Last update: 1.11.22
Post Pandemic 2022 Workplace
During COVID-19 pandemic US businesses moved rapidly to hybrid work and fully remote work arrangements. The shift came in response to lockdown orders, social distance and safety measures. Many employees relocated from the state where their employer is based to other states.
Work from home WFH meaning is work remotely. With new communication channels and technology tools, it seems you can work anywhere.
For many workers WFH mean flexibility and freedom. A way to find better work-life balance and fulfill dreams. Whether it’s an opportunity to travel, be closer to family, explore nature or just live in a bigger house.
The pandemic made workplaces transition to remote work incredibly fast and effective. For people working, the economic uncertainty and related financial hardship led to out-of-state relocation. WFH arrangement allowed employees to move from expensive and less safe locations. One remarkable case is the mass COVID-19 exodus from New York City to other states.
Working from home when “home” is out of state can create tax implications for both, the employee and employer.
Pandemic Remote Work and Tax Implications:
Employer: Employer has to withhold and pay taxes in the state where the employee works. The employer registers the business with the state where the employee lives and withholds. Taxes are paid in compliance with the state’s income tax law.
It is noteworthy that a considerable number of employees do not inform the employer about their new location. As a result, companies risk facing costly tax penalties for noncompliance. Human resources consulting services may suggest reasonable report procedures for employees’ locations without raising privacy, ethical and legal issues.
Employee: Employees pay taxes to the state where they live and work. Typically, employee who resides in one state and works in another state receives credit to avoid double state taxes.
Employees who relocated during the pandemic from their place of employment should be aware of specific regulations. Especially when filing taxes after moving to another state. In some cases, the same earned income can be subject to both state and local taxes.
Take into account that states use different approaches to determine when employee’s remote work becomes subject to state’s income tax. Particularly, states vary on the way they treat employees temporary move during COVID-19.
The Future of WFH
Changes to work arrangements are expected to be long term. Although WFH employment was primary a response to the pandemic, it will impact US workplace in the future. Businesses now struggle with issues of retention and labor shortages. One way to remain competitive is to address talent and employees preferences by shifting to work from home.
Note that under the Americans with Disabilities Act (ADA), remote work has been long considered reasonable accommodation. In a recent case of disability discrimination, U.S. Equal Employment Opportunity Commission (EEOC) sued ISS Facility Services. Apparently, the company denied employee’s request to work from home due to her disability and COVID-19 safety concerns. Then, ISS Facility Services fired her.
This Sept 2021 lawsuit (Civil Action No. 1:21-CV-3708-SCJ-RDC) is the first to raise issues of failing to provide accommodation related to pandemic.
Hybrid Work Schedule
In industries such as manufacturing remote work is not possible. Factories that resume production require onsite workers. In addition, WFH create major operation concerns where essential job functions must be performed with on-site equipment.
As business managers consider what to do next, hybrid work makes sense. In an effort to keep up with competition, workplaces that return to office offer their employees hybrid work schedule options. What is hybrid work? A blend of partial work that is done in remote setup and part is on site.
The hybrid work model embraces flexibility. It arranges a workweek of WFH and traditional in-person days. Furthermore, hybrid workplace benefits workers and companies. It may reduce voluntary employee turnover and cut employer’s costs with downsized office space.
Moving forward, it seems that WFH and hybrid work schedule are here to stay. One reason is that business owners and recruiters realize that flexibility and remote work are critical incentives in attracting quality talent. Same goes to current employees who seek safety and work-life balance. HR consulting views WFH and hybrid work as key factors in employees job satisfaction and employers’ successful retention efforts.
Contact Benjamin Regev CPA today and learn what we can do for your business.