Working Remotely has Problems - 23 April 2024

WFH, or Work From Home, has gotten a lot of support since COVID-19 started to ravage the US and the world.   When some people decided to move their homes greater and greater distances from the traditional offices, the WFH concept was been expanded to include working remotely and a cottage industry has grown up to advocate for remote work.  In the articles I have seen the analysis is shallow and focuses on two things, the benefits to the employee (reduced or eliminated commute costs, etc.) and the benefit to the corporation being mainly reduced rent for offices that are not longer needed.  But we need to get real.  

Working remotely has problems, big problems.

In a recent news article in The Stranger, a Seattle popular newspaper, a report was posted:

Texas Attorney General drops challenge of Seattle hospital: In December, a Seattle hospital filed a lawsuit against Texas AG Ken Paxton after he demanded the hospital turn over the medical records of Texas children who receive gender-affirming care from the hospital. Paxton dropped the request for medical records as part of a settlement agreement with the hospital, according to KOMO. However, the hospital also had to drop its registration to do business in Texas. That won't affect children receiving gender-affirming care, but it may be annoying to the hospital employees who live in Texas and work remotely for the hospital. [23 April 2024 as reported by Ashley Nerbovig]

To recap briefly, the Texas AG (Attorney General) had demanded medical records from a Seattle hospital based on Texas state laws and the hospital sued the Texas AG (I do not know why they did not simply ignore the demand, but that is not material.)  They settled the suit and mutually agreed to drop everything.

As part of the agreement, the hospital cancelled its registration to do business in Texas.  I do not know what else a Seattle hospital might do in Texas, but the Seattle hospital can no longer have employees based in Texas because the hospital no longer is registered in Texas.  I deduce from the report that the hospital must have have employees in Texas or plans to have employees in Texas.  A company (or hospital) that has employees in a state must usually pay taxes and provide benefits for the employees to that state, and that implies some sort of registration process so that the state knows who the employer is and what reports and payments are required.  Texas has no state income tax but they do have unemployment tax and other state-specific fees and taxes, therefore the hospital  must register as an employer if they have anyone working in Texas.  (Attendance at conferences, business meetings, and training events and other business travel are usually exempted from the definition of "working".)  

As a result of this decision to drop the case and drop registration, the Seattle hospital must move or terminate all employees in Texas because they no longer have a business registration there.

This is a consequence of working remotely that most employees do not see and most analysts do not include.  If a complay has even one employee in a state, they must be prepared to withhold taxes, pay taxes, and pay for benefits in that state.  If a company has health insurance for employees but the insurance company is not registered to work in a particular state, the company cannot offer benefits in that state without a special contract with another insurance company(s).  This is a burden that most companies would take only reluctanctly (read that: only for VPs or perhaps Directors, but not for regular employees below an executive level).  The situation is made yet more complex and expensive is "remote" includes other countries.

At the end of the day, this requirement for registration in every state is one of the key reasons that working remotely is a bad idea.