January 15, 2019

Legal Issues With Remote Employees

In 1995, 9% of American workers said that they telecommuted at least some of the time. By 2016, that number had shot up to 43% (Gallup). The law is trying to keep up with this shift.

Specifically, as more people telecommute from more varied locations, the law needs to decide where disputes between employees and employers should be resolved. Can a remote employee in Vermont who violates a non-compete clause be sued in New York because her former employer is there? How should small businesses deal with disputes with far-flung employees?

The most straightforward answer is that companies should have employees (and independent contractors) sign an agreement with a clause (called a forum selection clause) specifying where disputes will be resolved. With that said, courts have reached conflicting conclusions about whether such a clause is enough.

A court in Florida recently held that a forum selection clause alone doesn’t mean an employee can be sued in the state set forth in his or her employment agreement. That ruling conflicts with a 2016 case that recommended a forum selection clause as the preferred method of dispelling ambiguity about jurisdiction. In that case, decided by a court in Pennsylvania, the employee agreements in question did not include a forum selection clause. The court, however, concluded that the remote employees’ ongoing relationship with headquarters were enough to establish jurisdiction over breach of contract claims. The court further noted that the benefits of remote work meant that it was not unreasonable for an employee to appear in a distant court for a limited period of time.

It remains to be seen whether that logic holds as full-time, remote work continues to grow. But one thing will likely remain unchanged: when an out-of-state employee objects to personal jurisdiction, the burden is on the employer to establish jurisdiction. As the most recent ruling has shown, this applies even if the employee’s contract contains a forum selection clause. So, if contractual provisions are not enough, what can companies do to solidify in-state jurisdiction for their out-of-state employees?

Documented, routine contact is important — frequent calls, meetings, and trainings with headquarters, whether virtual or in person, help build the case for the out-of-state employee’s connection to a specific location. Managing payroll, benefits, and IT servers in a central headquarters that matches the location stipulated in a forum selection clause may be helpful as well.

Of course, this is a developing area, so it’s always a good idea to speak with a lawyer.