Managing work-from-home agency employees

Don't overlook the hidden challenges

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Lots of us are working from home these days. Many agencies have transitioned to having their teams work full- or part-time remotely.

This creates new challenges for agency leaders as they try to figure out how to support and get the most from their employees.

Chip and Gini discuss some things that work — and some that don’t — when it comes to leading distributed teams.

But the focus of this episode is on some of the important things that you might overlook, especially if you are new to having employees who don’t work in the office — including some who may now be thinking about moving somewhere else to be closer to family or simply take advantage of the fact that they no longer need to come into the office every day.

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Transcript

The following is a computer-generated transcript. Please listen to the audio to confirm accuracy.

Chip Griffin 

Hello, and welcome to another episode of the Agency Leadership Podcast. I’m Chip Griffin.

Gini Dietrich 

And I’m Gini Dietrich,

Chip Griffin 

and we’re here today to talk about working from home because that’s what we’re all doing right now. Well, Jenny is and I am, I don’t know about you, a lot of you are, well, some of you, I

Gini Dietrich 

think most people are,

Chip Griffin 

most most people aren’t. And, and many of you have newly work from home team members, and some of those team members are even moving to other locations. I know a number of folks who have decided to pick up their their luggage and their belongings and move to a whole other parts of the country either because they can or because they need to be close to family for childcare reasons or all sorts of other things. So this is a topic that I know is on your mind.

Gini Dietrich 

Yes. And not only are we working from home, but we have other experiences while we do that.

Chip Griffin 

What do you mean exactly?

Gini Dietrich 

You know, like interns who are also remote learning, and yes, hamsters who write on their wheel. I’m

Chip Griffin 

just I’m just glad we were able to kind of get started on this. I did. I did have to see the new hamster though.

Gini Dietrich 

We did. Yeah, she there is a new hamster. We had to introduce you to pumpkin.

Chip Griffin 

hamsters last longer than fish, but still not very long as it turns out. No, actually, we’ve

Gini Dietrich 

had a fish super long. But now that’s gonna die because I just said that out loud. So

Chip Griffin 

Oh, 2020 2020 Yeah,

Gini Dietrich 

a 2020.

Chip Griffin 

What can I say? Yeah.

Gini Dietrich 

Do things are gonna change?

Come 2024

Gini Dietrich 

like, January? Everything’s better.

Chip Griffin 

Oh, I think it’s an absolutely things just suddenly change this magic thing. So do you know we wake up and it’s like, oh, something happened. It’s like, we’re recording this just a couple of days before we change our clocks. I’m sure that that, you know, it’ll be the same thing. You know, just kind of like you wake up. And it’s a whole new time even though the sun’s you know, different. It’ll be the same thing on January 1 2021. Yeah, I think so too.

Yeah. Yeah.

Chip Griffin 

You go ahead and believe that. That helps you sleep at night, Jenny? Go for it.

Gini Dietrich 

Yeah, so anyway, work from home is going to be going on much longer than

Chip Griffin 

and it’s it is, you know, there’s a lot of conversation, a lot of people are thinking about how do I communicate with my team? How do I, you know, how do I build team culture? We’ve talked about some of these things, you know, how do you how do you have to look at meetings and client service and all those kinds of things, when you have your team working remotely. But there are also some much more mundane, but just as important administrative issues that you need to look at. And so that’s what we’re going to talk about today.

Gini Dietrich 

Well, when you describe it that way, I can’t wait mundane, and administrative issues, yay.

Chip Griffin 

But very important. And we talk about every aspect of the business on this podcast, we don’t, we don’t. We don’t just talk about, you know, the fun of getting new clients. And we talk about the things that most people don’t think about when they’re running a business but have a significant impact on how profitable you are, they have a significant impact on risk, and all that kind of stuff. So yeah, that’s what we’re going to talk about today, particularly because a lot of you are in uncharted waters here. If you’ve had an office, and you now have all of your employees working remotely, particularly if you have any of them who have moved from one location to another, or if your office is in, for example, one state, but you have employees in another. Those are things that were relatively easy to deal with when you had an office. But now with the remote, there are other issues that you need to be thinking about.

