As noted in previous columns, the number of "virtual workers" is rising dramatically. Virtual workers are those whose supervisor and/or peers are situated in a different place. We've documented an 800% increase in the number of virtual workers over the past five years - for very tangible reasons.

Companies that engage virtual workers can save millions of dollars on facilities costs by locating employees in less expensive suburban areas rather than high-cost metropolitan areas, and personnel by reducing the need to replace or move workers. And they see greater organizational agility - the much-coveted ability to respond quickly and effectively to changing business conditions.

Unfortunately, when it comes to enabling virtual workers, the courts are in the Dark Ages. In particular, the courts seem determined to make things harder, not easier, for one class of virtual workers: telecommuters. The U.S. Supreme Court recently decided not to hear an appeal by a Tennessee telecommuter who was charged New York state income taxes. A New York state appeals court ruled that the state had the right to tax 100% of an employee's income derived from New York sources, even if the employee did not reside in New York and spent less than 25% of his time in that state.

The effect is to potentially increase the tax burden of telecommuters whose employers are based in states with higher income taxes, thus making telecommuting a less-attractive option to employees and making it harder for employers to recruit such employees. For example, companies creating "virtual contact centers" leveraging VoIP to enable contact center workers to work from home may find it more challenging to build out such centers. Corporations aren't the only ones who lose - employees who may be considering telecommuting as a way to save energy costs and improve work-life balance now have to weigh the potential effect of a tax increase.

This is nuts! Just when companies ought to be striving to make telecommuting more attractive - not less - to their employees, the courts are trying to throw on the brakes. So what can forward-looking companies and their employees do?

IT executives should review their telecommuting policies in light of potential employee tax liability. It's a good idea to engage the legal and human resources departments to ensure you're fully informed. One stopgap workaround is to certify that employees who work at home are doing so for the company's benefit, as employees who work at home for their employers' benefits may be exempt from tax increases.

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