Telecommuting: Employee’s Dream; Compliance Nightmare
The American workplace is undergoing dramatic change. Some companies have reduced their workforce in difficult economic times and asked employees to take on more responsibilities. Other employers have discovered contracting out some operations is a cost-effective method of running their businesses. On top of this is the rapid development of technology that allows companies to outsource work and has created a new option for even local employees.
Telecommuting, or the ability to work outside the office, is becoming a more popular option that employers are offering. No longer are employees expected to work within the traditional construct of an office. Technology allows them to work effectively from anywhere in the world. In turn, employers find workers can be more productive and efficient when they don’t waste time sitting in traffic during a commute, office space and support needs plummet and the world is greener due to telecommuters.
Giving employees the option of telecommuting, however, should not be offered lightly. Companies should determine whether telecommuting is a good fit based on the type of work employees perform, and the company’s ability to remain compliant with the myriad of applicable laws.
Who Is Eligible?
The important first step for any company is to understand telecommuting. Telecommuting occurs when an integral contributor works from outside the office at an office-based job. Data management and processing as well as information technology are areas that traditionally lend themselves to telecommuting. However, jobs that require hands-on production of a certain product or good should not be performed remotely.
Employers must analyze their workflow to determine who is eligible for telecommuting.
This presents the first of several challenges for the employer.
Typically, high-achieving and self-driven employees are a good fit for telecommuting because these are the workers who can be trusted to produce quality work while meeting deadlines and other time constraints without an overseer. However, company officials must be careful not to unlawfully discriminate against other employees who may wish to explore the telecommuting option. To minimize allegations of unlawful discrimination, companies should consider a telecommuting policy to outline the general criteria for those workers who will be eligible to work remotely. For further protection, the telecommuting policy should be written and signed by both the employer and employee so that both sides know the expectations that come with telecommuting, i.e. the ability to produce high-quality work in a timely manner without close supervision. A supplement to these written agreements is a documented discussion about the employee’s workspace and what outside distractions might exist that will affect his ability to perform required tasks. Policies also should be created to explain:
Who is responsible for which equipment and supplies?
What is the expectation of privacy for the worker? What safeguards must be in place to keep company information in confidence?
Further, there should be a clear understanding about how the employer and worker will communicate throughout the workday, whether that’s via telephone, e-mail or video conferencing, such as Skype.
Worker Classification and Safety Issues
As an employer delves into telecommuting, an important distinction is whether the worker is an employee or an independent contractor. Misclassification of workers is the hottest area where both the federal and state governments are assigning their investigators. The basic test for this distinction is how much control the employer has over the worker. For each relevant law, e.g., Unemployment Insurance, Worker’s Compensation Insurance, the Internal Revenue Code, the specific applicable test varies. However, for most states, including Connecticut, the most common standard is the “ABC Test” with “C” being the toughest part. The test focuses on the following:
- The worker is free from control or direction in the performance of the work under the contract of service and in fact;
- The service is performed either outside the usual course of the business for which it is performed or is performed outside of all places of business of the enterprise for which it is performed; and
- The individual is customarily engaged in an independent trade, occupation, profession, or business, i.e., the individual works for multiple customers and has a history of this.
Most of the remaining states use the common law “right to control” test, which focuses on the employer’s right to control the worker. The more the company can show it only controls what task is ultimately performed and when it is due, the more likely the worker is an independent contractor.
Another concern for employers is application of the Occupational Safety and Health Administration laws. The good news is this law has very little application to telecommuters. OSHA will not inspect home offices and will not hold employers liable for an employee’s home office. The administration also does not expect employers to inspect the home offices of employees, however, employers are responsible for hazards caused by materials, equipment or work processes which the employer provides or requires to be used in an employee’s home. If such a situation expands into a home manufacturing operation, OSHA may conduct an inspection, but this is no longer a telecommuting situation.
Additionally, many employers who must comply with OSHA record-keeping rules must include telecommuters in records of work-related injuries and illnesses regardless of where those injuries or illnesses occur. (Employers exempted from the record-keeping rules include those with 10 or fewer employees during all of the previous calendar year or employers classified as low-hazard industries such as retail, finance, insurance or real estate.)
Wage and Hour Concerns
An additional concern for employers with telecommuters is potential wage and hour issues that arise from workers in a remote location who are not under the direct supervision of a manager. Employers can avoid many of these pitfalls by limiting telecommuting to exempt employees. However, that may not be a practical solution if hourly workers are the ones actually performing tasks that fit into a telecommuting program. If non-exempt workers are telecommuters, employers should take careful steps to clearly define the workday so that wage and hour problems don’t emerge. Specific steps include establishing a beginning and end to the workday and requiring workers to keep records of when they started and finished their day on the clock. Workers also may be provided breaks during the workday. Pay policies and record keeping are important here too. Finally, travel time on the job and time spent waiting for assignments should be counted as time spent working.
A company also should decide who pays for the business expenses of telecommuting workers, such as mileage driven in the course of the workday, telephone expenses, supplies and shipping costs. Purchase of office furniture, computers, modems, etc. is another major concern, as well as their regular upkeep and maintenance.
With the change in workplace dynamics, more companies are considering telecommuting as a viable option for everyone. With it, come big risks regarding compliance issues. Only after you understand all these legal ramifications (and their costs) can you decide if telecommuting is really right for you and your employees.