Prior to the global pandemic, we thought of digital nomads as wistful wanderers who lived and worked wherever the road (or flight) took them. This group was largely independent contractors or freelancers who are not bound by location to complete client work. In fact, our annual digital nomad study confirms that the ranks of digital nomads were dominated by the self-employed. But the pandemic flipped the script.
Our data shows that digital nomads in the U.S grew from 7.3 million in 2019 to 10.9 million in 2020. However, instead of the self-employed, the pandemic surge was driven by people with traditional jobs. In other words, your full-time employees.
Covid-19 accelerated changes that were already taking place in the workforce. Our adoption of mobile and cloud technology gave us a digital readiness that allowed us to completely cut the cord to the physical office when our backs were against the wall. Untethering work, when possible, from the dependency of a single physical location allowed leaders and employees to experience the “anywhere office” in real time.
By necessity, many workforces became fully remote. Learning to work away from the office led many workers to take the next step of working from various locations. Some were domestic nomads, shuttling from home to a relative’s house, or an AirBnB, while others became digital nomads traveling to see the Northern Lights in Alaska or explore the beaches of Costa Rica. In fact, the number of digital nomads with traditional jobs rose from 3.2 million in 2019 to 6.3 million in 2020—a 96 percent increase. Traditional job holders now make up a majority of those pursuing this nontraditional work lifestyle.
As HR teams rewrite new policies and rules of the remote workforce, data from University of Chicago, Instituto Tecnológico Autónomo de México and Stanford University shows that Americans want to work from home 2.5 days a week on average. Combined with the wants and needs of a multi-generational workforce, it is important to design workforce policies that build in the flexibility that workers need. After all, new data reveals that flexible environments can lead to happier and more productive employees.
Formalize the Policy
Having a digital nomad policy will not only allow you to attract and retain top talent but it is essential to protect you from regulatory and legal risk. With or without a formal policy, many workers are traveling and working. Workforce laws and regulations are typically based on where the work is performed, even when the employer is located in a different jurisdiction.
Digital nomads can unintentionally create a problem by working in a different state or country without informing their employer. Working in a different state or country can accidentally create a new “permanent establishment” for the employer. This then opens the employee and employer up to that location’s tax, regulatory and compliance laws and rules. Employers may unknowingly be breaking employment laws because they are not aware that their employee is working in that location. Additionally, there is a risk to the safety and well-being of the traveling employee. Most U.S. medical benefit insurance plans will not cover employees living abroad. This also applies to workers compensation.
A documented digital nomad policy will help protect you from risk but is also an essential framework for the future of work. Rather than a haphazard approach, you can use the documented policy in your recruitment efforts.
Digital nomad policies will vary by company and industry but there are three standards that apply to all.
- Get it in writing. Your policy should include a provision for a written agreement with every employee who is a digital nomad. You should also have a documented record of revisions.
- Outline compliance responsibilities. Being a digital nomad can trigger tax, immigration or other legal issues. You will want to clearly state the employee’s responsibility for compliance.
- Define limitations. Your policy should address any limitations such as the number of days in a calendar year that they can work as a digital nomad or locations that are not allowed.
If you are just beginning your digital nomad policy, your first step is to identify your current digital nomads so that you can get them compliant with your new procedure.
The pandemic rewrote how we approach work, but digital nomadism is here to stay. A documented policy will help you attract and retain in-demand talent and ensure compliance with laws and regulations. But even more importantly, it can be a critical strategy in helping you to future-proof your organization and become an employer of choice.