- Digital nomads, who rely on tech services to complete their work while traveling, have become more common during the COVID-19 pandemic
- Companies can open themselves up to regulatory and legal risks if they rely on digital nomads without having policies in place
- Setting certain limits on travel, proper classification, and other steps for working with digital nomads
Summary by Dirk Langeveld
While much attention has been paid to the growth of remote work as a result of the COVID-19 pandemic, a similar trend of people working while traveling has also been rising in popularity. Unlike remote work, where people complete their tasks from home or another location, digital nomads work while living or traveling in different places around the nation or world.
One recent study found that the number of digital nomads increased by 49 percent between 2019 and 2020. Digital nomads were dominated by freelancers and other independent workers before the pandemic, but the majority now hold traditional jobs.
A recent article in the Harvard Business Review argues that companies seeking to employ digital nomads should have a policy in place to respond to this trend. These workers tend to have tech-dependent roles and be highly skilled, but their work arrangement can also create risks for the company if a policy is not in place.
- Businesses may run afoul of regulatory or legal issues when they have only informal arrangements with digital nomads, including the possibility of the workers inadvertently creating a “permanent establishment” subjecting the company to taxes, laws, and other rules in regulations in the state or nation where they’re situated
- Policies can include tracking where the digital nomad is traveling, classifying them as a telecommuter, limiting the time they can work from any one location, and forbidding them from working in certain places where rules and regulations will create complications
- Companies should determine how compensation will be awarded, as some businesses have been reluctant to offer higher pay when employees are based in areas with a lower cost of living
- Policies can also work to appeal to digital nomads, including allowing people to work from different time zones, investing in software that allows for better digital collaboration, and taking steps to make it easier to onboard digital nomads and process their payments
