Terminating remote employees: Beware the legal hazards.

• Author: Cirner, Paul E.
• Position: Nuts & Bolts

Remote work has exploded since the COVID-19 pandemic began, with some employers hiring employees to work remotely anywhere in the United States.

With the recent economic downturn, layoffs are beginning to occur. And, for the first time, a significant number of remote employees may be included in layoffs. Layoffs of remote employees present unique legal hazards for employers.

Final paychecks

Generally, remote employees are subject to the wage-and-hour laws of the states and localities in which they are physically present and working. An employer's payroll practices for final paychecks in its home state may not be sufficient to meet the requirements of the out-of-state remote employee's locale.

For example, employees in Washington state must be paid their final wages no later than the next regular payday following separation from employment. In Oregon, by contrast, discharged employees must be paid their final wages by the end of the next business day following a termination.

Final paycheck laws vary from state to state. Noncompliance may result in significant penalties, and in some cases, private causes of action with the ability to recover attorneys' fees.

Employers may want to carefully review the final paycheck laws applicable to out-of-state remote employees prior to terminations of employment.

Access to personnel files

Nineteen states (including California, Illinois and Minnesota) grant employees the right to access certain employment documents. State laws on personnel file access can differ greatly regarding, for example, the types of documents subject to review and the permissible procedures for requesting and conducting such reviews.

Employers laying off out-of-state remote employees may face requests for personnel files.

Employers may want to review state laws applicable to their out-of-state remote employees in order to prepare compliant responses to such requests.

Severance restrictions

The layoff process may include the offer of a severance agreement that provides additional compensation to an employee in exchange for a release of claims against the employer.

In recent years, several states--including the entire West Coast -- have passed laws placing restrictions on severance agreements between employers and employees.

Oregon, for example, prohibits an employer from including terms that would prevent an employee from disclosing conduct constituting discrimination and harassment (including sexual assault) prohibited under state...