COVID has forced many of us to adapt by Working from Home (WFH). In the process, we have been forced to get familiar and use online meeting tools such as Zoom, MS Teams and WebEx to a level of sophistication not previously achieved by many users.

Here are six major impacts on employers of this sudden, but likely long-term change in the work habits of many employees:

Employment exposures

U.S. companies particularly in the technology sector have long been used to working with highly skilled employees in other continents where salaries are lower and labor competition less intense. WFH will result in an acceleration of this trend not just abroad but also within the U.S. by, for example, enabling WFH employees in States where salaries are low to compete with those in high cost locations such as San Francisco or Silicon Valley.

There are, however, drawbacks associated with this advantage. For example, FLSA regulations complicate how overtime is monitored and measured for non-exempt U.S. workers when they work from home and increase risks for employers in the event of an FLSA lawsuit by an employee. Similar exposures exist in France and in other European countries. Furthermore, it is important that the home worker is told he/she must inform their insurer and mortgage company that they are working from home to ensure they do not lose coverage or breach mortgage loan conditions.

WFH can also complicate how disciplinary interviews are managed as it is imperative these are held in a private environment. In countries such as suburban India or Hong Kong where an entire family could be living in a small condo, this may not be possible.

Confidentiality & Data Privacy

We have all heard of the draconian penalties associated with breaches of GDPR regulations in the European Economic Area (EEA). Similar but less stringent regulations apply in Australia, Japan, China and India to name a few. Furthermore, companies need to protect their confidential information. Corporate data privacy and information protection procedures will therefore need amending to ensure adequate controls are in place to prevent breaches of GDPR or leakage of confidential information accessible from home that could be misused by others in the home or visitors to the home. This would apply both to hard copy material and to the security of access to home-based laptops or PCs.

Home IT

Beefing up home IT setups can be one effective way to prevent data privacy breaches or loss of confidentiality. For example, a home LAN (local area network) can improve security from a hacking viewpoint by a significant extent. Costs can be controlled by tailoring the level of security to the ability of the concerned employee to access personal or confidential data. Making sensitive documents print disabled would be a further option. Ensuring PCs and laptops auto lock after a short deadtime is another simple precaution to take.

There are of course significantly increased IT costs and risks associated with WFH offsetting some of the advantages of this mode of working.

Saving Office Rental Costs

If your employees are mainly virtual you may not require an office or perhaps you will just need a smaller office in an overseas country. In some countries such as Japan or China, the company’s registered office must be its physical office where you will continue to need to be able to receive mail and other official documents from regulators. Companies could even hire meetings by the hour - this is becoming increasingly popular. A case in point is Fidelity National Information Services, a financial technology company with 198 offices, and approximately 95% of employees working from home. Other major companies, such as the investment bank Barclays and Oreo-maker Mondelez International also expect to use less real estate as more employees work from home. According to Global Workplace Analytics, "a typical employer can save about $11,000 year for every person who works remotely half of the time." And, according to the same study, workers can often save between $2,500 and $4,000 a year working remotely half time.

Bank and Payment Frauds

With COVID has come an increase in phishing and bank frauds. Phishing software is now very sophisticated and can, for example, produce emails purportedly coming from a familiar email address with instructions to transfer monies. Finance employees WFH therefore need focused fraud prevention training and updates to ensure fraudsters do not benefit. Their home networks will also need a higher than normal level of protection from external threats.

Protecting your IP

WFH has resulted in companies sometimes hiring key workers overseas. If these workers are developing core IP for the business, it is important that steps are taken at an early stage to ensure the IP belongs not just to the business but to the entity within the business that holds the real enterprise value (EV). A good example in this respect in Sweden where a standalone IP agreement is required with the employee to ensure any core IP produced belongs to the business and not to the employee. Including IP protection wording in an employment agreement will not achieve this result in the case of Sweden.

The COVID induced boom in WFH means that in the future, companies will be much more open to managing a distributed workforce where the skillsets of the employees become more important than where they are located physically.

This will apply both within the U.S. and abroad. Pre-COVID immigration restrictions in the U.S. were already forcing technology companies to seek talent abroad. The wider acceptance of WFH will accelerate this trend. It is therefore important for companies to understand and avoid common pitfalls when expanding abroad and to seek expert advice at an early stage before they actually begin to hire.

Shan Nair is the president of Nucleus, a one-stop global expansion solution for businesses and a consultant on international expansion.