Gini Dietrich 

Yeah, that’s a really, really good point. Because now you have to be thinking about taxes in each of the states where your employees lives. And if And to your point, if people have moved, that’s a massive consideration. Certainly, it allows you some some some massive flexibility as well. But those are the kinds of things you have to think about. So you have to be thinking about insurance, you have to be thinking about. In some cases, you may have to incorporate the business in some states, depending on where they are taxes, all sorts of fun, administrative end of year kinds of things that you didn’t have to think about before now.

Chip Griffin 

It conveniently I’ve just recently written about this. So we actually have a guide for you to look at some additional information. But you know, we’ll for those of you who prefer not to read, we will talk through some of these issues for you over the next 15 or 20 minutes. So the first the first issue and the one that most of you will be thinking about probably most immediately unless you’re already dealing with our payroll taxes because you always have to, you know, to have that. So if you’ve got if you don’t have any employees who have moved, not a whole lot is changing here with an asterisk that I’ll talk about in a minute. But if you have employees who are moving to different locations, you need to make sure that You’re working with your payroll processor to update their locations and make sure that whatever paperwork you need to do with the payroll processor takes care of the new states in which you may have to withhold income tax. This is all pretty straightforward these days, you know, 20 years ago, when I first got started, I tried doing a lot of this stuff manually, that was a nightmare. Nowadays, most people use ADP or paychecks or, you know, into it or, you know, one of those things, and it takes care of most of this for you. But you still need to make sure you’re putting the right data in.

Gini Dietrich 

And one thing I will add to this, just based on personal experience, you know, I have employees scattered across the country, well, North America, really. And if you have a service like an ADP or paychecks, I guarantee I highly recommend that you use them to their fullest extent. Because if there gets there’s a screw up a state perspective, or they didn’t file the correct paperwork, and they will take it and they’ll pay all the fines as well. So I cannot recommend that more, because you don’t want to be responsible for and there’s a lot, you know,

Chip Griffin 

right? There’s a ton of paperwork to file. Yeah, yeah, it’s expensive enough, there’s absolutely no reason not to be outsourcing payroll processing. Really, I mean, even even most of the medium size agencies out there are using payroll processors, it’s only the very largest who might be thinking about doing in house, but even a lot of them are still using a service like ADP or something like that. Because Yeah, it just, it just takes away so much of a headache. But now that the asterisk here is that there are some interesting situations that that depending upon, you know, where you have employees, where you may have to get in the middle of a food fight. So for example, if you are a Massachusetts agency, and you have employees who live in New Hampshire, who are no longer going into the office in Massachusetts, Massachusetts, has decided that they will still collect income tax, even though that person never crosses the state border anymore. Wow. But because they used to work in the office in Massachusetts, they sell they say they’re still entitled to a percentage of their income in taxes. Hmm. Needless to say, the State of New Hampshire disagrees with this and is suing Massachusetts in federal court to try to solve this one. There are very few states that have no income tax, which is why this is really a big issue. But even if there are two states that both have income taxes, you know, one may prefer to get the cut over the other. And so you can have, you know, these kinds of battles that go on. So in those cases, you’re going to need to figure out, are you going to continue to withhold or not because your employee obviously is, particularly if they’re in a no income tax state like New Hampshire, they’re not going to want anything withheld. So, right. So that can be messy. It’s really not directly your problem as an employer, but it’s something you may end up having to get in the middle of.

Gini Dietrich 

So the second thing I will say is, this is actually a conversation that’s been happening in some of the agency network on social media, but the P employees are asking employers which rightfully so to pay for things like cell phones, and printers and ink and you know, auto supply type stuff. And employers are responsible for that. So, you know, what do from your perspective, what should an agency owner be providing? And where’s the line to say, okay, the rest is up to you.

