For the past few years, we have used the phrase “Great Resignation” to describe the sharp increase in the number of employees quitting per month in the United States, which, according to the U.S. Bureau of Labor Statistics, exceeded 4 million quits per month at its peak during the pandemic. But recent trends suggest that the Great Resignation appears to have finally reversed course.
One trend the Great Resignation left in its wake is employees pushing back on the return-to-office mandates from employers. The private sector wants to encourage in-person interaction and stop having to pay for offices that are primarily empty. Municipal governments and local businesses have been championing a return to the office. City business districts have lost customers at local restaurants, parking lots and other vendors. This has caused friction between those that have enjoyed working remotely, especially among people that have adopted one of the most extensive forms of remote work — digital nomads.
What is a Digital Nomad?
Fueled by the pandemic, the trend to “work from anywhere” drove millions of traditional job holders to become digital nomads, working remotely outside their home city, state and even country for varying periods of time. While many telecommuters work from a consistent home office, digital nomads are location-independent, embracing a technology-enabled lifestyle that allows them to travel and work from pretty much wherever they can find a Wi-Fi connection. For many, this opened opportunities to travel around the world, care for ailing family members regardless of their location, explore future relocation destinations or simply maintain greater flexibility — without having to forego a steady paycheck.
Consequently, the recent push to return to the office presents a difficult choice for some employees — maintain a highly flexible, nomadic lifestyle and risk losing their job, or return to the office to keep the job but accept a loss of freedom. A recent slowing of job growth, increasing interest rates and the anticipated return of student loan payments are some of the factors that may influence the decision to return to the office. However, for those less affected by these factors, continued pursuit of the digital nomad life will likely continue unabated.
Employers have an opportunity to access talent pools among digital nomads, but often do not have the infrastructure in place to welcome and support these candidates. Building a solid infrastructure involves assessing the following:
Guiding Principles: The first thing an employer needs to ask is whether or not to provide opportunities for employees to work as digital nomads. The decision should be grounded in carefully considered guiding principles. These principles should be shaped by the culture and values of the organization and will ultimately guide the decision-making process relative to policies and procedures for all remote work, whether hybrid, fully remote or genuine digital nomadism. The development of these principles should include senior leadership of the organization and speak to how the operations and internal and external customers will be impacted by where employees are located and what hours they work.
Business Case: Whatever decision an employer makes relative to supporting (or not supporting) employees pursuing work as digital nomads will likely engender both supporters and detractors. For the benefit of the organization, developing a solid business case for embracing employees working as digital nomads will provide significant value in winning over those less supportive of the approach. If the organization has struggled with recruiting and retaining employees, encouraging digital nomads as a method to increase the applicant pool and supporting the chosen lifestyle for current employees can aid in recruitment and retention efforts.
Eligibility: Who will be eligible to work as a digital nomad? Much of this decision is focused on the nature of the job, but equal measure should be placed in evaluating the suitability of the individual employee. While some employees thrive in an environment with few traditional office trappings, others do not. A demonstrated record of success working as a digital nomad can provide some comfort to managers and supervisors that this approach will continue to work.
Employee Status: Employers will also need to decide whether the “work from anywhere” risks associated with compliance are worth the benefits of allowing the practice to continue. This will include tax withholding and unemployment insurance obligations, which are typically driven by the nexus between the employer, the employee and the local jurisdiction. The onus on the employer varies widely by jurisdiction and is often based on the residency of the employee or even the mere presence of the employee working in the locale for a certain amount of time, among other factors. Digital nomads can trigger these obligations in some jurisdictions with even one day’s work. It is also important to set a health benefit policy. Given these challenges, many organizations are struggling with whether they will remain the employer of record of remote employees and bear the costs of doing so. As an alternative, they are considering contracting with a professional employer organization (PEO) to act as employer of record for remote employees, relieving some of the compliance burden.
Immigration: Additional considerations include the degree to which the employer will assist with immigration requirements, like visas, that may be required in order for someone to work in another country. During the pandemic, some countries began to actively attract digital nomads to boost their local economies. By February 2021, 21 countries were offering digital nomad visas. As of March 2023, more than 50 countries offered digital nomad visas. For those countries that do not offer this flexibility, the employer will need to decide whether to provide assistance or simply expect the employee to address these issues themselves, potentially increasing risk to the organization.
Employee Expectations: For those that work in professions where the work can be done without team collaboration, there is perhaps little need to set official working hours. However, digital nomads working outside a company’s standard business hours that work in teams or need to be available for video meetings should consider how that will impact their lifestyle.
In addition to working through the business needs, it’s also crucial to check with a legal team or compliance consultants on the short- and long-term ramifications of the policies related to digital nomadism. The pandemic experience, coupled with advances in technology platforms, has disrupted the expectations of some members of the workforce that believe that literally working from anywhere is not only possible, but the preferred lifestyle choice. The end of the Great Resignation may challenge that choice among digital nomads, and employers will need to weigh the benefits against the risks when deciding whether or not to provide the infrastructure to support digital nomads moving forward.
Portions of this article were inspired by a Segal piece “Digital Nomads: Talent Opportunity, Risky Adventure or Both?” by Susan Goldenson, Christopher S. Nickson, Scott Nostaja and Tami Simon.
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