Companies are pushing to lure employees back to the office, but the trend of working remotely has so far proven unstoppable. Still, it presents unique challenges for companies in terms of tax laws, workers’ compensation cases and travel expenses. Remote work is here to stay, although we will see variations of it. Hybrid models requiring a few days in the office are becoming increasingly popular, while some companies are asking for 100 percent return to the office (RTO).
Gen Z’ers, who will constitute 23 percent of the global workforce by 2024, in particular may have difficulty accepting RTO. According to Forbes, Gen Z is the most ethnically diverse generation, with more than 50 percent from non-white backgrounds. They are deeply aware of social issues, from discrimination to sustainability and are more tech savvy than previous generations. Working remotely from home allows them to divert attention to causes they care about, as well as to side hustles. And by telecommuting, they help reduce pollution/carbon emissions (climate change is a core value for many Gen Z’ers).
Why is it important to know about the future of remote work? Gen Z’ers have a choice. They may refuse a job based on remote work guidelines, whereas previous generations may not have done so. Recognizing these concerns, according to a Forbes survey, 72 percent of companies said they would offer commuter benefits, 57 percent would help with child-care costs and 64 percent would provide catered meals.
However, will this be enough to attract Gen Z’ers back, or will companies take the risk of losing this talent pool? This remains to be seen. In other words, work-life balance is going to mean everything. This is the new business paradigm that employers must keep in mind as they create Remote Work Policies, and as HR redefines its talent acquisition guidelines in conjunction with travel, tax, risk management and legal departments.
The Middle Ground: Hybrid
While employers are trying to convince employees that returning to RTO full time is going to be healthier and safer, many potential employees won’t accept anything less than a hybrid model. “We are a hybrid company and the people who want to work here believe in that ethos,” explains Kelly Soderlund, traveler trends expert at Navan. “In 2023, Navan doubled down on expanding its physical footprint by moving into larger offices in three US cities (New York City, San Francisco and Austin, TX). This was something we were able to do because we remained in our office spaces throughout the pandemic – that is, while others are still focusing on bringing folks back into the office, we’re able to focus on our growth.”
Some employers are listening, and responding by offering more incentives for the hybrid model, including expensing items partially or fully such as parking and healthy meals (at the office), and/or Internet access, cell phone plans and office supplies (at home). Online meeting platforms such as Zoom may be reimbursed, as may travel expenses to and from an office site for specific events.
“Many companies are still finding their footing when it comes to remote working,” reflects Erica Antony, chief product officer at CWT. “On the one hand, it can be a great perk that helps attract and retain talent. In some cases, businesses may also be able to reduce their office footprint and save on operational costs. But it does raise its own set of challenges and considerations,” Antony explains.
“From an employee engagement standpoint, relying solely on virtual meeting and collaboration tools doesn’t cut the mustard. There’s been a rise in travel for small meetings as organizations want to ensure their employees have some regular in-person face time to foster greater creativity and collaboration,” she says. “Seeing this trend, last year we introduced a new feature in our myCWT web and mobile apps designed to simplify team travel. Travelers can share a “live” view of their itinerary with their colleagues, which updates in real time when any changes are made to the bookings. The recipients can then join the trip and book the same flights and hotels in the shared itinerary with just a few clicks.”
The New Office
What will the new remote scene look like? When employees do come into the office, whether that’s five times a week or one day in a month, the dynamics of the employee group may be different. Instead of working in siloed cubicles, offices will be seen as hubs for innovation and team collaboration.
“Our philosophy is you don’t go to the office to work, you go there to collaborate,” states Steve Reynolds, CEO of Tripbam in Dallas, TX. “What’s lacking with remote work is in-person interactions and building relationships. Employees based in Dallas come in once per week and are expected to work in cross functional teams and avoid staring at a computer screen all day. You can do that at home. In addition, we buy lunch for the office. The office is an open space without cubicles or walls. Also, there are several huddle rooms for small meetings and larger ones with A/V for collaborating with employees outside of Dallas. It works well as we have zero employee turnover.”
Another way the “New Office” will present itself is with a greater emphasis on health, hygiene and safety. Many companies have increased access to mental health counselors (and offer paid sessions with them), and a larger emphasis on wellness and health in general. Coffee breaks with filtered water and organic coffee, exercise and stretching breaks woven into the workday, standing desks and back-supporting chairs, as well as free yoga during the power hour lunch break, are all on offer.