Chip Griffin 

Yeah, and so this is this is difficult, because there are there are a lot of different rules out there. So in some jurisdictions, the business actually is required to pay some of these work from home expenses. In some places, it’s just what should you be doing? And then, of course, you layer on top of that, you know, what are these things are actually taxable, because somebody may cross the line into a taxable benefit for the employee. So, so when you’re starting to cover expenses at home, things like a percentage of the broadband expense, for example that employees may have, because a lot of us have had to upgrade our internet services, because of all of the video that we’re doing and things like that, and employees are asking to be reimbursed for all are part of that bill, you need to figure out what you’re going to do from a business perspective. And I would argue that if you are actually having people work from home, you need to be subsidizing these activities in some fashion. If you’re going to do that, though, you also need to work with your accountant to make sure that you’re doing it properly. So that you’re not, you know, creating some tax liability there that you’re not thinking about. And in generally speaking, I’m not an accountant or a lawyer or anything like that. So it’s, you know, my normal disclaimer, right? Yeah. But in general, the IRS has tried to clean some of this stuff up because back 1015 years ago, you had to actually allocate what percentage of your cell phone use was personal versus business, for example, right? You don’t have to do that. They’ve generally decided that if you’ve got a business cell phone, you can still use it for personal purposes, and it’s not taxable. That said, as we get into some of these things, I mean, if you need a new chair, for example, at home, because you know, it was fine for using an hour a week when you were doing just quickly Little projects, but now you’re doing it eight hours a day, you may want a better share, should your employer be picking that up, you know, quite possibly, but then what happens to it after they’re gone so that there’s a lot of issues that you need to be thinking about as an employer. In general, I think agencies should be looking for ways to help subsidize some of these expenses. But you really need to have a clear policy about what you’re going to do. And then you need to make sure that that policy is is vetted by the appropriate professionals to make sure that it’s in compliance with whatever rules may exist in the jurisdictions where you have employees. And again, keep in mind, if you’ve got remote employees, the rules, there may not be the same as where you are. So you know, it’s going to take some investigation to make sure that you’re on the side of the angels here and just Just do your best you’re not, you know, at the end of the day, as long as you’ve made a good faith effort, you know, most of the time you’re going to be okay.

Gini Dietrich 

Yeah, and I mean, just to reiterate what you said about different jurisdiction, jurisdiction, you know, when you look at states like California, Illinois, they’re completely different than, say, Maine or Kentucky, so,

Chip Griffin 

right.

Gini Dietrich 

Not that I have that experience. But yeah, you have to really pay attention to those why the professionals are so important,

Chip Griffin 

right. And it’s and, and a little bit of investment upfront for them to look at your your plan and make sure that it’s or that your policies are okay, is absolutely worth it. Because the the expense of being wrong can be, can be very bad, which is a great segue into the next one, because this is the most expensive issue that you can probably run into, and that is your actual business taxes. Because when you when you’ve got employees in other jurisdictions, it potentially creates what’s called a Nexus. And I’m not talking about LexisNexis, I’m talking about a Nexus that causes you to be taxed by another jurisdiction. This is messy, this is very difficult, and it can be very expensive. So you really need to work with your accountant to make sure that you understand if you’ve got a remote employee in Massachusetts, or Kentucky or California, are you on the hook for paying business taxes in those states, not just the payroll taxes that you’re paying for the employee, those are, again, pretty straightforward. But business tax is a percentage of your overall agency profits could be taxable in those jurisdictions. And this is something I’ve run into a number of times over the years with my own businesses.

Ah,

Gini Dietrich 

that’s what I have to say on that one.

Chip Griffin 

Because because keep in mind, if someone is permanently working from home, and they’re an employee, it’s their home office is basically a branch office for your agency. Yeah, in the eyes of taxing jurisdictions. Yeah, right. So so you need to understand that that may create that, that tax liability or even licensing requirements are all sorts of other things. So it’s great to have the flexibility of remote workers in other jurisdictions, but you really need to make sure that you’re understanding, you know, what the what the potential liability is there, because it’s not, you know, in a lot of cases, it doesn’t end up being a huge cost to you. Other than that, you’ve got to, you know, do all the paperwork that goes along with it. But you also have to come up with some formula for figuring out how to allocate revenue, because there’s, there’s a lot of different things that you can look at. And there’s not really a lot of clear guidance, as it turns out, about how you allocate revenue to different states, you know, is it based on the amount of employees you have there, the amount of time they’re putting in? Is it based on the clients that you have in those jurisdictions, there’s a lot of different ways that you can calculate it. You need to work with your tax advisers to make sure that you’re doing it. The best way for you

Gini Dietrich 

is hire help. Yes, your help,

Chip Griffin 

right. And just I mean, most importantly, just realize that you have this potential issue, right. So you know, we can’t solve it for you on this episode, but but we’re just flagging it for you. So that, you know, to look into this. And this is this goes for whether you’ve had remote employees forever, and you just haven’t been doing this. Or if you have newly work from home ones, this is something you should be looking into.

Gini Dietrich 

So speaking of work from home, I have to check on my intern for one moment because I though I allowed her to use her iPad to read books, it sounds to me like she’s watching Youtube Kids.

