Remote Work Provisions in Employment Agreements

Why Remote Work Provisions Matter

Remote and hybrid work arrangements are now standard for many employers. But too many companies implement remote work without updating their employment agreements to reflect the new reality. This creates gaps in expectations around work location, hours, equipment, expenses, and tax obligations.

A remote work provision in your employment agreement creates clarity about the terms of the remote arrangement and protects both the employer and the employee when questions arise.

Key Elements of a Remote Work Clause

Work Location

The agreement should specify the employee's primary work location, even for fully remote employees. This matters for several reasons:

• Tax obligations — The employee's work location determines state and local income tax withholding requirements
• Employment law compliance — The laws of the state where the employee works (not where the company is headquartered) generally govern the employment relationship
• Workers' compensation — Coverage is based on where the employee performs their work

Include language that requires the employee to notify the employer before changing their primary work location, particularly if they move to a different state.

Work Hours and Availability

Remote work does not mean unlimited flexibility for every role. The agreement should address:

• Core hours — Time periods when the employee must be available for meetings and collaboration
• Time zone expectations — Whether the employee is expected to work in a specific time zone
• Responsiveness — Expected response times for emails, messages, and calls during work hours
• Overtime tracking — For non-exempt employees, how hours are tracked and reported when working remotely

Equipment and Technology

Define who provides and maintains the equipment needed for remote work:

• Company-provided equipment — Laptop, monitor, keyboard, headset, and other hardware. Specify that these items remain company property and must be returned upon termination.
• Employee-owned equipment — If the employee uses their own devices, address security requirements, acceptable use policies, and whether the company will reimburse any portion of the cost.
• Internet and phone — Whether the company reimburses internet service or phone costs.
• Home office setup — Whether the company provides a stipend for desks, chairs, or other home office furniture.

Expense Reimbursement

Several states (including California, Illinois, and others) require employers to reimburse employees for necessary business expenses, which may include home internet service, phone usage, and office supplies when working remotely.

Your agreement should address:

• Which remote work expenses are reimbursable
• The process for submitting expense reports
• Any spending limits or pre-approval requirements
• How state expense reimbursement laws apply

Data Security and Privacy

Remote work introduces additional data security risks. The agreement should require the employee to:

• Use company-approved devices and software for work tasks
• Maintain secure internet connections (avoiding public Wi-Fi for sensitive work)
• Follow company cybersecurity policies, including password management and multi-factor authentication
• Keep confidential information secure in their home workspace
• Allow remote IT support and, in some cases, monitoring software

Workspace Requirements

Some employers require remote employees to maintain a dedicated workspace that meets certain standards. The agreement might address:

• A quiet, private workspace suitable for video calls
• Adequate lighting and ergonomic setup
• Compliance with OSHA guidelines for home offices (though enforcement is limited)
• Availability for home office inspections in certain industries

Hybrid Work Arrangements

For hybrid roles where the employee splits time between an office and remote location, the agreement should clarify:

• Required in-office days — Specific days or a minimum number of days per week/month
• Scheduling flexibility — Whether the employee chooses their in-office days or the employer sets the schedule
• Right to modify — Whether the employer reserves the right to change the hybrid schedule
• Travel expectations — If the employee lives far from the office, who covers travel costs for in-office days

Multi-State Compliance

Remote employees working in different states create multi-state compliance obligations for the employer. Key areas to address:

Tax Withholding

The employer must withhold state income taxes for the state where the employee works. If the employee works in multiple states, withholding may be required in each state.

Employment Law

The laws of the employee's work state generally govern the employment relationship. This includes minimum wage, overtime, paid leave, meal and rest breaks, and termination requirements.

Workers' Compensation

Workers' compensation coverage must be maintained in the state where the employee performs their work. A remote employee injured while working from home may be eligible for workers' compensation benefits.

Registered Agent and Business Registration

Having employees in a state may create "nexus" requiring the company to register to do business in that state and comply with its tax and regulatory requirements.

Right to Revoke Remote Work

Many employers want to retain the right to require employees to return to an office in the future. If so, the agreement should include a clear provision stating that the remote work arrangement:

• Is subject to change at the employer's discretion
• May be revoked with reasonable notice (specify the notice period)
• Does not create a permanent right to remote work

If the remote work arrangement is a material term of employment (for example, the employee relocated specifically for a remote role), revoking it could constitute a constructive termination. Consider how this interacts with "good reason" resignation provisions if applicable.

Best Practices

1. Specify the primary work location for tax and compliance purposes
2. Address equipment, expenses, and reimbursement clearly
3. Include data security requirements tailored to remote work
4. Comply with state-specific expense reimbursement laws
5. Track hours carefully for non-exempt remote employees
6. Reserve the right to modify the remote arrangement with reasonable notice
7. Require notification before the employee changes their work state
8. Review insurance coverage to ensure it covers remote employees

Remote work provisions have become essential components of modern employment agreements. By addressing work location, equipment, expenses, security, and compliance upfront, you create a framework that supports productive remote work while protecting the company's interests.