Is your compensation and benefits plan increasing retention and productivity?

What benefits are important to retain today’s employees?

AB: A wide range of benefits is available today. Obviously, health care and retirement are the big ones. Often those need to be part of the package to attract people from the get-go. Then there's the whole smorgasbord—gym memberships, pet insurance, backup day care, even snacks in the break room.

But what do your employees really value? Obviously, adding any of these benefits is not going to cost as much as your base pay, but each has some cost associated with it and is going to take time to plan. If it’s something your employees don't really care about, is it worth even offering in your package?

You also must consider the benefits that are more experience oriented, such as work-life flexibility or the ability to work remotely. How can you adjust your benefits package if you're allowing a lot more remote or hybrid work than you were before? Knowing your employees and understanding what is important to them is critical.

There are a lot of shifting expectations given what's happened in the world in the last few years, as well as changes in workforce demographics. It’s worth taking a step back and reevaluating policies on a fairly frequent basis.

Part of navigating the employee experience is not just providing choices, but ensuring employees know they have them. Do they understand the benefits available and their value? Because if you haven't provided employee education, you’re missing the value of those benefits to enhance employee satisfaction.

These are things that we help employers think through and weigh. There's no right answer. As I mentioned earlier, no one size fits all.

AWH: I think the most powerful question we ask in our industry is “Why? Why do you do that? Why do you have that?” We get businesses to think about why they made those decisions and when, and the interplay of what's coming with what's already happened.

You were mentioning items that aren't outlined as a benefit in the traditional sense but are reflected in a total rewards statement. I know there was a push for that statement to show, “More than just your 401(k) plan, here's all the other things we give you.” But I don't remember ever seeing remote flexibility, for example, listed on statements I’ve come across.

Are there any emerging benefits that companies may want to consider?

AWH: On-demand pay is a pretty hot topic that has started to show up in some of our payroll technology conversations. It is the opportunity for employers to pay employees more often than on their scheduled pay date. Think of it as an advance before pay day. In the gig economy, this is pretty standard, and it’s now touted as a talent attraction and retention tool.

We're certainly seeing on-demand pay in the retail space, and it definitely needs a good technology configuration to support it and get it right. Daily pay advance calculation has to take into account all of the complexities of deductions, garnishments, hours, Fair Labor Standards Act regulations, taxation and other pieces of the puzzle.

Technology is integral to complying with new legislation and new employee requirements, and to ensuring both businesses and employees have what they need. But the payroll technology you choose has to have really good strategy behind it. Complement your great technology with a great team to provide employees with great experiences and great service.

Having the budget to support this effort is also important, because when working to attract and retain employees, you want to make sure it's something you can actually implement and maintain.

How can remote work create potential compliance issues?

Audra Marshall: On the global side, we’ve been hearing about the push to allow people to work remotely. During COVID, our clients said, “We want to just let people do this and be happy and continue to work, because this is hard.”

In the news, you saw that some countries had this large influx of remote workers and their salaries didn't change. To the point about checking in frequently on what's happening, some clients say, “We do think we want to let people work remotely, potentially in a longer-term fashion.”

But now they’re thinking, “Should I continue to pay that New York or California salary if someone's going to stay in Portugal?”

AWH: What's in scope or not in scope for different parties? I think sometimes we're all wondering whose responsibility this is. I'm in payroll: “Am I supposed to be tracking where employees work?” Or I'm in HR: “Should I mandate that employees let us know in advance before they work in a state?”

Should you put up guidelines or create a policy about whether and for how long employees can work in a state or country? We have a lot of calls where we're determining who's going to be in charge of certain areas. There's definitely complexity and confusion around this.

The laws are changing rapidly. Compliance is a big part, obviously, of payroll and payroll tax. We're now thinking about this as a tax concern as well as from a compensation, employee experience and retention standpoint. And remote workers are here to stay. Even with big tech companies trying to pull back, things are never going to revert to the pre-COVID in-office requirement for white-collar workers. 

For example, a business has their headquarters in Wisconsin, and they've only had people operating in one state. Business operations and all things tax are assigned to Wisconsin. Simple.

Now they have decided to expand their talent pool and hire administrative staff in California. Great idea. Get the best talent from everywhere. However, this employee working out of their home in California is creating nexus, or a business relationship, with that state, even with just a single worker. Some businesses may not know that they're now responsible for abiding by all of the worker and business requirements for the state of California, which is more strict than some other states.

Businesses that don't have this knowledge might end up with penalties. They might have an unhappy employee and unwanted calls and knocks on the door from the state of California, with additional audits, as a result of saying yes to the best hire they could get at the time. So, it's a really interesting dynamic.

AM: The reality is that it's hard to comply with all the states employees might be in with all the factors that differ from state to state. The same is true with countries. There are several things that companies can do to be more compliant or to help manage their remote or global workforce.

A big consideration is getting a remote work policy in place that ideally gives your business partners and your employees some guardrails. Then try really hard not to have lots of exceptions to your policy. The golden rule is to try to eliminate exceptions.

In addition, some business traveler tools enable you to monitor employees in different countries and states and determine your eligibility for certain employer tax credits.

You can analyze that data and see, for example, that a lot of your employees may actually want to work in Spain. Maybe you should not only have a remote work option there, but also officially set up a physical location there.

Having worked outside of the U.S. for a long time, I can tell you that employment law is quite different elsewhere. If you let people work remotely or send them on assignments, it’s important to consult employment attorneys in those locations to see what rules might apply.

How can companies manage the new compliance challenges related to remote work?

AWH: Many businesses never imagined they would need to think about global employees. To that end, Audra and her team have a proprietary tool that helps to not only track remote employees but also evaluate the risk to the business.

AM: Let's say Ana is an employee in the U.S. who wishes to work in the Bahamas. Will she have any personal income tax obligations? Will her employer have a social tax obligation there? And at a very high level, would her presence in the Bahamas create something called a permanent establishment?

It’s more of a corporate tax construct that could cause Ana's company to have a tax, a corporate tax or a partnership obligation to withhold in that jurisdiction. The output in the tool is green, yellow or red. Green indicates no worries and yellow shows a bit of risk.

But with red, you should stop and get some in-depth analysis to make sure that you really can't do this, or you can do this but need to put some other things in place. In some locations, this has become a very big issue. We are finding that clients still use this tool as part of their internal system because they have a global remote policy but not the bandwidth to manage it as part of the HR function.

They give employees access and explain, “You can put your desired remote work location into the tool and see if it looks OK. And if it does, bring it back to us and we can talk further.”

AWH: At the onset of COVID, a lot of U.S. states and some jurisdictions said, “Don't worry about where your employees are working. We're just going to keep our nexus as it was.” So even if you used to work in Massachusetts and now you're somewhere else, just leave everything as it was.

Then the states peeled back those laws at different times. It wasn't like, on Jan. 1 everything goes back to the original law. They all peeled back individually. Policy for remote workers must mitigate risk. Yet guidelines were all over the place—so a tool that actually helps provide clarity and support is so needed.