Courtesy of technology, employees can work from home or anywhere else. For organizations that have not issued a flat ban on such work, there is a glitch that no one is talking about. What if home (or “summer home”) is in another state? Or in another country?

Start with employment law. Many foreign jurisdictions will take the position that an employee working in their jurisdiction will be subject to the labor and employment law protections of their jurisdiction. For example, in Sullivan vs. Oracle, a California court took a very broad view on application of California wage & hour law to residents of other states working temporarily in California. It is just as likely that a foreign court will take the view that local labor and employment laws apply to an individual spending weeks working in their jurisdictions. And are you really willing to pay French overtime pay? Or grant German vacation? Or what about the worst case scenario: if an accident happens in a foreign land, does your workers’ compensation policy provide you with protection?

Continue with withholding obligations. In a typical secondment, most companies have safeguards in place to determine whether the secondment triggers local income tax and social security withholding obligations. But these safeguards often are overlooked when dealing with an employee who “just” wants to work from home or telecommute. Income tax treaties often permit work from a foreign jurisdiction without triggering local income tax obligations, assuming the stay does not exceed 183 days in a calendar or taxable year. But is there a treaty with that country and are all the requirements of the tax treaty met? What about state income tax withholding requirements for work from home arrangements in the U.S.? And what about social charges? Is a totalization agreement in place between the jurisdictions that exempts the foreign employer from local social charges? What if not?

Continue with immigration requirements. In many instances, the employee will be telecommuting from a jurisdiction whose nationality he/she holds. But what if — in the meantime — he or she has accepted U.S. citizenship and thus either expressly abandoned or lost local citizenship? What if the employee plans a world trip or a summer in the south of France? Are you “on the hook” if he/she performs work from foreign lands?

Move on to doing business requirements. Is the company now engaging in business in the employee’s home location when he/she is performing services there? This may be less of an issue if the employee is working for a company that has a local subsidiary or branch and thus related business licenses in that foreign jurisdiction, but what if this is not the case? More importantly, with telecommuting, do you even know where your employees are?

Finish with permanent establishment tax considerations. Foreign jurisdictions are becoming more and more attuned to companies engaging in activities in their jurisdictions without filing proper corporate tax returns. Accordingly, your telecommuting employee may have created a taxable presence or permanent establishment in the foreign jurisdiction for your entire organization. Again, a tax treaty may provide relief, but its requirements must be met. Has this been thought through? Has tax signed off on the work from home arrangement?

Companies that have said “no” to all such arrangements are receiving the same response as the Grinch who stole Christmas. But, maybe, when the multinational risks are factored in, these companies look smarter in hindsight. Before giving the quick and easy “yes” answer to telecommuters (whether permanently or “just for the summer”), your company owes it to itself to at least consider the implications.