Remote Workers – Important Things Employers Need to Know to Be Compliant
When Stay-At-Home orders first hit in March 2020, many Colorado employers found themselves scrambling to get their office-based employees set up to work from their homes. Most of us never imagined last March that we would still be in a similar situation in January 2021.
Since the remote work phenomena may be here to stay, or at least partially, here are some important things employers may need to revisit to maintain compliance with workers’ compensation, local taxing, and wage & hour laws.
Workers’ Compensation (“WC”)
Did you know that a different WC Classification Code may need to be assigned to your employees who are working 50% or more from their homes?
For example, an Administrative Assistant at an insurance company may have an 8810 (Clerical Office Employees) WC Classification when they are assigned to work in the office. If that same Administrative Assistant works from home 50% or more of the time, their correct WC Classification Code is 8871 (Clerical Telecommuter Employees). Wherever the employee works more from determines the correct code to use.
Occupational Privilege Tax (“OPT”)
Commonly called a head tax, this tax applies only to certain Colorado cities (Denver, Aurora, Greenwood Village, and Glendale). It is imposed on businesses operating in one of these cities, and on individuals who receive compensation above the city’s threshold amount in any month for performing services in any of these cities (Denver – $500 in earnings, Aurora – $250, Greenwood Village – $250, and Glendale – $750).
It is important to understand that OPT is based on the city where the employee performs their work (the “worksite” address), not where the company’s office is based. For example, if an employee of a company outside of Denver performs services in Denver (i.e., employees who repair or service equipment in Denver) then both the business and employee are liable for Denver OPT if the employee earns the minimum monthly pay threshold for those services rendered while in Denver.
So, for companies whose employees have transitioned to remote work, either fully or partially, their OPT liability may change based on where the employee is performing their work (i.e., their home address). Here are some examples:
- If the employee of a Denver company lives in Lakewood and works 100% from home (making more than $500/month), neither the employer nor the employee is responsible for Denver OPT.
- If this same employee above works ½ in the Denver office and ½ from their home office in Lakewood and makes $500+ in a month while working in the Denver office, both the employer and employee are liable for Denver OPT.
- If the employee of a Lakewood company lives in Denver and works 100% from home (making over $500/month), both the employer and the employee are responsible for Denver OPT.
- If the employee, who resides in Denver, of an Aurora-based company, works in both their home office and in the company’s Aurora office – and meets the salary thresholds in any month for work rendered in both cities – then both the employee and the employer are liable for BOTH Denver OPT and Aurora OPT for that month.
Commute Times for Hourly Workers – Are They Required to be Paid?
In most circumstances, employees are not compensated for commute time to and from work. However, with the nuances of office closures due to “Stay At Home” and “Safer At Home” orders, it’s important to take a look at some of the further details. Here are a couple of examples to illustrate this point:
- Per company orders, the employee is not allowed to work in the office; they are required to work-from-home. The employee’s standard work schedule is 8 am – 5 pm (less 1-hour unpaid lunch). If the employer requires the employee to come into the office to attend a company meeting from 1 pm – 3 pm and is to work from home before coming in and after going back home from the meeting (or to pick up and distribute the company mail each afternoon), the employer is required to pay for the employee’s commute time.
- If the employee is given the option to work-from-home OR the office, the employer in the above example is not responsible for paying for the employee’s commute time. The employee has the option to work from the office for the entire day, so if the employee chooses to only come into the office for the mid-day meeting (or just to gather and distribute the mail), the employer is not required to pay for travel time to and from the employee’s home as commute/travel time to and from work is generally not required to be compensated.
J. Kent Staffing does not intend for this to be legal advice and recommends that all Colorado employers consult with tax, insurance, and/or employment law experts for guidance and direction.
City and County of Denver, Business Taxes Frequently Asked Questions.
U.S. Department of Labor, Wage and Hour Division, FLSA2020-19. December 31, 2020.
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