Sustainability initiatives will also gain prominence in the “New Office.” Many Gen Z’ers appreciated the impact that working from home had on the environment, with less commuting and energy waste. Now that they’re being asked to go back to the office, they’re demanding employers highlight sustainability. In fact, a recent survey discovered that out of almost 23,000 respondents, a large number of Gen Z (55 percent) and Millennials (54 percent) have gone so far as to research a company’s “environmental impact and policies before accepting a job from them.”
How are employers reacting to these demands? Some companies are offering Green Spaces for creativity and relaxation, others are upgrading their recycling and food wastage programs or promoting cruelty free and sustainably sourced products. And a few are going all out by redesigning their office spaces to create agile environments with biophilic designs that don’t hurt the environment. The concept of “defined” or “designated” cubicles may become history as some offices adopt “hoteling” (where there is no assigned seating – employees sit where there is space available for the type of tasks at hand).
The Headache of Complex Laws
Managing a remote employee’s expenses or setting the vibe of the new office is just the tip of the iceberg. Controlling the numerous legal and tax implications of the rapidly emerging New Remote Universe is where things can get difficult. To break this down a bit, here is a starting list of considerations – and a template for the creation of a Remote Work Policy:
1. Wage and hour compliance: Hiring remote workers means employers must pay extra attention to how accurately hours are tracked. Complying with employment laws can get tricky; according to SHRM, remote workers don’t really log in or out by the clock, and can work overtime at odd hours.
2. Tax laws vary from state to state and can become a legal nightmare if not addressed right from the start.
According to ADP, employers withhold applicable state and local income taxes based primarily on where an employee performs services/physical location – and secondarily, where the employee lives. What happens then when an employee working remotely in Texas moves to Oregon? Which state tax does he pay? Does his tax bracket change? Does his employer even know he has moved?
3. Employers must generally cover employees under Workers’ Compensation policies based on where they are working. If employees are in another state, a policy addendum may be needed, which can mean additional costs and paperwork.
4. Crafting employment contracts for remote workers that covers RTO policies is a smart idea. For example, suppose a remote worker assumes his contract does not call for a return to the office, and then based on this information, decides to move out of state.. Once he moves, he finds out he is being asked by the employer to RTO in the home state. This can cause a loss of trust between employer and employee or even the resignation of the employee.
5. While not a tax implication, employers should educate their remote teams on a few other areas of pressing concern to avoid potentially devastating legal implications:
• The potential for data security and privacy breaches (companies must provide measures to protect sensitive corporate information)
• The potential for mental and physical health issues (companies can provide discounts on ergonomic equipment for home offices, and/or encourage access to confidential hotlines for those whose stress levels are hard to self-manage)
• The potential for confusion in workers compensation cases. For example, are you covered if you trip over your home office chair and hurt your knees? (companies should provide educational seminars or briefings for employees, etc.)
Entering a New World (Again)
Employers and travel managers have always grappled with compliance; the New Remote Universe simply adds another spoke in the wheel. To help stay on top of it, issues such as employment laws, tax implications, home office expectations and safety protocols, and “tracking” the whereabouts of remote workers if they fail to report their locations, should all be defined explicitly in a Remote Working Policy. Even the “small stuff,” such as guidelines on professional etiquette and dress code for videoconferencing, can find an appropriate home in a Remote Working Policy.
While COVID-19 may not be the main driver of future Remote Working Policies at this red-hot moment, ongoing geopolitical and economic pressures worldwide are of concern. Countries around the world are constantly updating their remote work policies, and it can be hard to keep up. Thus, consulting with tax and employment lawyers who have repeatedly created such policies, is extremely useful.
“Employers and their travelers may be at risk of significant fines and sanctions if they do not have the correct immigration and tax protocols in place,” Antony explains. “CWT has partnered with a leading global specialist in business traveler compliance management. For our clients who have subscribed to this service, we can provide a data feed of their travel bookings to our partner’s platform, which automatically assesses individual trip data and proactively alerts nominated stakeholders, travel managers, and their travelers to specific tax and immigration compliance requirements pre-trip. This eliminates the headache of navigating these complexities and helps keep travelers and their employers fully compliant in the evolving landscape of a mobile workforce.”
We know that working from home is going to look different for everyone. It will vary by company, job, employee, tenure and office culture – and there is no one “correct” template. Maintaining an open and clear line of communication between employer and employee is the principal factor in a successful remote working environment. Clarity can breed confidence – and eventually lead to success – in the “New Normal” of 2024.
