How to tackle the compliance challenges of flexible work

Increased flexibility has brought enormous benefits to both employees and employers. Workers get the benefit of working where and when they want, and employers have an easier time finding the right people with the right skills due to a broader talent pool. But this trend also poses significant challenges for organizations caught in a balancing act between flexibility and compliance. To gain the full benefit of a distributed, flexible workforce, companies must ensure they're complying with regulations that can vary drastically by region. These regulations end up creating a complexity crisis that organizations can only solve by having the right people, processes, and tools in place. But before we delve deeper into this balancing act, let's clarify what we mean by both flexibility and compliance.

What employees want

When it comes to flexibility, much of today's workforce is looking for:

• Remote work
• On-demand pay
• Flexible scheduling
• Alternative work arrangements
• Flexible PTO
• Job sharing
• Increased or reduced hours

Some employers aren't interested in meeting these needs, but this might be a risky move with long-term consequences. Six in ten remote workers say they would look for another job if their company stopped offering remote work options. A full 43% of workers say they are more afraid of working in an office full-time than of losing their romantic relationship or getting a divorce. These results demonstrate just how deep an aversion some employees have toward working in an office environment, and employers need to be wary of potential consequences for retention and engagement if they don't offer the desired flexibility.

A full 43% of workers say they are more afraid of working in an office full-time than of losing their romantic relationship or getting a divorce.

But even in cases where companies want to offer the desired flexibility, they run into compliance issues that can become a major barrier to giving workers what they want.

The employer balancing act

Many leading organizations are trying to keep up with employees' preferences by offering much of the desired flexibility. But for every bit of flexibility they offer, employers need to stay compliant with a growing list of company and regulatory requirements, including:

• Employee scheduling
• Timekeeping
• Data privacy
• National/regional labor laws
• Taxes
• Employee documentation
• Employee classification
• DEI initiatives/targets and anti-discrimination regulations
• Leave/accommodation policies

For example, how does a company stay compliant if it has employees working in the office in one region and at home in a different region with different compliance frameworks? If you have an employee who'd like to work abroad for a few months, what are the tax implications for payroll? If you work with a combination of deskless workers and in-office workers, how do you determine which workplace benefits and perks are extended to each? As we'll explore further, these are all prime examples of the compliance barriers that discourage many employers from reaping the full rewards of increased flexibility.

The difficulty of this balancing act is showing up in a growing body of research. A 2023 survey found that 71% of respondents do not feel their organizations are equipped to handle the risks of remote work, and only 41% feel that their hybrid work policy addresses crucial issues. The question then becomes: how can an organization navigate the maze of compliance to offer employees the flexibility they're looking for?

We'll look at this question from several angles to show how the right approach and technology can turn compliance into a competitive advantage rather than a barrier.

Anti-discrimination laws

These laws can vary significantly across countries and jurisdictions, and employers often learn after the fact that policies considered legal in one area are illegal in another. These laws can involve categories like race, ethnicity, religion, gender, sexual orientation, disability, age, and sometimes marital status. Some jurisdictions may have specific protections for characteristics like language or political beliefs. For example, an employer expanding to a new jurisdiction might have to offer HR support in a specific local language, which has implications for all corporate communications.

This compliance challenge grows exponentially when a company has a geographically distributed workforce and many different categories of workers. For this reason, companies need technology with built-in knowledge of compliance across the globe to help manage these challenges. Asking managers and administrators to keep up with these changes through sheer manual effort is a recipe for both burnout and compliance violations. Luckily, modern HCM solutions contain both the breadth and accuracy to help companies handle these concerns, and they are updated constantly to ensure ongoing compliance within a shifting global regulatory landscape.

Mitigating proximity bias

Research shows that workers who are physically closer to managers or decision makers are more likely to be promoted or assigned choice projects than those who aren't. People working remotely are also promoted 31% less frequently than in-office workers, and nearly 90% of CEOs report they are more likely to prioritize in-office employees for career-advancing projects, raises, or promotions.

This research shows how common it is for companies to show bias against remote workers. However, the legality of these attitudes and policies will come under deeper scrutiny as the world settles into a new normal of flexible work options.

90% of CEOs report they are more likely to prioritize in-office employees for career-advancing projects, raises, or promotions.

If a jurisdiction suddenly makes remote workers a protected category under anti-discrimination legislation, employers need to respond to this change immediately, and doing this through purely manual, global review isn't possible. They need solutions that help alert them to these changes and help automate compliance with shifting regulatory frameworks.

Tax implications

As with anti-discrimination concerns, a company with a flexible, physically distributed workforce faces a laundry list of tax implications, from jurisdictional tax codes to different scheduling frameworks and employment classifications. There can be a world of difference between an in-office, full-time employee residing in the same jurisdiction as an organization's headquarters, and a remote contract employee based in another jurisdiction. Employers may also need to withhold wages to contribute to different regional taxation frameworks that include social security programs or regional taxes. Beyond these examples lie hundreds of potential tax scenarios, and it's asking too much of payroll and accounting employees to perform the manual work of reconciling all these factors in real-time with zero errors. Again, companies looking to tap into a broader talent pool through enhanced flexibility need modern solutions that are updated constantly to help them stay compliant with a shifting global tax landscape.

