary in how they handle remote workers under their workers’ compensation laws, but many offer coverage for injuries that occur during working hours, even in a home setting.
Providing clear guidelines on how to set up a safe home office, along with documenting reported injuries, can help mitigate potential claims and liabilities. Employers should also consider updating internal procedures for reporting and investigating remote incidents..
The Hidden Tax Trap
Remote work doesn’t just affect HR; it affects your finance department too. Many employers are surprised to learn that a remote worker in another state can create a “nexus,” or tax obligation, in that state.
That might mean new requirements for income tax withholding, unemployment insurance contributions, or even business registration. These obligations vary widely by state and have become a growing source of litigation and regulatory enforcement.
For employers with workers in multiple states, staying compliant requires tracking the location of employees, understanding each state’s specific rules, and proactively managing registration and filing obligations. What may seem like a small administrative oversight can snowball into a significant financial liability.
Data Security in a Decentralized World
Remote work has also reshaped how companies manage cybersecurity and data privacy. Sensitive company and customer data is now being accessed from living rooms, cafés, and vacation rentals — often on personal devices or unsecured Wi-Fi networks.
This introduces risk not only under internal policies but also under laws like the California Consumer Privacy Act (CCPA) or the Health Insurance Portability and Accountability Act (HIPAA), depending on the nature of your business.
Employers should ensure they have appropriate safeguards in place, including secure VPN access, encryption, clear usage policies, and employee training. Remote monitoring tools can also help, but must be implemented carefully to avoid violating employee privacy rights under state law.
Outdated Policies, Unintended Risk
Many employment agreements and handbooks were written for a centralized, office-based world. As the workplace evolves, so should your documentation. Without clear terms, employers risk disputes over hours, expense reimbursements, data protection, or even relocation.
For example, does your policy specify where remote work is allowed? Who provides and maintains office equipment? How is performance measured outside of traditional supervision?
Updating your documents to reflect modern expectations not only reduces legal ambiguity, it also sets clearer standards that benefit both the employer and employee.
What Can Employers Do
The shift to remote work brought welcome flexibility. But it also requires structure, strategy, and compliance. Employers who treat remote work as an informal or ad hoc benefit risk overlooking serious obligations.
Now is the time to:
Review where employees are located and whether you’re properly registered and withholding taxes in those jurisdictions.
Update timekeeping and wage policies to reflect the realities of remote work.
Reevaluate safety practices and workers’ compensation coverage for off-site work.
Strengthen your data security and privacy protocols.
Modernize employment agreements and handbooks to reflect today’s hybrid workforce.
Reducing Risk in a Remote Work Era
Remote and hybrid work have opened new opportunities for flexibility and efficiency, but they also introduce a host of legal and compliance challenges that employers can’t afford to ignore. As regulations evolve and enforcement increases, organizations must take a proactive role in updating their policies, agreements, and internal practices to reflect the new world of work.
If your business employs remote workers across the city or across state lines, now is the time to assess your risk, clarify your obligations, and ensure your policies are keeping pace. Our firm can help you review existing frameworks, navigate compliance requirements, and develop a remote work strategy that’s both flexible and legally sound, enabling you to reduce liability and move forward with confidence.