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Does a company have the right to track the whereabouts of its employee?

Employee locations have massive tax and legal implications for employers. For instance, if an employee worked two weeks in New York City each year, their company must legally withhold NY taxes from their paycheck. If an employee stays 183 days or more in the United Kingdom, they are required to file taxes as a resident. More surprisingly, if a company employs several people in France, permanent establishment laws mean that company might have a French entity, whether it wants one or not.

However, efforts to track employees raise privacy concerns and have the potential to go too far. Do you see a psychiatrist regularly? Are you interviewing for jobs with a competitor? Tracking applications that could expose such details, legally or not, have no place in the business world.

The conversation about tracking has intensified as COVID-19 has turned once office-bound workers into remote, mobile employees who may cross tax and legal jurisdictions without anyone knowing. Whether employees work from home or from COVID-19 getaways, it may affect where and how much tax is owed by both them and their employer.

State governments are eager to enforce their tax laws, and both employees and employers are equally eager to avoid overpaying taxes or suffering penalties. Should employee tracking become the new normal now that so many workers are remote? How should HR departments approach this difficult subject?

The Baggage of Tracking

When I used to travel worldwide as a consultant, I suffered the painful annual process of manually completing a Big Four tax calendar at the end of the year. Once a year, I spent hours going through my calendar, my travel history, and my emails to try to figure out exactly where I was each day. Unsurprisingly, road warriors like myself were the first employees to welcome location tracking through our phones and laptops. Anything to spare us from that Outlook scavenger hunt!

For the overwhelming majority of workers, however, any kind of tracking is new and unnerving, particularly for those who never travel for work.

Newspapers warn that consumer mobile apps and social networks collect and sell our personal information, including granular location data, by tracking us without explicit permission. After COVID-19 struck, some employers required their remote employees to install software that tracks productivity. These apps take continuous screenshots, snap webcam photos, or record keystrokes and mouse actions.

Even when employers have a legitimate reason to track employees, they have to navigate this baggage. But is there a responsible way to gather location data without infringing on privacy?

The Hard but Necessary Conversation

People who used to work in New York City are now working from home in the suburbs or even out of state in Connecticut or New Jersey. Remote employees have temporarily relocated to vacation rentals, second homes, or their childhood neighborhoods, where their parents need care and company.

Employees might save their employers millions of dollars by working from these new locations, or they might create tax exposure in more expensive locales. Either way, employers need to know what they owe and where.

If you plan to start locating employees, you need to be mindful of the cultural baggage and approach this conversation with tact. Here are my suggestions:

1. Tell Employees What Information You Need to Collect and Why

HR leaders should explain that the company needs to know which jurisdictions employees have spent time in so it can pay taxes or avoid penalties. HR should not collect or see any data on the specific addresses that an employee has visited. Employers only need low-resolution data on employee whereabouts at a jurisdiction level. This information should not be any more detailed than what you would tell someone on a Zoom conference when they ask, “Where are you calling in from today?”

2. Be Straightforward About How You Will Manage Location Data

Where will it be stored? Who will have access to the data? Who owns this data? How long will it be retained? Answer these questions and subject your location tracking program to third-party audits. This transparency will help employees feel comfortable with who has access to their location information.

3. Give Employees a Choice

They deserve the option to manually document their location if they prefer not to be located through a smartphone or computer app. In some cases, it may make sense to use travel and expense data that has already been submitted by employees. Employees should also have the ability to review their location data before it is used for any compliance reasons. Further, they should be able to deactivate these applications when they travel for personal reasons.

It’s hard to tell employees that you want to monitor their location, but this conversation cannot be avoided anymore. As long as remote work continues, employers must track employee whereabouts on some level — but in a way that protects their privacy and personal information.

Steve Black is cofounder and chief strategy officer at Topia.

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