Worker classification

Around the world, workers are entitled to very different rights depending on how they are classified. And while many readers might be familiar with classifications like full-time, part-time, or contractor, many other designations exist around the world and are subject to different employee rights. This can involve differences in basic definitions of what's considered an employee or a contractor, and can impact rights and entitlements ranging from overtime pay to workplace benefits. These classifications impact anti-discrimination and tax concerns, but even in their own right, they can fundamentally shape how an organization must employ, manage, and pay a worker.

Navigating the multi-jurisdictional world of compliance without the help of technology would be like trying to solve a Rubik's cube whose colors are constantly changing.

For many companies, these realities fall into the realm of "unknown unknowns" and ultimately dissuade them from leveraging the full benefits of a flexible labor force. As we've seen, it's becoming impossible for companies to address these unknowns through human effort alone. Navigating the multi-jurisdictional world of compliance without the help of technology would be like trying to solve a Rubik's cube whose colors are constantly changing. This is why best-in-class software is essential to help companies stay on top of changes in global compliance and to turn compliance into a competitive asset rather than a liability.

Data security and privacy

Employee data is some of the most safely guarded data in the world, yet even in this realm, different jurisdictions can have very different ideas about what information needs to be protected and how securely. In much of the world, for example, companies can report on burnout rates in their workforce using a variety of metrics. In some countries, however, burnout is classified as a health condition and is thus subject to regulations protecting personal health information. Processes for notifying individuals of data breaches can also vary significantly between countries and even by industries within those countries. Many employers do not consider these things when they expand to hire new workers in new jurisdictions, causing a compliance nightmare for their administrative workers and discouraging further investments in a distributed, flexible team.

Who gets to be remote or hybrid?

Some jobs are easier to accomplish remotely while others might need someone to work from a specific location part or all the time. The generates concerns about fairness that companies need to manage through transparent policies, procedures, and worker classification so expectations are clear at the beginning of a person's employment. Any appearance of ad hoc decision making about who can and can't work remotely will create perceptions of unfairness or even discrimination.

Fair scheduling

Any employee or manager involved in shift-based scheduling or timekeeping will tell you that fairness is one of their biggest challenges. Workers constantly face constraints in when they can work, and they often need the option to reschedule their working hours. Alternately, they require adequate notice and lead time before being called unexpectedly to work. They also need the ability to swap shifts with willing colleagues. But changing availability or swapping shifts often requires a cumbersome negotiation with a manager or scheduler, who must then do the time-consuming work of creating a schedule that supports workers while satisfying the demands of their company.

Luckily, advancements in artificial intelligence are now helping companies generate quick, efficient schedules based on constraints that employees can input using the same self-serve options they're used to in their personal lives as consumers. These schedules can also leverage accurate, up-to-date labor forecasting to help employers avoid any capacity shortfalls. With these advancements, companies can empower workers while removing administrative burden from managers and schedulers, making work life better for all.

Moving forward

Now that we've covered the challenges of finding compliance and fairness in flexibility, it's time to identify how companies can move forward to offer workers a better experience while staying compliant.

Managing the boundless workforce (and boundless complexity) with technology

It's unfair to expect any employee or team to hold the entirety of global compliance in their heads, and nearly just as taxing to ask them to manually reference indexes and resources when managing a flexible, distributed workforce. That's why it's crucial to have a workforce management platform that contains up-to-date knowledge of regional compliance concerns relating to workforce scheduling, payroll, taxation, and any other areas impacted by increased flexibility for workers.

More power for employees, less headache for managers

The primary goal of offering more flexibility for employees is to provide them with greater choice while remaining compliant and fair as an organization. Companies looking to fulfill this goal are providing workers with self-service options to determine their available work hours, swap shifts with colleagues, and access the information they need on-demand. Asking a manager to respond to every tweak to an individual worker's schedule will lead to burnout for the manager and will slow down the approval process for the worker, resulting in a lose-lose scenario.

Further, constantly evolving constraints to work scheduling will put the scheduler in the position of endless firefighting, trying to meet capacity while incorporating all of employees' requested accommodations. This manual labor is one of the reasons companies shy away from greater flexibility for workers. But it can be solved by a solution that leverages employee self-service while using an AI-assisted scheduling engine to always produce the best possible, most up-to-date work schedule.

Improved worker experience

The tools that help companies stay compliant and fair with a boundless workforce are the same tools that can help make work life better for both managers and workers. Investments in AI not only improve workplace scheduling, but also can be leveraged to manage workers of any classification in any region, ensuring a compliant work environment that fulfill workers' top desires, increases engagement, and boosts productivity. For many employers, a fully engaged, distributed, and flexible workforce might seem like a pipe dream. And without the technology to cut through the complexity of it all, they are right. But with the right tools, organizations can accomplish what was previously thought impossible and truly realize the vision of an engaged, healthy, and boundless workforce that balances flexibility and compliance.

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