San Francisco sets new rules for the remote-work boom
A new housing package tries to keep flexible workers in the city without freezing out the neighborhoods that attracted them.
2 min read
The ordinance is being read as a labour measure and it is really a tax one. Its central provision decides where a remote worker’s employment is located, and every other question in the debate follows from that.
The definitional core
An employer with no premises in the city can still have employees living in it. Whether that constitutes a taxable presence has been answered inconsistently for five years, with firms taking whichever position produced the smaller bill.
The ordinance picks the employee’s residence. It is the simplest rule to administer, the easiest to audit against payroll records, and it produces the outcome the city wants, which is not a coincidence.
Where the work happens stopped being a question about buildings.
What employers object to
Not the rate. The compliance surface.
A firm with employees in forty jurisdictions now tracks forty definitions, and the ordinance adds a forty-first that does not match the others. The larger employers can absorb that; the firms complaining loudest are the ones between fifty and three hundred people, where the compliance cost is real and there is no dedicated tax function.
Two industry groups have asked for a de minimis threshold below which the rule does not apply. The city’s finance office has resisted, on the grounds that a threshold is an invitation to sit just underneath it.
The office question underneath
The unstated argument is about commercial vacancy. A city whose revenue assumed occupied offices is finding that assumption does not hold, and taxing the distributed workforce is one of the few available substitutes.
That makes the ordinance a symptom rather than a policy, which several supervisors have said out loud. The office-conversion programmes moving in parallel are the other half of the same problem.
What to watch
Watch whether a de minimis threshold appears in amendment. Watch the audit rate in the first year, since a rule that is never enforced is a rule firms will price accordingly. And watch whether any neighbouring jurisdiction adopts the same residence test, because a single city using it is a compliance burden and a region using it is a standard.
