Firm News

How Wage And Hour Laws Apply To Remote Workers And Telecommuters

Wage and hour laws are among the most critical compliance concerns for many employers in New York State and across the country. While wage and hour compliance is essential across all industries and working arrangements, the increasing prevalence of remote work and flexible scheduling over the past few years has given rise to a number of questions regarding how wage and hour laws apply to telecommuters and others in off-site working scenarios. The business attorneys with Schwab & Gasparini are happy to discuss these concerns with clients and advise on compliance strategy. Call us in White Plains or Hudson Valley at 914-304-4353, reach out to our office in Albany at 518-591-4664, or contact our staff in Syracuse at 315-422-1333.

Wage and Hour Laws: Does Location Matter?

At the federal level, employers’ compliance with wage and hour laws is overseen by the Wage and Hour Division (WHD) of the United States Department of Labor (DOL). Federal wage and hour laws are dominated by the provisions of the Fair Labor Standards Act (FLSA) regarding minimum wage requirements and overtime pay calculations, although the WHD’s oversight does extend to certain other aspects of employment law – such as mandatory pumping breaks for nursing mothers – that can affect employees’ working hours over the course of a workday (or shift).

What Is the Federal Wage and Hour Law?

The WHD does not set federal standards for either overtime pay or minimum wages; both are established by federal law. Unlike some other federal laws that relate to income and financial calculations, these are not regularly updated (the federal rate has not been changed since 2009, although it was updated several times over the two preceding decades). In assessing employers’ compliance with overtime pay calculations and minimum wage rules, however, the WHD applies the state or local standard whenever that is more favorable to the worker.

What Are the Wage Laws in the United States?

Because New York State’s minimum wage laws specify a higher rate than the federally required minimum, the enforcement rule for applying the standard most favorable to the worker means that the WHD will evaluate a New York employer’s compliance with FLSA wage and hour requirements based on the minimum wage required locally, rather than gauging compliance by the lower minimum wage rate currently mandated nationwide. Among the various implications this enforcement practice may have for businesses that employ remote workers or telecommuters is that determining the appropriate working location of each employee can be critical to ensuring compliance. As the New York State Department of Labor (NYDOL) explains, the state applies distinct minimum wage requirements to specific regions throughout the state. The location where the employee works, not the location where the employer is headquartered, determines which minimum wage rate will apply.

What Is the Difference Between Remote Workers and Telecommuters?

Although the terms are often used somewhat loosely, the various agencies of the federal government have been relatively consistent in using remote worker to refer to someone who performs work for an employer (e.g., a government agency) off-site, and is not subject to an expectation to make an appearance in a specific office location or central reporting hub consistently – or, as the United States Office of Personnel Management (OPM) says, “on a regular and recurring basis,” typically with an expected on-site visit at least once per pay period.

This definition is consistent with the distinction that the United States Department of Agriculture (USDA) draws between remote work and telework. The latter term, telework, is sometimes used instead of telecommuting, but generally refers to an arrangement in which an employee works an approved number of days per pay period from an approved location other than the employer’s normal place of business. Human resources (HR) professionals do not always follow the federal terminology precisely, and depending on the industry, may sometimes incorporate additional terms to reflect the range of options common in a given field; a business law attorney with Schwab & Gasparini may be able to help you navigate these complexities and determine what they mean for your business.

What Is a Telecommuter Position?

For New York State employers, because of the segmented minimum wage requirements, the distinction between remote workers vs. telecommuters can have important implications. The expectation that telecommuters are generally “tethered,” in a sense, to a specific place of business owned or operated by their employer, lends itself to an interpretation that this location is the employee’s “normal” or default working location: Telecommuters work from elsewhere part of the time, as agreed by a specialized and in many cases individualized arrangement. Like in-office or on-location workers, telecommuters’ employment is generally tied not just to an employer’s place of business, but to a single location.

Are Remote Work and WFH the Same?

The acronym “WFH,” for “work from home” (or, sometimes, “working from home”) surged in popularity during the early stages of the Covid-19 pandemic. A working model that had previously had few but ardent adherents rapidly became the norm across several industries. The shift was particularly marked in densely populated urban areas, where the impact of viral spread was felt early and deeply. In an effort to reduce the opportunities for “superspreader” events (in which a single infected individual transmits a contagious disease to many others who happen to be nearby), many businesses put employees whose work did not consistently require their on-site presence into a telecommuting rotation, taking turns coming into the office or other working location. Employees whose work was already conducted primarily via computer and rarely needed in-person contact were sometimes summarily assigned to remote working arrangements.

The vast majority of remote work opportunities in the past few years have indeed been iterations of the “work from home” model. However, remote work and “WFH” do not necessarily have to be the same, and an employee’s remote working location can theoretically be anywhere that is not the employer’s business address. This flexibility can pose a challenge for employers’ recordkeeping obligations with respect to wage and hour laws, since you need to know the jurisdiction of the employee’s legal working location in order to accurately calculate minimum wage requirements.

Wage and Hour Laws: Avoiding Employee Misclassification Pitfalls With Remote Workers and Telecommuters

Of course, many remote workers and telecommuters earn significantly more than the minimum wage, even when that wage is set to the comparatively high rates set in New York State. If the base pay for all of your employees exceeds the near-future increases projected by the New York State Governor’s Office, then determining which region-specific minimum wage applies to a given worker may not be a pressing concern for your business. For these employers, potential compliance issues related to employee misclassification are more likely to be top-of-mind.

