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Jessica Jones
Jessica Jones

Home Office Illegal Working [BEST]

Yes, under the FLSA, your employer is required to pay you for all hours that you work, regardless of whether the work is performed at home, at a location other than your normal workplace, or at your office. If your employer knows or has reason to believe that work is being performed, the time must be counted as hours worked. This is true even for hours of telework that your employer did not specifically authorize. For more information, see Field Assistance Bulletin No. 2020-5.

home office illegal working

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Prime Minister Rishi Sunak has pledged to crack down on illegal migration to the UK and increase raids on illegal working by 50%. Since December, the Home Office has significantly ramped up its immigration enforcement activities.

In line with its renewed focus on tackling illegal working, Smith Stone Walters expects the Home Office to increase the number of in-person compliance visits it carries out on sponsors of overseas workers this year. Below, we set out how the government will work to prevent illegal working going forward, and how employers can ensure they are compliant with their legal obligations.

As part of the crackdown on illegal working, the Prime Minister has also pledged to hire 200 new Immigration Enforcement staff and restart data sharing with banks to ensure those in the UK illegally do not have access to bank accounts.

An illegal worker is an individual who does not have the right to work. It can be an individual who does not have a right to work at the outset (i.e. an overstayer) or someone who has a right to work such as an individual on a Student visa but has worked beyond their employment conditions (i.e. working more than 20 hours per week during term-time). It may also be a person who had right to work when employed but that right has expired.

Most employers have experienced changes in workforce arrangements as a result of the COVID national health emergency. Many employees demonstrated that they can effectively work from anywhere. For the most part, this meant working from a home office. However, the "work from anywhere" concept has been taken literally by a growing number of workers, who may now be working from a variety of locations, such as vacation homes, or with relatives in other states.

There are also several states that maintain a "Convenience of Employer" rule. Connecticut, Delaware, Nebraska, New York and Pennsylvania sometimes apply a "convenience of the employer" test to tax out-of-state employees who work for in-state employers. New Jersey is considering similar legislation in 2023. In these states, such employees are taxable unless the employer requires the services to be performed out-of-state. There are several variations on rules and enforcement. For example, recent New York audit letters specify that earnings are taxable to New York unless the taxpayer is working from a bona fide office of the employer located out of state, as opposed to telecommuting from a home office outside of New York.

A separate concern, if employees are working in different states, may be the biggest consideration: State corporate or other business activity taxes can apply, if even a single employee is working in a state. In effect, if an employer did not previously have a recognized office in a state, but one employee starts working from there, this can trigger entirely new registration requirements and tax liabilities. It may be necessary to register with the secretary of state and relevant tax authorities, provide a registered agent address, and pay corporate and business activity taxes, sales taxes and employment taxes, including employee withholding. There are often state and local licenses and business permits as well.

Some states waived this "nexus" test for employees working from home due to COVID, but these provisions have generally expired. Also, state corporate tax apportionment calculations are often based on a company's payroll in the state, so remote workers can change the amount of corporate taxes due.

However, claims management is generally unchanged. Employers should still document any injury with a written statement from the employee, and photos of the injury and job site if possible. The statement should explain whether the injury was in the course of employment, which may be less clear if employees are working from home. One key test is whether the activity being performed at the time of injury provides some benefit to the employer. As a recommendation, be sure to require a separate dedicated work area and clear working hours and break times.

As an example, say someone who normally works in Pennsylvania begins working from their vacation home in New Jersey. They may learn that New Jersey State disability law covers maternity and apply for benefits. The employer may not even be aware that the employee has been working from New Jersey. Upon receipt of a claim, the New Jersey Department of Labor might contact the employer, since their wages were never reported to New Jersey. The Labor Department might notify the Department of Taxation, which may have no record of wages or withholding. This could lead to audits and fines.

Pennsylvania Personal Income Tax law permits a taxpayer to claim certain unreimbursed employee business expenses, including a deduction for home office expenses. The deduction is allowable for taxpayers who are temporarily working from home during the COVID-19 pandemic if they meet the qualifications outlined in the section below. However, even if you meet the qualifications, there are other considerations that have to be accounted for when claiming the deduction.

1. You may claim a deduction for home office expenses if your employer does not provide a suitable work area OR you are not permitted to report to your normal employer provided work area due to the COVID-19 pandemic.

3. There also must be exclusive use of the area for which the home office deduction expense is claimed. In other words, the area cannot be used for any other personal use during the time the home office expense is claimed.

Example: You claim that 25% of your home was used for your home office and you deducted the appropriate expenses. Then you sell your home and your overall gain from the sale of that home (minus original cost) was $10,000. You would be required to pay PA personal income tax on 25% of that gain ($2,500).

Your organisation needs robust HR systems in place to minimise its exposure to these risks. We offer bespoke Prevention of Illegal Working services, tailored to your needs and budget, whether you need an audit of personnel records, staff training or a hotline for those tricky illegal working questions.

What is a Civil Penalty?A civil penalty is a fine that can be imposed under the prevention of illegal working legislation. Civil penalties are issued by the Home Office once they have discovered that an employer is employing a person who does not have permission to work in the UK.

Those organisations that hold a sponsor licence should also be aware that the Home Office may revoke a sponsor licence and impose a 12 month cooling off period on a new application if they have encountered breaches of illegal working legislation. This means that the employer would no longer be able to sponsor any non-EEA nationals and would have to wait at least 12 months before they could reapply for a sponsor licence.

The home office deduction is available to qualifying self-employed taxpayers, independent contractors and those working in the gig economy. However, the Tax Cuts and Jobs Act suspended the business use of home deduction from 2018 through 2025 for employees. Employees who receive a paycheck or a W-2 exclusively from an employer are not eligible for the deduction, even if they are currently working from home.

It is imperative for businesses to take preventative measures to avoid breaching the immigration rules. However, if you find yourself in a situation where you are facing UKVI action and a possible civil penalty notice for illegal working, then help is at hand. We can support and advise about the Home Office process.

If the Home Office becomes aware or suspicious of potential immigration breaches, this can even happen following an anonymous tip-off (you might want to imagine a disgruntled former employee or unhappy customer). The home office are authorised to act on this information. They may contact you and request a visit to your business in the first instance.

If you believe working conditions are unsafe or unhealthful, you may file a complaint with OSHA concerning a hazardous working condition at any time. If possible, bring the conditions to your employer's attention. If the condition clearly presents a risk of death or serious physical harm, there is not sufficient time for OSHA to inspect, and, where possible, a worker has brought the condition to the attention of the employer, the worker may have a legal right to refuse to work in a situation in which he or she would be exposed to the hazard. If you have questions about what to do, contact your local OSHA office. We will keep your information confidential. We are here to help you.

Employers should carefully check the genuineness of the document presented to them. If an employee is found to be working illegally, the employer will be liable if it was reasonably apparent that the documents were false.

The definition of an illegal worker in the UK is someone who is working in the UK without leave to remain. This also covers the situation where a person has previously had leave to remain, but this has expired or if their leave to remain has now become invalid for any reason.

Employees have very few electronic privacy rights when working from home because there are generally very few employee rights to priv


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