As employers and employees start thinking about whether or not to return to the office after Covid restrictions are lifted, both groups have some unexpected consequences to consider that financial advisors can assist with, according to two people immersed in the process.

For employers who provide employee benefits, determinations have to be made now about how allowing employees to continue to work from home can affect their benefits, warned Doug Ramsthel, executive vice president and partner at Burnham Benefits.

For employees, working from home can have negative impacts on careers and on psychological well-being, according to Clint Padgett, president and CEO of Project Success and the author of "How Teams Triumph: Managing By Commitment."

“Employers offer benefits to attract and retain key talent,” Ramsthel said in an interview today. “But if benefits become complicated because of where an employee lives and works, the benefits can actually turn into deterrents.”

Burnham Benefits is a consulting firm based in Irvine, Calif., that advises mid- and large-sized companies on their benefits packages. State laws and administrative regulations differ from state to state and can cause complications, Ramsthel said.

For instance, if an employee works for a company in one state and decides to continue after Covid to work from home—a home that can now be located anywhere—the benefits packages may not transfer, he said. Health insurance networks available in one state may not be available everywhere, or doctors and hospitals that are “in network” may not be available. Also, health savings accounts are treated differently for tax purposes in different states. These circumstances can increase costs for employees who decide to continue to work remotely.

“We are suggesting employers and their advisors get ahead of this,” Ramsthel said. “Decide what the policy for remote work is going to be going forward and determine what that means for the employees’ benefits package. Then tell employees what their options are.”

Employers may want to require that new employees, especially in the financial field, work from the office at first. Also, senior people may need to be in the office to provide training and coaching. “Employees need to be on-site to absorb the culture of a firm,” he added.

Some employers are asking employees what they would like to see the company do about these issues, the consultant said.

“Employers need to manage employees’ expectations. For instance, if a sudden client meeting comes up, is that a commuter expense or a business expense for tax purposes?” he asked.

Employees also need to consider the impact on their careers and their mental well-being, Padgett, the business consultant with Project Success, said in an email. A recent Pew Research Center study showed that 54% of people now working remotely would like to continue doing so. Padgett said employees and their employers may both come to regret that view.

“Working from home limits the interaction between employees and their managers and co-workers,” Padgett said. “That might be fine for a short time, but over the long haul it means you aren’t developing relationships or communicating in ways necessary to create a cohesive team.”

In addition, “when employees leave the office at the end of the day, they put both actual distance and emotional distance between themselves and work. With remote work, that barrier between home and work is removed, which could lead to greater instances of burnout. As a result, people are more likely to produce poor quality work or leave their current jobs in search of something they hope will be better,” Padgett said.

Working in the office leads to more communication with other employees, which means ideas are exchanged. “Those organic conversations often result in creative thinking and problem solving,” he added. 

In extreme circumstances, employers may consider paying employees less if they move their home/office to a less expensive area, Padgett said.