Navigating the Legal Risks of a Remote Workforce

Amanda Williams


May 30, 2024

4 people on a computer screen in a virtual meeting

The COVID-19 pandemic forever changed the modern office environment. Four years after the pandemic’s onset, fully remote or hybrid work environments have become more permanent, with many employees working from home on a full- or part-time basis. 

The ability to implement a remote workforce model has created many opportunities for companies to grow and develop. For employers that do not require in-person attendance, companies can recruit and hire from multiple states, increasing the prospective talent pool. In addition, the prospect of remote work may attract a more diverse set of candidates who want a more flexible working environment due to family or personal needs. A remote workforce may also benefit employers looking to reduce overhead costs as remote-first companies typically spend less money on office space. 

However, implementing a remote workforce model comes with significant challenges. Many employers need help engaging and connecting with their remote employees and identifying ways to hold them accountable. Proper storage and handling of confidential information can also be challenging in a remote setting. Additionally, ensuring wage and hour compliance can be an issue due to the difficulties associated with remote employees properly tracking all time worked. 

Employers must also be aware of the potential legal risks that may arise if they fail to effectively navigate certain issues with their remote employees. If employers fail to properly navigate the nuances of employing a remote workforce, they may face unexpected employment claims. Such legal issues particularly arise in the context of promotion, termination and everyday employment decisions.

Promotion, Termination and Jurisdictional Risks

According to a Live Data Technologies survey of white-collar workers, remote employees received less mentoring and were promoted 31% less frequently than their counterparts who worked from an office. Promoting fewer remote employees than in-office employees could expose the employer to potential lawsuits, given the many different state, federal and local employment laws. For example, Title VII of the Civil Rights Act of 1964 safeguards employees against discrimination and retaliation if they fall within a protected class based on race, color, religion, sex or national origin. The Americans with Disabilities Act (ADA) prevents discrimination and retaliation against individuals with disabilities. Though an employee’s status as a remote worker does not place them within a protected class, employers should consider if their remote workforce consists of employees who would otherwise fall into a protected class. According to the U.S. Census Bureau, white and Asian workers are more likely to work from home, while Black and Hispanic workers are underrepresented in remote work. The bureau also found that women are more likely to work remotely than men.

It is important to keep such demographics in mind and consider how certain decisions and policies may impact different groups within the workforce. For example, if a company’s remote workforce is primarily women, and they are consistently passed over for promotion in favor of employees who work in the office, the female employees may claim the company treats male employees more favorably. Employers can avoid these potential claims by understanding and tracking the demographics of their remote and in-office workforce and making employment decisions based on objective factors that are applied equally to remote and in-office workers.

Another concern is variation in employment laws from state to state, as employers must follow applicable laws in their employees’ jurisdictions. The laws of the state where the remote employee lives and works will govern that person’s employment. For example, if a South Carolina-based employer has employees who work in its South Carolina office and remote employees who live and work in North Carolina, then South Carolina employees will be governed by South Carolina employment laws, and the North Carolina employees will be governed by the employment laws of North Carolina. In addition, city-level ordinances may also impact the employment relationship, meaning employers may need to adjust their policies regarding wages, paid leave, meal and rest breaks, noncompete agreements and more depending on such differences.

Tips for Employers with Remote Workforces 

Navigating the advantages, disadvantages and potential legal pitfalls of employing a remote workforce can be challenging. However, the following steps can help companies more effectively address these risks:

  • Implement remote working policies to address eligibility requirements, procedures for requesting remote work, duties and work expectations of the employee, timekeeping procedures and the employee’s obligation to comply with all company policies.
  • Establish procedures for safely handling and storing confidential information in a remote setting.
  • Understand and apply the relevant employment laws of each state where the company employs workers.
  • Utilize objective criteria when making employment decisions to avoid unequal treatment of remote vs. on-site workers.
  • Take care to avoid an out-of-sight, out-of-mind mentality by staying aware of how many employees work remotely, who they are and how you are maintaining connections to them.
  • Train managers on remote work policies and provide them with tools to engage and manage their remote employees.
  • Invest in your remote workforce and evaluate ways to continue promoting their success.
  • Keep your remote workers engaged through virtual team-building exercises, and schedule daily or weekly check-ins via video conference.
  • Offer training and mentorship programs to remote workers through webinars, online learning portals and on-the-job training.
  • Provide regular feedback to remote employees about their performance and establish mentorship programs.
  • Consider opportunities for occasional in-person conferences or events to give employees a chance to connect, even if only on an annual basis.
Amanda Williams is a partner with Parker Poe where she defends employers on a range of employment issues involving claims of discrimination, harassment, wrongful termination, retaliation, and wage and hour disputes.