by Armando Rodriguez, Esq - Product Compliance Counsel Compliance And Legal Department
& Marti Cardi, Esq. - Senior Compliance Consultant and Legal Counsel,
June 01, 2022
Lately, employers are asking Matrix what state they should designate as the "work state" for their employees. Now, you may be asking yourself, "how many people really come to you and ask about work state?" The answer is: a lot! As the elusive Return To Office (or RTO) becomes more aspirational and less realistic, and more states are implementing paid family and medical leave programs (I'm looking at you, Maryland and Delaware!), asking exactly where your employees "work" is a legitimate and very real concern.
Background
An employee's "work state" can have implications for numerous state governmental programs. Think: unemployment benefits, wage & hour laws, income taxes, workers' compensation, and now paid family and medical leave. There may be more! This post is only discussing the impact of work state determination for the purpose of statutory disability and paid family leave benefits.
I'm sure you're all keenly aware that there are 8 states plus D.C. and Puerto Rico currently paying disability and/or paid family leave benefits. Four more states have passed PFML legislation and are in the implementation phase. If you're not on top of the details and need a refresher, you can review our statutory plans guide--always available to you and always up to date.
Each state is unique in its leave reasons, benefit duration, eligibility requirements, and other parameters. In addition, every state has its own definition of what it means to be employed within that state for the purpose of benefits eligibility. For most states, residency isn't even considered. In the states where it is considered, it's the last test, and always considered in combination with other factors.
Consider an employee who lives and works in New Jersey. Let's call him "Bob."
What About Bob?
Bob lives in New Jersey and works at a physical site in New Jersey. New Jersey uses the following definition for employee eligibility under its Temporary Disability Insurance benefit:
The term "employment" shall include an individual's entire service performed within or both within and without this State if:
(A) The service is localized in this State; or
(B) The service is not localized in any state but some of the service is performed in this State, and (i) the base of operations, or, if there is no base of operations, then the place from which such service is directed or controlled, is in this State; or (ii) the base of operations or place from which such service is directed or controlled is not in any state in which some part of the service is performed, but the individual's residence is in this State.
Ouch. But actually, this is easy so far. Since Bob is currently working at a site that is in New Jersey, he meets the definition of employment under the first part of the definition.
After a while, Bob gets a promotion to a position that requires frequent out-of-state travel. When Bob isn't traveling, he still reports to the local office in New Jersey. Additionally, the New Jersey office provides Bob with his assignments. In this arrangement, Bob would still meet the New Jersey definition of employment, as his base of operation is in New Jersey.
OK, still with me?
Eventually Bob tires of the frequent travel and decides to take a job in New York. Although he had initially planned on moving to New York, Bob ended up moving to Massachusetts to be closer to family. Almost immediately, Bob starts a hybrid schedule, working 3 days from home in Massachusetts and 2 days in person in New York. Additionally, Bob's work is assigned and directed by the New York office. New York uses the following definition:
The term "employment" includes an employee's entire service performed both within and without this state provided it is not localized in any state but some of the service is performed in this state, and
(1) the employee's base of operations is in this state; or
(2) if there is no base of operations in any state in which some part of the service is performed, the place from which such service is directed or controlled is in this state; or
(3) if the base of operations or place from which such service is directed or controlled is not in any state in which some part of the service is performed, the employee's residence is in this state.
Even though Bob is working three times a week out of his home in Massachusetts, he is considered a New York employee for the purpose of statutory benefits. This could even apply if Bob was working out of an RV while he spends a year birding.
But let's make things interesting. What if the New York office is not Bob's base of operations, and Bob's work is not controlled or directed by the New York office? Massachusetts' definition of employment includes this language:
The term "employment," except in such cases as the context of this chapter otherwise requires, shall include an individual's entire service, performed within, or both within and without the commonwealth, if--
the service is not localized in any state, but some part of the service is performed in the commonwealth and...the individual's base of operations or place from which such service is directed or controlled is not in any state in which some part of the service is performed, but the individual's residence is in the commonwealth.
Ta da! State of residence finally comes into play! So Bob may meet the Massachusetts definition of employment.
Wrap Up
As you now see, determination of an employee's work state hinges on many details and is rarely as straightforward the employee's residence. Moreover, as mentioned above, designation of an employee's work state can have multiple implications. It is for these reasons--the complexity of the factual and legal analysis and the possibility of consequences to other employee rights and employer obligations--that when asked, Matrix respectfully declines to make this determination for our clients. Instead, be sure to consult with your own legal counsel prior to determining your employees' work state--which can be different for different employees!
But Matrix can help in other ways!!
Matrix offers integrated FMLA/leave of absence, ADA, and integrated disability management services. While we cannot determine your employees' work state, we can manage your employees' leaves of absence, statutory benefits, and leaves as an accommodation in accordance with your determination. In addition, we offer this compilation of the statutory definitions of "employment" and the like for each state that has paid disability and family leave benefits programs. For more information about our solutions, please contact your Matrix or Reliance Standard account manager, or reach us at [email protected].