Are Remote Workers and Telecommuters Independent Contractors?

One potential source of confusion is whether a worker who performs his or her tasks primarily or exclusively off-site constitutes an employee vs. an independent contractor. Accurate classification on this point is essential not just for wage and hour laws, but for tax code compliance, workers’ compensation claims, and even managing your company’s internal expectations and procedures concerning such matters as reimbursements for travel expenses and work equipment.

Filling Remote Work Positions vs. Transitioning Employees to Telecommute Options

Obviously, if a qualified individual applies for an open position that is advertised as a remote work option, and a company hires this person, then he or she is an employee. Independent contractors bid on contractors and make pitches; they do not fill out job applications (or if they do, they are no longer independent contractors once they accept an offer). As a general rule, any role a company fills by job posting or internal promotion is likely to be an employee role, regardless of where the responsibilities listed in the job description (another likely indicator of employee status) are fulfilled.  Questions are more apt to arise in situations where an employee who was formerly in-office (or otherwise “on-site”) changes his or her working arrangements to begin working remotely, some or all of the time.

Questions To Ask for Accurate Classification of Telecommuters and Remote Employees

If an individual’s role within the company changes significantly at the same time as the shift to a remote work or telecommuting arrangement, there can sometimes be legitimate cause for confusion. If the person is still performing roughly similar tasks, regardless of location, and those tasks maintain approximately the same relevance to the company’s work (e.g., if the person now working remotely has been the payroll manager for the past three years, and the company has not decided to hire an outside accounting service to manage payroll), then the worker is likely still an employee. For employers who are uncertain which rules apply, there are a few questions you can ask to help clarify telecommuter status:

• Does the company have the right to order this person back to the office (i.e., send a “return to office” mandate)? The Internal Revenue Service (IRS) expressly states that remote workers may still be employees even if they have the choice of whether or not to work from home, as long as the employer has the right to control what will be done and how. However, requiring work to be done from a specific location requires a degree of control that is common in employer-employee relationships, but would not usually apply in an independent contractor arrangement (unless otherwise stipulated in the contract).
• Is the company paying the worker substantially more now than when he or she was in-office? Independent contractors are generally responsible for their own overhead, and they typically charge more for their work (by hour or by item completed) to make up for the greater burden of those expenses. Employers save on taxes and, in many cases, on benefits by hiring independent contractors, but they also generally end up paying independent contractors 50-90% more than they would pay an employee for comparable work.
• Is the worker sending invoices? Some independent contractors may work on a retainer basis; they may even bill by the hour, although some business experts discourage this practice. Usually, however, the individual will be submitting regular invoices, which the company will be responsible for handling under accounts payable (rather than under payroll).
• Has the employee been terminated? This may sound basic, but businesses sometimes overlook it. While you can be found to have misclassified an employee (in error or in fraud) from the beginning of their work for the company, you cannot legally change an individual worker’s status from employee to independent contractor without paperwork. If your business has not, at a minimum, given the employee notice of termination and accepted a W-9 tax form to initiate a new independent contractor relationship, then there is likely no reason to think his or her status has changed.

Two general points to keep in mind are that neither the IRS nor the DOL typically considers a single factor to be definitive in worker classifications (both aim to develop a holistic picture of the working relationship), and that neither agency, again, generally lists working location among the factors to be considered.

Telecommuters and FLSA Exempt Employees

Another way businesses may sometimes misclassify telecommuters and other off-location employees is in their FLSA exemption status. These exemptions are related primarily to overtime pay calculations rather than minimum wages, but it is important to note that the compensation paid to each employee does play a role in determining whether the worker can legally be treated as exempt from overtime pay requirements. The exemptions can cover a variety of “white collar” working roles, primarily related to administrative, technical, or managerial tasks, but the salary basis requirements for considering employees in most of these roles exempt are substantial, as the DOL explains.

Working location, whether for habitually remote employees or for telecommuters, is not considered a factor in determining exempt status. What this means for employers is that they should evaluate each employee’s job role and salary basis for telecommuters and other alternate-location workers as they would for any other individual employed by the company. For those who meet the exemption requirements, in most cases, no further administrative calculations are necessary. For employees who do not meet the criteria for one of the exemptions, the challenge for businesses can sometimes be accurately tracking hours worked in order to perform the required overtime pay computations for those employees.

Navigate Wage and Hour Compliance for Remote Workers With Confidence

Most of the time, telecommuters are subject to the same requirements and entitled to the same protections that would apply to any other worker. In certain instances, however, working location can make a difference in minimum wage requirements, while remote work can pose a separate set of concerns for overtime pay calculations. Avoiding the temptation to think of off-site workers as somehow distinct from those who come to the business address in person several days per week sets employers up for effective compliance strategy, but a conversation with an experienced business attorney may also prove helpful. Contact the Schwab & Gasparini team by calling us at any of the following locations: 914-304-4353 (White Plains and Hudson Valley); 518-591-4664 (Albany); 315-422-1333 (Syracuse).

Mon Oct 20 2025, 12:00am