The buzzword “telecommuting” first appeared in the mid-1970s to describe a type of work arrangement in which an employee works outside the office, typically at home or a location nearby like a library. Rather than travel to the office, the employee communicated and collaborated with supervisors and colleagues remotely, typically by phone and fax.
In succeeding decades, as email, texting, video conferencing, file sharing, and other forms of electronic communications were introduced, more and more employees telecommuted. With enhanced work-life balance, their engagement and productivity increased in many cases, good news for both the employer and the employee.
Since 2005, the number of telecommuting workers has increased 115 percent, according to a 2017 report.1 Nearly 4 million workers (roughly 3 percent of the total U.S. workforce) now work from home at least half the time. But among them, a new group of stalwarts that falls into a new category of remote worker is emerging.
Who are these employees? Like other telecommuters, they work at the office part of the time and at home part or most of the time. The chief difference is the distance between their homes and offices. Rather than drive from one to the other like more traditional telecommuters, many board a plane and fly back and forth, spending part of the week at an out-of-state office and the rest in their home state.
“It’s becoming more and more commonplace,” said Chad Sorenson, treasurer for HR Florida State Council, an affiliate of the Society for Human Resource Management (SHRM) representing more than 14,000 individual human resource professionals in the state. “Many people today live in one state and work in others, and not just traveling salespeople and sports figures.”
Going where the job is
The economics of the last 10 years is a key factor in such work arrangements. Many people lost jobs during the last recession, when unemployment peaked at 10 percent in 2009.2 In the ensuing recovery, many workers found that job openings were in other locales, as various industries reshuffled bases and operations.
Uprooting a family was likely uneconomical for many families at the time. Trade-offs would include whether or not a spouse or partner was employed and whether or not a home would need to be sold and at what price.
The alternative, either full telecommuting or a combination of remote and out-of-state work was the answer for many, at least in cases where the employer agreed to such atypical work arrangements.
As a result, remote work has been on the rise, although breaking out how much of that involves working in one state and having a home in another is a little hard to tell. According to Gallup’s 2017 "State of the American Workplace" report, more American employees work remotely and for longer periods. 3 In 2016, 43 percent of employed Americans spent at least some time working remotely—a four percentage point increase since 2012. This takes into account employees on the road, but not necessarily living in or splitting time between two places.
The same survey also noted that 31 percent of employees spent 80 percent or more of their time working remotely, indicating some possibility of living and working in two separate locations. That’s up from 24 percent of employees found to be doing the same in 2012.
Other factors driving the concept are technology and talent.
“It’s just so much easier now for people to collaborate with colleagues and customers without necessarily being in the same room,” said Valerie Keels, a member of SHRM’s HR Disciplines Panel and HR leader at Gavi, a global vaccine alliance. “And, since many companies are in a 'war for talent,’ they’re more open to employing someone with highly valued skill sets on a flexible, long-distance work basis.”
Questions for the employer
Once they do just that, employers confront significant federal and state tax and labor regulations, such as rules governing workers compensation, wage and hour regulations, and employment laws like the Family and Medical Leave Act.
“Questions abound regarding which rules must be followed,” said Sorenson.
He provided a few examples:
- If the employee spends half his or her time in one state and half in another, in which state does the person file income taxes?
- If the person is injured on the job at home, does the company abide by its state’s workers' compensation laws or the employee's home state’s laws?
- Would a slip-and-fall injury at the employee’s home be covered by a homeowner’s insurance policy or by the company’s workers compensation policy?
- Does the employer withhold taxes for the state in which the employee lives or in the business's home state?
- In which state does the company pay unemployment taxes?”
Other concerns include nuances in different state labor laws.
“There can be issues around paid time off and paid sick leave, noncompete employment agreements, and employee payment upon job termination, which differ state by state,” he said.
Some states, for instance, require employers to pay sick leave, whereas others do not. With regard to noncompete agreements, some states permit such contracts to be inked with employees, but others do not. Additionally, a state may require payment to an employee immediately upon job termination, whereas other states may allow the final check to be provided to the former employee within seven working days.
“Employers need to take careful note of these rules, as there are financial penalties for noncompliance,” Sorenson said.
Employee impacts
Obviously, there are added expenses for an employee with out-of-state working arrangements. For instance, there are added travel costs as well as the cost of hotels or temporary housing. In some cases, an employer might be willing to pick up such costs, but sometimes not.
There is also the human impact of remote work—the stress and fatigue caused by this atypical working arrangement.
“You’re going to be spending less time with your spouse and children in your own home,” said Dr. Anita Woolley, associate professor of organizational behavior and theory at Carnegie Mellon University’s Tepper School of Business. “Your spouse will be handling pretty much everything in your absence, creating potential relationship strains. And you’re also going to be spending a lot more time on planes and in a home environment like a furnished apartment.”
While employees in traditional work settings have clearer delineations of when they’re supposed to work—such as the customary 9-to-5 schedule—remote workers or workers coming in from out of state “aren’t exactly sure when to flip the switch,” said Keels. “As a result, they may end up working longer or shorter periods. Typical employees, on the other hand, are better equipped to turn off their work modes.”
Remote and long-distance commuting workers also may not receive the full value of employer-provided benefits. A case in point is health insurance.
“If someone lives in Colorado but works in Oklahoma, and the employer has a fairly strict HMO network to keep costs down in the home state, the employee will have to use a different provider and possibly pay for these out-of-network services,” Sorenson said.
Given the possibility that a benefits package designed for one state may not be portable to another state, employees should consider taking matters into their own hands, backfilling any void in their health, disability, and life insurance. (Learn more: Benefit tips)
“In such cases, the employer may want to pick up these additional costs,” said Sorenson.
The issue is one of parity—treating remote workers the same as employees in more traditional work environments.
“From an insurance perspective, you want to be sure that all employees have the same health, life, and disability insurance benefits, no matter where they work and live,” said Keels.
Sorenson agreed. “If the company has a great fitness center at headquarters, it should consider paying for a fitness center when the employee is working from home,” he said. “Additionally, if you’re giving traditional employees $100 a month to cover parking costs or free lunches at the company cafeteria on Fridays, you should think in terms of providing something comparable to the telecommuters.”
With regard to the added stress of remote and out-of-state working arrangements, Dr. Woolley advised that companies provide free psychological counseling and mentoring services to help employees cope with the added anxiety.
“Talking about such issues as relationship strains and guilt on a personal level helps the employee better understand how to strike a balance between both worlds,” she said.
Not that all employees feel anxiety in these working situations. “Although they may be gone from home for half the week, the other half of the week they’re totally home,” she explained. “They can scoot out in the middle of the day to take care of a child’s doctor appointment or attend sports and other school activities. This wouldn’t be possible if they were working the usual 9 to 5. It’s not all bad for all people.”
She makes a good point. For companies that appreciate the challenges of remote and out-of-state workers’ flexible work arrangements, and make an effort to understand the related labor, tax, employee benefits and other complications, they may end up with happier, more engaged, and highly productive employees.
More from MassMutual…
8 ways to engage millennials in the workplace
The freelancer’s benefit checklist
___________________________________________
1 Global Workplace Analytics and FlexJobs, "2017 State of Telecommuting in the U.S. Employee Workforce".
2 U.S. Bureau of Labor Statistics, "The Recession of 2007-2009," Feb. 2012.
3 Gallup, “State of the American Workplace, 2017,” Feb. 15, 2017.