This month’s featured article highlights how a clear, well-written handbook policy—originally crafted by Akamai HR Solutions—enabled a California employer to enforce serious corrective action against an employee, and why the discipline held up when it mattered most. Need a customized, legally compliant employee handbook? Visit our Handbook page to build yours in just a few clicks.
When Remote Flexibility Meets Policy Boundaries
The modern workplace embraces flexibility. Remote work allows employees to balance personal needs with professional responsibilities, and employers who offer hybrid options often gain an edge in retention. But flexibility without guardrails can create serious legal and operational risk.
That lesson became very real for a California employer when one of its employees quietly relocated from Utah to Michigan—without approval, without notice, and without regard for the company’s established relocation policy.
The move triggered an immediate compliance headache. Suddenly, the company was faced with questions about payroll tax liability, state registration requirements, benefit coverage, and whether it could even continue employing this individual under state and federal law.
The Handbook Policy: Clear, Written, and Enforceable
Fortunately, the employer had prepared for this scenario. Its handbook—developed in partnership with Akamai HR Solutions—included a clear Employee Relocation Policy, stating in part:
Employees must inform their supervisor and the Operations Director in writing if they plan to work from a location other than their primary address, even temporarily, for more than one week. [The Company] must be registered as a business and employer in the state where employees work for tax purposes and other state and local requirements. Prior to relocating, all employees must receive written confirmation from the Operations Director to approve the request. Requests to relocate outside of the country will not be approved absent extenuating circumstances.
The policy was more than a formality—it reflected the employer’s responsibility to comply with multi-state payroll tax obligations, business registration requirements, and labor law coverage. It also underscored the importance of prior approval to ensure operational needs could still be met.
The Violation and Response
When leadership discovered the employee’s unapproved move, they had a choice: ignore the policy and risk liability, or enforce it. They chose enforcement.
HR investigated, documented the facts, and confirmed the employee had failed to request relocation approval as required. Instead of terminating the employee immediately, the company opted for serious corrective action: a formal written warning that explicitly outlined the violation, referenced the relocation policy, and put the employee on notice that any further policy violations will result in termination.
The corrective action letter was carefully worded to show:
- The employee had violated a clear, written policy.
- The company had legitimate business reasons (including legal compliance and operational needs) for enforcing the policy.
- The discipline was consistent with how similar violations were handled.
Why the Discipline Held Up
The decision to issue corrective action—rather than termination—helped the employer strike a balance between risk management and fairness. The discipline held up for four key reasons:
- The policy was clear. There was no ambiguity in the handbook. Employees were explicitly required to obtain written approval before relocating.
- The violation was documented. HR retained emails, payroll records, and proof of the employee’s new address to support the corrective action.
- The risk was real. Multi-state employment laws, payroll tax rules, and benefit coverage requirements made the violation more than a technicality—it had genuine legal implications.
- The action was proportional. By choosing serious corrective action over termination, the employer demonstrated fairness, which strengthened its position if challenged later.
What Could Have Gone Wrong Without the Policy
- Payroll & tax compliance exposure: If the company hadn’t registered as an employer in Michigan, it could have faced penalties, back taxes, and audits for failing to withhold and remit state payroll taxes correctly.
- Workers’ compensation and benefits risk: Coverage typically applies only where the employer is registered correctly. Without notice, the employee might not have been covered in the event of an injury, leaving both the company and the employee exposed.
- Wage and hour law conflicts: Each state sets its own overtime, meal/rest break, and leave laws. Employing someone in Michigan without approval could have created conflicts and unintentional violations.
- Unemployment and litigation risk: If the company had disciplined or terminated the employee without a clear relocation policy in place, it could have been perceived as arbitrary, potentially opening the door to unemployment claims, wrongful termination allegations, or claims of unequal treatment.
- Precedent for other employees: Without clear enforcement, other employees might assume they too could move across state lines without approval, multiplying the compliance risks.
Fortunately, this was also an easy update to the handbook with Akamai HR Solutions. Once the employee’s work location shifted from Utah to Michigan, we updated the handbook to add a Michigan state-specific addendum. This ensured the employer’s policies aligned with Michigan wage and hour laws, leave entitlements, and notice requirements—closing compliance gaps before they became a problem.
Employer Takeaways
- Write it down. A relocation policy isn’t just about logistics—it’s about compliance. Ensure your handbook clearly outlines approval requirements, tax considerations, and the necessity for written authorization.
- Tie policies to legal obligations. Policies are strongest when they clearly align with state and federal requirements, such as payroll tax registration or benefit eligibility rules.
- Document everything. When violations occur, retain proof of the conduct, the policy, and the discipline issued. Documentation is your best defense.
- Be proportional. Consider corrective action over termination when appropriate. Balanced discipline demonstrates fairness and reduces risk if challenged.
- Review remote-work policies regularly. As more employees move across state lines, your policies should be updated to reflect new compliance realities.
Disclaimer: The information in this featured article is provided for general educational purposes only and does not constitute legal advice. Akamai HR Solutions, LLC is not a law firm, and no attorney–client relationship is created by your use of this content. Laws may change or apply differently to your business. For legal guidance tailored to your specific circumstances, please consult a qualified attorney.