As a result of the Covid-19 pandemic and the ensuing expansion of remote work, many employers who are eager to attract and retain talented employees have adopted more flexible work policies. Among those are remote and hybrid options, with some now permitting employees to work from anywhere in the world.
There are a whole host of considerations that must be made when contemplating whether to allow employees to work from anywhere, and particularly to work outside of the United States. Depending on from where and for how long an employee is working from another country, several practical challenges, legal obligations, and tax implications may arise. For this reason, it is important to flesh out these concerns before an employee embarks on their international travels.
Preparing a temporary overseas remote work agreement is one way to mitigate and reduce the risks associated with the employ of a traveling employee. This agreement needs to outline key features of the arrangement, including:
- Duration of Agreement – The agreement should set a time limit for the overseas arrangement in order to establish that this is a temporary work arrangement. Setting a time limit is a way to avoid long-term exposure to foreign employment and tax laws.
- Work Hours & Job Duties – It will be important to establish whether the employee will be working core hours with scheduled start and end times, or will be able to work flexible hours. In doing so, both parties should be cognizant of the impact time zones may have on the ability to schedule meetings.
- Employee Benefits – Foreign employment laws may impact employee benefits, such as sick time and medical benefits. In addition, it is important to consider impacts to workers’ compensation, health insurance and retirement or pension plans, as these contracts may not apply to international employment payments.
Governing Law and Choice-of-Law
Similar to multistate employees and other employees traveling throughout the United States, employees traveling abroad may find themselves subject to the local employment laws of their host country. However, certain employee rights, such as those derived from Title VII of the Civil Rights Act, the Americans with Disabilities Act (ADA), the Age Discrimination in Employment Act (ADEA), and the Uniformed Services Employment and Reemployment Rights Act (USERRA), may still extend to employees working abroad. The applicability of these laws will depend on whether the employer is based in the United States, and will depend on several factors for employers that are not based in the United States.
Depending on how long an employee remains overseas in a particular country, the employer and the employee may be subject to certain employment taxes in that country. This determination will need to be made on a case-by-case basis, with the understanding that employees could end up being double taxed for their international remote work.
Visas and Permits
An employee who performs work while traveling on a tourist visa may be subject to adverse consequences such as detainment and deportation, as many foreign nations restrict the ability of tourist visa-holders to perform work while working within their country. The visa rules vary from country to country, so employers and employees should be sure to arrange for the correct visas and work permits ahead of time. This may also require that the employer register with the country, which can be a costly endeavor.
Employers that have or are considering adopted a work-from-anywhere policy need to be mindful of the impact and interaction between United States and foreign laws, and are best to document the arrangement in a written agreement with the employee.