Chip Griffin 

Maybe it’s just an audio book. But while while you are investigating her intern, I’ll monologue a bit and I’ll talk about employee benefits, because this is something awesome that you need to be thinking about when you have remote employees. So I will go solo on camera while I’m waiting for you to return. And so as as you’re thinking about employee benefits when you have remote workers, it’s important to think about what kinds of policies that you have for things like health insurance, and how that translates to people who are in other jurisdictions, particularly when you start hiring people who are far flung away from where your main location is from where you live, because a health insurance plan that works well for you in say New Hampshire may not work well for someone in California. And part of this is because of the crazy health insurance rules that we have around the United States. But part of it is because There are just different provider networks in different locations. And so you want to be thinking about those kinds of issues and talking to your employees, frankly, to figure out, you know, what are, you know, is the plan that we have a good one in your location or not? Is it something that, that we should be thinking about the next time we’re looking at plans, because there really are some big differences. And again, this is something I’ve run into before where I had a plan that was great for most of my employees in a particular region. But then the employees in another region said, Well, I can’t find any doctors or in network, and it’s very, very difficult. So you want to be thinking about those kinds of issues. Because we’re agencies are about talent. And so you need to be thinking about team morale and all that kind of stuff.

Gini Dietrich 

That’s really a really great point. Because, you know, quite honestly, it’s not even something I’ve come up against is the loss of a really good plan. But, um, you know, we’ve we’ve always been covered, no matter where the employee is, that’s a really good point that I hadn’t been

Chip Griffin 

willing to keep keep in mind, there’s there is a difference between being covered and being able to use the doctors that you’re used to using, right? Absolutely. And particularly, you know, in the part of the country that I’m in, there are a lot of lower cost providers that specialize in New England. And so and they then partner up with nationwide networks, but those networks may not be as robust. And sometimes this is even big name plans. So in a previous existence, I was working with one of the Blue Cross providers, which normally you would sit there and say, Okay, well, that’s, you know, that’s sort of the gold standard of insurance historically, over the years, they’ve got, you know, Nash national networks. They did, but but in one particular market in New York City, they, that particular Blue Cross plan didn’t have good providers. And so it was a huge issue for we had a whole new York office in that case, that just hated the plan, because they couldn’t find any doctors that took that particular insurance. So you need to be aware of those things and thinking about them. And so don’t just make the decision between yourself, the owner and the broker, you want to make sure that you’re talking to your employees and getting their feedback. And you may not be able to make everybody happy, but at least they’ll feel like they’re listened to if you solicit opinions before you go into the renewal process.

Gini Dietrich 

Yeah, that’s a really good point. And one that you should definitely have on your list of things to consider,

Chip Griffin 

right. And of course, you need to know what’s actually required to because different, you know, there are different rules, you know, around who you have to provide insurance to, and all that kind of stuff, again, based on jurisdictions. And again, keep in mind, it’s not based on where you’re located. It’s based on where your employee is located in most cases.

Gini Dietrich 

So we’ve talked payroll taxes, business taxes, employee benefits, business insurance,

Chip Griffin 

business insurance, right, because it’s not, you know, health insurance is what we think of when we say insurance. But most agencies have business liability insurance, general liability, maybe errors and omissions. We saw some discussion in the Spin Sucks community recently about an agency that’s looking for cyber liability. That’s a whole nother nightmare, we could do a whole nother conversation about that most agencies don’t really need cyber liability. But whatever general liability policy you have, if you’ve got employees who are working from home, there’s a good chance that you need to list their residences on your policy to make sure that you’re getting maximum coverage. And so that’s something that you want to make sure you understand between, you know, hopefully, you’re using a broker, I would generally encourage you as a broker when you’re dealing with business insurance, because they can, they can help you work through a lot of the nuances. But whether you’re working directly with the provider or through your broker, you want to make sure that they understand you have remote employees, and what are the implications? What do you need to make sure that you’re including in your policy, to make sure you’re covered?

Gini Dietrich 

Ah, so much fun to be thinking about it really expensive? Yeah. Yeah, I

think the only

Gini Dietrich 

other thing we haven’t talked about is contractors versus employees, which is a really good point, especially right now.

