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In Which State is a Telecommuter Employed?

On behalf of Cohn Lifland Pearlman Herrmann & Knopf LLP | Jun 2, 2016 |


Preeti Gundecha was employed by Deutsche Bank, first in its London office, then in its New York office and finally in its New Jersey office. After taking maternity leave, she moved to North Carolinia and thereafter returned to work, telecommuting to the New Jersey office from her home in North Carolina.

When she was ultimately laid off by the bank, Ms. Gundecha applied to New Jersey for unemployment benefits. However, her claim was denied by the agency, its appeal tribunal and the board of review. She then appealed to the New Jersey Appellate Division, arguing that she was employed by a New Jersey company, was temporarily telecommuting from North Carolina and should be considered a New Jersey employee.

The primary issue before the court was whether Ms. Gundecha’s services were “localized” in New Jersey. The court noted that New Jersey has not considered the “localization” requirement in over forty years and that telecommuting did not become common until recently. Therefore, the issue was how the localization rule should be applied to telecommuters, an issue of first impression for New Jersey courts.

Citing a New York decision that addressed the localization issue for telecommuters, the New Jersey court stated that the employee’s physical presence was the most practicable, feasible and determinative factor in determining localization. As Ms. Gundecha lives and was physically present in North Carolina while she was providing services to the bank’s New Jersey office, her work and employment were localized in North Carolina, and that is the state responsible for her unemployment benefits. The Appellate Division thus affirmed the New Jersey board of review’s decision denying her benefits as she was ineligible.

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