"New Normal" Considerations: Remote Workers, PPE, and Potential Tax Implications

As we begin Q4, one has to wonder how much longer the COVID-19 pandemic will continue. I shared the hope that, by now, a vaccine would have been deployed and we could all have a new sense of normal—whatever that may look like!  Alas, we will have to wait a little longer for the cure and hope a second wave won’t arrive as predicted this winter.

The ripple effects of the Ides of March have already been felt, and no doubt are causing more havoc across the travel industry. United Airlines announced its “long tunnel,” predicting that it will take until 2024 for the industry to return to the same levels of travel as 2019. This mirrors a recent FCM study, which predicts “the level of business travel is likely to remain low until 2023.”

Then there is the workplace. Who would ever have imagined longing and wanting to go back to the office? The once optimal meeting place for social gathering and collaboration is quickly becoming a distant faded memory as it, too, has become a causality of this pandemic. As corporations and companies around the globe have had to adapt to their employees working remotely, one has to ask what role will the office play after the pandemic. While once unthinkable to not have a physical company business center, it’s undeniable that some savings and sustainability gains will come from not having to occupy as much office footprint post pandemic.

Certainly employees have seen the savings in not having to commute. The longer this wave continues, the harder it will become to move back from this new work-from-home model.

As with anything, there are always pros and cons that have to be weighed when considering what makes the most sense for each company and its employees. New health and safety protocols factor in heavily as these costs cannot be ignored or denied.  As I said in a previous blog, the cost of travel will continue to rise, not fall. Try explaining to your employees that the company will not cover any health and safety equipment when they are traveling on business and possibly being exposed to a virus risk.  No mask, no disinfectant wipes, no hand cleaner...I would suspect that will go over like a “lead zeppelin” with one’s employees.

So, while the company may be saving at the office, employees working from home may potentially raise new costs and concerns for their companies. Take the simple question of home internet. Will your management approve the cost of home internet for every employee or just the employees who were deemed “remote workers” and identified and verified as such by not having an office space within your HR system? If everyone is working from home, then in effect they are all remote workers, yes? But the costs are understandably concerning to finance leaders. If you do the math of, say, $65 per month for 10,000 workers, this is an added $650k in costs monthly. And for a company with 100,000 workers that number balloons to $6.5M in additional monthly costs! Then you have to consider home office equipment: desks, chairs, mats, printers, and the like. Could one argue a portion of the electricity bill should be reimbursed? The list to me is pretty endless.

I will share that I have had a discussion with one CFO and just approached this as “what ifs.”

Predictably the first reaction to all of these previously mentioned cost implications was “no, we cannot cover all these costs. We did not plan for this, nor do we have the budget for all these additional costs.”

My immediate reaction was, “well, maybe yes and maybe no.” There has to be some middle ground amid all this uncertainty and the realization that it is going to cost us more, or differently, than in 2019. But having raised this, I have to believe the reality is that most employees will not want to claim these cost, but this has to be discussed and determined as new guidelines for employees.

One other issue that must also be of consideration are “work from anywhere” taxes. While your employees may not be traveling officially, what if they have another home in another state or country that’s different than their location of residence within the company HR system? Let’s say I reside in California, but decide I am going to go work from my vacation condo in Hawaii for the next two months for a change of pace. Logical right? Now, while maybe not on official business as far as my travel cost to get to Hawaii, a consideration is: Are there tax risks for both myself and my employer while working in another state? Is the employer under obligation to report this if it’s known? It is understandable that Hawaii in this scenario will want their fair share of income tax revenue, right? If you think this couldn’t happen, think again.

I recently received a tax notification from a communication service provider, which stated that “ like many technology companies, X company is routinely evaluating its tax collection and remittance obligations. The application of these taxes to businesses like X that offer new types of technologies is a complex and evolving area.” Now, it turns out this is for a California imposed utility tax that goes into effect November 1, 2020, but begs the question: Will this supplier be forced to provide their users’ location data for tax purposes? Something like location-linking?

The reality is, as states and countries clamor for revenue dollars given these hard times, all of these “new-normal” considerations need to be given serious thought.

I must admit that, as I reflect on this pandemic and the events of 2020, I am reminded of what Bob Dylan recorded back in October 1963:

The line it is drawn…..The curse it is cast
The slow one now….Will later be fast
As the present now….Will later be past
The order is rapidly fadin'
And the first one now…..Will later be last
For the times they are a-Changin'

 

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