Digital nomads are making the world their oyster, and their workplace. According to MBO Partners’ State of Independence In America report, 4.8 million workers currently consider themselves digital nomads. Another 1.7 million aspire to be digital nomads one day. By 2035, that number will surpass 1 billion. Besides the adventure and financial freedom you can gain while traveling, working as a nomadic employee can also boost your productivity, personal wellbeing, and work-life balance. However, if you plan to work as a digital nomad or traveling freelancer, the rules of the workplace can be different. Whether you are classified as a self-employed contractor or a full-time employee, here is a quick guide to your rights as an employee on the go.
Your Tax Obligations In Your Country Of Origin And Travel
One of the trickiest parts of being a nomadic worker is clarifying your taxation earning when you are constantly traveling. Being on the move often means your place of earning shifts and therefore, the country where you are obligated to pay tax can also change according to local rules. This affects independent contractors who are responsible for paying their income tax. It can also impact employers if you are classified as an employee since they will be liable for taxes such as social security, income tax, or PAYE.
It is best to check the individual regulations of your country like the timeline for levying income tax or worker employee visa applications. For instance, in Estonia, there is now a Digital Nomad Visa which grants nomad workers permission to live and work in Estonia for up to 1 year as a remote worker. However, to be eligible to pay tax, you must be considered an Estonia Tax resident. Criteria for this include spending at least 183 days over 12 months in the country or having a place of residence in Estonia, according to the Estonian Income Tax Act. If you do not qualify as a tax resident in the country, your tax obligations include a 20 percent personal income tax charge.
Employer-Provided Benefits And Coverage
Your classification as a contractor or employee will determine your rights to employee benefits like a workplace pension and worker’s compensation. For some benefits like worker’s compensation, your business’ or employer’s location will impact your workers comp rates. For instance, in the state of Alaska, the highest workers’ comp rate is $15.85 per $100 in payroll. However, in Indiana, it is about half of that at $7.69 per $100 in payroll.
Most digital nomads tend to be self-employed or freelancers. This means you are responsible for health insurance, worker’s compensation, and a personal pension scheme. However, if you are classified as a full-time employee on the business payroll, then employers are legally obligated to provide you with a few standard employee benefits like worker’s compensation coverage and Social Security. Company policy and regulations of the country of incorporation also determine your rights to employee benefits.
The Presence Of Employee Discrimination And Equality
While you may think employee discrimination declines with out of office working arrangements, discrimination is still a challenge faced by the remote workforce, including nomadic workers. Even though you may be working as a remote worker, the federal and regional laws on employee discrimination remain in full effect. This means businesses are expected to make reasonable accommodations for special needs employees based on the Americans with Disabilities Act.
Finally, telecommuting employees (not freelancers or independent contractors) are also entitled to coverage under the Fair Labor Standards Act (FLSA). The FLSA dictates employee rights for minimum wages and overtime. According to the FSLA, employers are required to pay you at least the minimum wage and overtime if you work more than 40 hours in a week. For remote workers, your hours may be flexible but with the right time logging practices, your employer should be able to establish your hours worked. So even though you may be traveling while working and may not work the standard 9 to 5, you are still entitled to coverage under the wage and hours laws, including when it comes to overtime worked. Employers can utilize timekeeping tools for remote workers to accurately keep track of employee hours worked if there is no standardized clock-in system in place.
With more companies embracing the digital age and the innovation of technology, you no longer have to spend your workweek in an office. Finding out your rights as a nomad worker could be the first step towards exploring the world, and maintaining your dream career while doing it.