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San Diego Employers and Employees: Telecommuting and Unemployment

In San Diego, we follow the laws from the State of California and the United States. The below example is from New York. With PC AnyWhere and other services, it is possible to work at home with the same programs as at work. There can be, however, security issues and at our firm of Law Office of Scott C. Soady, A Professional Corporation, LLP we do not use telecommuting and all of our staff works in the office. This issue of unemployment, however, is not one unique to New York and in San Diego this is the EDD.

Maxine worked in New York for a financial information services provider. When she moved to Florida, her employer agreed to allow her to telecommute. Maxine was responsible for the same tasks that she had handled in New York, only now from her laptop in Florida she logged onto her employer’s mainframe computer each workday.

Two years into the telecommuting arrangement, Maxine’s company decided to end it. When she turned down an offer to return to New York, Maxine was without a job. She was denied unemployment benefits in Florida following a ruling that she had voluntarily quit her job without good cause. However, the Florida agency advised Maxine that she might be eligible to receive unemployment benefits in New York.

In what may be the first court decision of its kind on interstate telecommuters, New York’s highest court also ruled that Maxine was ineligible for benefits, but for a different reason. Under New York law, a threshold requirement for eligibility is that the employee’s entire service for the employer, except for incidental work, must be “localized” in New York. Maxine argued unsuccessfully that her services were localized in New York, at her employer’s mainframe computer, notwithstanding that she initiated this service on her laptop in Florida. The court ruled instead that the physical presence of the employee determines in which state a telecommuter is located. For work done while she was located in Florida, Maxine was not eligible for unemployment compensation in New York.

When the new economy met the old unemployment insurance system in Maxine’s case, the court stayed with principles that predate the age of computers. The outcome was dictated by two rules that are uniformly recognized: All of an individual’s employment should be allocated to one state, which should be solely responsible for paying benefits; and that state should be the one in which it is most likely that the individual will become unemployed and seek work.

Unemployment has the greatest economic impact on the community in which the unemployed individual resides, and benefits generally are linked to that area’s cost of living. Legislators and judges from previous generations could not have foreseen today’s world of interstate telecommuting, but the rules they created are still valid. For better or worse, Maxine was tied to Florida, where she was physically present, and she could not look to New York for unemployment benefits.

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