Remote Work and Compliance: Gaps You Might Be Missing
- LMSPortals
- 5 hours ago
- 6 min read
Remote work has moved from a perk to a permanent fixture. What started as a pandemic workaround is now a defining part of modern employment. But as companies embraced distributed teams and work-from-anywhere policies, many overlooked a critical dimension: compliance.
The truth is, managing compliance in a remote environment is more complex than it looks. It’s not just about security protocols or keeping people productive—it’s about legal, regulatory, and operational risks that may not be obvious until they become expensive problems. If your organization hasn’t done a deep dive into the compliance risks of remote work, there’s a good chance you’re missing something.
Here are the biggest gaps you might be overlooking.
1. Labor Law Compliance Across Jurisdictions
When employees are no longer tied to a central office, your company crosses legal borders—often without realizing it.
The risk: Employment laws vary by country, state, and sometimes even city. An employee working remotely from Colorado might be entitled to paid sick leave or overtime pay that your policy doesn’t account for. Internationally, the differences are even more stark—local labor laws may dictate everything from termination processes to mandatory benefits.
Why it’s a gap: Companies often assume their headquarters’ policies apply to everyone. That’s a mistake. Remote employees are typically subject to the labor laws of the place where they physically work, not where the company is based.
What to do:
Map where your employees are physically working.
Review local employment laws with legal counsel or an HR compliance advisor.
Consider using an Employer of Record (EOR) service for international hires.
2. Tax Obligations and Nexus Issues
Remote work can expose your business to tax liabilities in jurisdictions where you previously had none.
The risk: Having an employee working remotely in a state or country where your business doesn’t otherwise operate can create “nexus”—a taxable presence. This can lead to corporate tax, sales tax, or franchise tax obligations you didn’t anticipate. On top of that, you may need to register your business in new states or countries just because one person works there.
Why it’s a gap: Tax rules around nexus are nuanced and vary by jurisdiction. Many companies don’t catch this until a tax authority sends a notice.
What to do:
Track where employees are working regularly.
Consult tax professionals to evaluate nexus risks.
Create policies limiting where employees can work without prior approval.
3. Data Privacy and Security Regulations
A remote workforce spreads your company’s data across dozens or hundreds of home offices, personal devices, and networks. That raises serious compliance questions.
The risk: Laws like GDPR, CCPA, HIPAA, and others require strict control over how personal data is accessed, transmitted, and stored. When employees work from home, the chance of a breach—intentional or not—increases. And if sensitive data is mishandled, your company is still on the hook.
Why it’s a gap: Many companies rolled out remote access quickly in 2020 without fully assessing how it aligned with regulatory frameworks. Security tools help, but they’re not enough if employees are unaware or inconsistent in how they use them.
What to do:
Conduct regular training on data handling and cybersecurity hygiene.
Enforce VPN usage and multi-factor authentication.
Limit access to sensitive systems by role and location.
Review data privacy policies for alignment with laws in all operating regions.
4. OSHA and Workplace Safety Obligations
Most people don’t think of OSHA when they think of remote work. But workplace safety laws still apply—even if the workplace is a home.
The risk: Employers have an obligation to ensure that remote work environments are safe and ergonomic. While OSHA has limited its oversight to serious hazards and employer-provided equipment, liability can still arise if an employee is injured while working remotely.
Why it’s a gap: Companies often assume the home office is the employee’s responsibility. But under the law, you’re still accountable for workplace safety, including stress injuries and poor ergonomics.
What to do:
Provide ergonomic assessments or stipends for home office equipment.
Include remote work safety guidelines in onboarding materials.
Document policies that clarify what you do and don’t cover.
5. Timekeeping and Overtime Compliance
Remote work can blur the lines between work time and personal time—which is a problem if you have hourly or non-exempt employees.
The risk: If employees don’t accurately track time, or if they work “off the clock,” you could be violating wage and hour laws. This could lead to unpaid overtime claims or even class-action lawsuits.
Why it’s a gap: Without direct supervision, some managers lose visibility into work hours. And some employees don’t understand that answering emails at 9 p.m. counts as compensable time.
What to do:
Require time-tracking for non-exempt employees.
Train managers and employees on when time must be recorded.
Monitor overtime trends and investigate inconsistencies.
6. Work Authorization and Immigration Compliance
Hiring talent globally is easier than ever—but it doesn’t mean you’re legally allowed to do so in every location.
The risk: Some countries have strict rules about foreign entities employing local workers without a legal entity or a work permit. Misclassifying employees as independent contractors or ignoring local employment rules can result in fines, deportation orders, or bans from operating in that country.
Why it’s a gap: The rise of remote freelancing and global hiring platforms has led many businesses to assume they can hire anyone, anywhere. But compliance still matters, especially as enforcement increases worldwide.
What to do:
Use vetted international employment services or legal advisors when hiring abroad.
Stay current on visa and work authorization laws.
Avoid contractor misclassification by clearly defining roles and responsibilities.
7. BYOD and Device Management
Bring Your Own Device (BYOD) policies save money, but they also open the door to compliance problems if not managed well.
The risk: When employees use personal devices for work, it becomes harder to control security, software updates, and access. This is especially risky when dealing with regulated data like customer PII, health records, or financial transactions.
Why it’s a gap: Many companies haven’t revisited their BYOD policies since before the remote boom, and most haven’t enforced controls like mobile device management (MDM).
What to do:
Create and enforce clear BYOD policies.
Require company-approved security tools on personal devices.
Set rules for data deletion if an employee leaves or loses a device.
8. Culture and Ethics Monitoring
Compliance isn’t just legal—it’s also about maintaining ethical standards and a healthy workplace culture.
The risk: Remote work can isolate employees and make it harder to detect harassment, discrimination, or toxic behavior. Misconduct is less visible, and employees may feel less connected to company values or reporting channels.
Why it’s a gap: Many compliance programs rely on in-person cues or watercooler chatter to surface problems. That’s no longer reliable.
What to do:
Provide anonymous reporting tools and make them easy to access.
Conduct regular virtual check-ins and culture audits.
Reinforce your code of conduct in digital communications and training.
9. Licensing and Regulatory Oversight
Certain industries—like healthcare, finance, and legal—face additional compliance challenges when work goes remote.
The risk: Remote employees may be operating in jurisdictions where they or the company lack required licenses. For example, a financial advisor working in a state they’re not licensed in can trigger serious penalties.
Why it’s a gap: Businesses often assume licenses are portable. But they’re often location-specific.
What to do:
Audit professional licenses and their geographic scope.
Update business registrations as needed.
Limit remote work from locations with strict licensing requirements unless compliance is assured.
Final Thoughts
The flexibility of remote work is a competitive advantage—but it comes with real compliance stakes. As regulators catch up to the distributed workforce model, the chances of audits, penalties, or lawsuits will only increase.
The key takeaway? Don’t confuse convenience with simplicity. Just because employees can work from anywhere doesn’t mean your policies can be one-size-fits-all.
Take the time to assess your current remote work model for blind spots. Work with HR, legal, and IT to close the gaps. And remember: good compliance isn’t about restricting freedom—it’s about making sure the freedom you offer is sustainable.
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