The APA’s Government Relations Task Force (GRTF) formed a new group in April focused on employee temporary work presence and business nexus. The Temporary Presence Workgroup seeks to address problems and solutions for payroll management. This workgroup was created within the GRTF’s State and Local Topics Subcommittee.
COVID-19 and Remote Workers
The COVID-19 pandemic emphasized the problems associated with regulatory compliance for workers who live in one location and work in another. In March 2020, state governors began issuing COVID-19 stay-at-home orders. Generally, payroll departments continued to withhold taxes as if employees were physically located in their usual place of work and many states issued guidance accordingly. However, by July 2020, employees were not only working from home but also working from other remote locations.
Today, employers are in the process of determining whether to have employees remain working from remote locations or to return to the physical office. Some will arrange for a hybrid approach with both remote and physical locations for work. When an employee works remotely in a state or locality in which the employer did not previously conduct business, a business relationship can form requiring reporting, registration, business taxes, and new healthcare coverage, among other considerations.
The criteria currently used by states and local governments to determine a relationship to employers and employees may no longer make sense. For example, the “convenience of the employer” test for identifying why an employee is working remotely or the physical location of a single employee to create business nexus.
The APA’s GRTF Temporary Presence Workgroup will examine the evolving situation more closely and offer states guidance on more appropriate criteria going forward.
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Alice P. Jacobsohn, Esq., is Director of Government Relations for the APA.