Chip Griffin 

Yeah. And that’s, I mean, that’s certainly something that we’ve talked about in general before, but particularly now, as we’ve got, you know, folks who are, who are going remote and again, maybe moving from one location to another, a lot of agencies that I know are saying, Well, you know, let’s, why don’t we just switch to contractor status? That’ll be easier for everybody, then I don’t have to deal with any of these other headaches.

Gini Dietrich 

Not true.

Chip Griffin  

Not true. Not Not true. As we’ve talked about before, it’s very difficult to even have independent contractors who live in certain states like California. You know, basically, if you if you’ve got someone in California, just make them an employee, your life is going to be so much easier if you do that. Yep. But But you particularly have to be careful anytime you have someone who’s currently an employee and then becomes a contractor. That is probably the most risky thing that you can do, because it’s very easy for the IRS and other taxing authorities to see that that transition has been made in most cases. And so you want to make sure that you are if you’re doing that it’s legitimately because that employee is starting their own business. They’re they’re no longer working for you full time. They actually have other clients, they’re, you know, they’re soliciting other people. clients, they’re marketing themselves as a business. And in fact, I would tell you, if you want to have independent contractors, don’t have them as truly independent, don’t contract with them by name, make them set up an LLC. Most states, it’s very easy and very low cost to set one up. Yes, have them set up an LLC that at least is the first step into being quote unquote, a legitimate business. It doesn’t completely exonerate you, but it helps a lot.

Gini Dietrich 

Yeah, I, that’s probably the biggest thing give to engineers, when they’re thinking about working with contractors, make sure they that you are paying them to business and not as intimate.

Chip Griffin 

Yep. Yeah, it is. It is, it is a big deal. And particularly now, because every government, state, federal, local, they’re all looking for tax revenue right now. And so as a result, they will they will particularly enforce any rules that are advantageous to them as far as collecting taxes. And independent contractors are traditionally much harder to collect tax revenue from than payroll employees. So most taxing jurisdictions really like to get someone classified as an employee. And so I guarantee you, they will be more aggressive as they’re trying to figure out how to meet some of the budget shortfalls that everybody’s experiencing because of both the economy and the health situation.

Gini Dietrich 

Sure, sure. Sure, sure.

Chip Griffin 

So stay outside of the agency.

Gini Dietrich 

It’s so much to think about, you know, you started a business because you think of doing things differently, or you you know, you get tired of working for the man or whatever it happens to be. And then all of a sudden, you’re in all this and you’re like,

Chip Griffin 

Oh, my gosh, I have to what’s right, right. No, it’s it’s, it’s, it’s horrible that you have to think about these things. But you do. And so you know that that’s why I thought it was important for us to talk about it on this episode. Because these are not the kinds of things that you generally do or even want to think about. But it’s important that you do, because these are things that really can impact your agency’s success in the future.

Gini Dietrich 

So, um, I hope that you’ll link to your blog post with this episode, because it does do a nice job of breaking all the sections down, and it gives you a good roadmap of saying, Okay, this, I handled this, this, I handled this, don’t have to do this, and this,

Chip Griffin 

right. And I can tell you, that all of these things are things that I’ve dealt with from personal experience over the years. So these are not, these are not theoretical problems. These are These are not things that I’ve just imagined, oh, well, this could be an issue these I mean, everything in that article I have had to deal with, and I’ve had bad experiences on in the past. So I’m hoping that you can learn from my mistakes and my troubles, so that you have fewer of them.

Gini Dietrich 

Yes, do that. Because with the exempt Employee Benefit one I’ve also had all these learn from us.

Chip Griffin 

Indeed, indeed. All right, well, hopefully you did learn something. Hopefully you enjoyed yourselves, at least a little bit. Because, you know, we try to make this a little bit light hearted even when we’re discussing these serious issues. And you know, if you want any advice on

them, or they

Chip Griffin 

get mundane, exactly, and if you want any advice on hamsters feel free to reach out to Jenny on that too. She’d be happy to share. Yes,

Gini Dietrich 

I’m very experienced in hamsters right now.

Chip Griffin 

Actually, rodents, rodents, generally, I mean, because you’ve had rat issues. So you’ve dealt with both ends of the road and spectrum the enjoyable part. Well, I guess at least enjoyable in your mind. I don’t I don’t think hamsters in trouble but anyway, so Gini Dietrich, rodent expert. And with that we will draw this episode to a close before she starts calling me aurat. And I’m Chip Griffin.

Gini Dietrich 

I’m Gini Dietrich,

Chip Griffin 

and it depends

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