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At my office job (in Illinois), we've recently been offered the option of working from home. Many people have jumped at the chance, and the company has reported a great success rate in those who are currently "WFH" (working from home). I was intrigued by the idea of doing it, but I also wasn't in any rush to try it necessarily (I'm content having a few co-workers keep me company everyday!)

Last month, my girlfriend found out her job is going to transfer her to the West Coast in August. This, I thought, was the perfect opportunity to put the WFH option into action. I presented the idea to my boss who said he'd have to run it by HR first. I even presented the idea to the head of our department (the same man, who in fact, initiated the WFH program), who was incredibly supportive, but also said it was ultimately HR's decision.

A few days later, my boss informed me that HR nixed the idea, saying that California, Washington and New York were all "off-limits" for the WFH program, stating it was a legal issue having to due with cost of living being higher in those places.

I'm not a lawyer, but something doesn't seem right to me here. I know for a fact we have employees working from home in other states like Ohio and Indiana. I've also heard of other businesses allowing this (an IL to CA transfer) without issue. And how are they to determine what my own personal cost of living would be out there? I'm trying not to take it personally, but my brain can't help but think their motive is "We're not letting you work remotely from California, because then everyone would want to work remotely from California."

Looking for any help, any clarification on this supposed "law" that they are using to justify their stance.

Thanks,

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California and New York are very aggressive when it comes to revenue and taxes. As such, mere having an employee in these States creates a nexus and tax/filing liability for the company.

@Adam Wood mentioned sales tax - that is correct. Having an employee in the State of California will require collecting sales tax for CA, and if until now your employer didn't have to - that would be a good enough reason to refuse your request.

In addition to sales taxes, there's also the issue of corporate filings (they will now have to file paperwork in CA and pay CA franchise taxes just because of you) and payroll taxes (which are pretty high in CA and NY). It will also subject the to CA/NY/WA labor laws, which are more liberal than in most of the other States.

Washington doesn't have personal income tax, but does have corporate income tax and sales tax, so I'm guessing the reasons to exclude this State are the same.

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They might be concerned with having to charge sales tax in California if they have a single employee in California, creating a nexus situation with CA.

If that's the case, or even if there is some other issue, you might be able to switch from being a W2 employee to being a 1099 independent contractor. There's a host of additional issues this could cause, but it alleviate the nexus problem (if THAT is the problem).

Here's a terrible solution you can bring up, but shouldn't do under any circumstances: offer to set up a mailing address in an allowed State, and give your company plausible deniability with regards to your legal residence. Obviously, this is a terrible idea, but exploring that option with your employer would help you suss out what the actual objection is.

Ultimately, anything said here about the reason is just conjecture. You need to talk to the decision maker(s) about the real reason behind the denial. Then you can talk through solutions.

Also - don't forget that you can get another job. If you are serious about a future with your girlfriend, you should put that relationship ahead of your current employment comfort and security. If you are willing to walk away from your position, you are in a much better situation to negotiate.

  • Not only sales taxes - payroll taxes, corporate filings, the whole shenanigans. CA and NY are very aggressive States, don't know about Washington. Regardin the "sketchy" - it's more than sketchy, it's a tax fraud. – littleadv Jul 3 '14 at 1:59
  • Edited to reflect that it's a terrible idea. – Adam Michael Wood Jul 3 '14 at 4:28

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