The American workplace has been forever altered by the extraordinary advances in recent years in telecommunications and other technologies. As e-mail and the Internet have become staples of daily life, both employers and employees have come to recognize the benefits of working out of one’s home with the aid of telephone and computer connections – an arrangement commonly referred to as “telecommuting” or, alternatively, the “virtual office.” Telecommuting is, of course, attractive to employees because of its many conveniences, but it has more than its share of benefits for employers as well. It can, among other things, reduce office expenses and give employers access to the services of individuals who might be unavailable if forced to work in a more traditional environment.
Yet despite its obvious attractions, telecommuting presents employers with a host of potential legal pitfalls. For the most part, traditional employment laws are no less applicable to the “virtual office” than to the traditional office. Moreover, the unique nature of telecommuting makes legal compliance an often challenging enterprise. In the absence of careful planning, employers’ inability to closely monitor home-based employees and control their working environments can give rise to significant legal exposure.
Wage and Hour Laws
Telecommuting poses substantial challenges for employers seeking to comply with applicable wage and hour laws, such as the Fair Labor Standards Act (“FLSA”) and comparable state statutes. This is particularly true where, as is often the case, the employees do not fall within one of the several exemptions to the FLSA’s minimum wage and overtime requirements. Such non-exempt employees are entitled to one and one-half times their regular rate of pay for all hours worked in excess of 40 in any particular week.
As an initial matter, the FLSA requires that employers keep records of the time worked by non-exempt employees, including the total hours worked in a pay period. While this is fairly easy to accomplish in a traditional office environment, the virtual office makes it a more daunting endeavor. Employers, therefore, must be vigilant in creating a reliable, enforceable mechanism by which non-exempt employees report their hours worked on a regular basis.
Closely related are the problems associated with controlling the number of hours that non-exempt employees work. Whereas employees who work at the office can be closely monitored to ensure that unnecessary overtime is not worked, an employer’s ability to control the home office is severely hamstrung by the lack of direct contact between employer and employee. In this regard employers should be aware that “hours worked” under the FLSA include not only all time during which an employee is required to be on duty, but also “all time during which an employee is suffered or permitted to work whether or not he is requested to do so.” Thus, time spent doing work is compensable so long as the employer knows or has reason to know that such work is being performed but allows it to continue.
In many ways, the simplest way to avoid this unwanted overtime is to limit telecommuting to those employees who clearly fall within the exemptions of both federal and state law. There is nothing unlawful about making such a distinction, and it will go a long way toward avoiding any claim for unpaid overtime. In the alternative, employers may also consider having their home-based employees enter into a written agreement that, among other things, specifies the time that the employee may work and sets forth a procedure by which a supervisor can provide the employee with advance approval for any overtime. Additional benefits of such an agreement are discussed elsewhere in this article.
Discrimination and Retaliation Issues
An employer’s generosity in affording employees the opportunity to work from home can sometimes have unintended consequences. Employers, for example, must be cautious when selecting employees for telecommuting privileges. As with all employment decisions, this selection process is subject to scrutiny under the anti-discrimination laws. Employers, therefore, need to be careful to avoid creating the impression that members of a protected class have been discriminatorily denied such an opportunity. Likewise, where an employee has previously complained about discrimination or harassment, the denial of a telecommuting request can give rise to a viable claim of retaliation.
Perhaps the discrimination issue that most often arises in this context relates to disability discrimination. Indeed, when employees become unable to work in the office due to a disability, employers are presented with the issue of whether these employees should be permitted to work from home as a reasonable accommodation under the Americans with Disabilities Act (“ADA”) and state anti-discrimination laws such as Chapter 151B, which applies to Massachusetts employers. Both the ADA and Chapter 151B do not expressly indicate whether working from home is among the reasonable accommodations that must be afforded to disabled employees. Yet the Equal Employment Opportunity Commission has opined that telecommuting is, in fact, a reasonable accommodation, so long as the employee can perform the essential functions of the job and the accommodation would not cause the employer undue hardship. The courts likewise seem to be in agreement that telecommuting may be a reasonable accommodation under the law. There is, however, some division among the courts as to the particular circumstances that justify such an accommodation. In fact, many of the cases addressing this issue seem inconsistent in their enthusiasm for telecommuting.
There are, nevertheless, some general rules that may still be drawn from the various cases relating to telecommuting and disabled employees. For example, upon receiving a request from a disabled employee to set up a home office, an employer needs to carefully consider whether the employee’s essential job functions can still be performed. To the extent that the employer hopes to oppose the request on these grounds, it will be well served if it has already prepared job descriptions that detail the necessity of certain duties and responsibilities that cannot possibly be performed from home. Similarly, employers must be mindful of the consequences of permitting non-disabled employees to telecommute. An employer’s claim that it is unfeasible to permit a disabled employee to work from home is, of course, severely undermined if non-disabled employees have previously been granted the opportunity to establish such an arrangement.
Occupational Safety and Health Act
In November 1999, the Directorate of Compliance Programs for the Occupational Safety and Health Administration (the “OSHA Administration”) issued a detailed advisory opinion letter stating that the Occupational Safety and Health Act (“OSHA”) applied to home-based workers and that employers were responsible for ensuring that such workers’ home offices were safe and in full compliance with OSHA. The opinion letter went so far as to suggest that on-site examinations might be necessary and that hazards that were found in the house might violate OSHA even if they were not part of the employee’s designated workspace. It was even proposed that employers might be liable under OSHA if they knew there was lead paint in their employees’ home offices but did nothing to remove the attendant dangers.
The opinion letter was met with widespread criticism, and it was retracted shortly after it was released. The OSHA Administration has since issued a directive that makes clear that a distinction will be drawn between the home offices of telecommuters and “home-based worksites, such as home manufacturing operations.” The OSHA Administration also announced that while it reserves the right to inspect home manufacturing operations, and although it requires that employers keep appropriate records of all work-related injuries, it will not, as a matter of policy, conduct inspections of ordinary home offices or hold employers liable for work activities in employees’ home offices.
Thus, it would seem – for the moment anyway – that the OSHA Administration does not intend to actively pursue cases involving home offices. That is not to suggest, however, that employers should be unconcerned about the conditions of the home offices of their telecommuters. Unsafe working environments can give rise to claims for workers’ compensation. Furthermore, in the event that customers or other third parties visit an employee’s home office, unsafe conditions can create exposure for claims of negligence against the employer. Thus, despite the OSHA Administration’s recent reversal, employers are still advised to take reasonable steps to ensure that home offices are safe. This includes, in appropriate circumstances, entering into a telecommuting agreement in which the employer specifically reserves the right to inspect the employee’s home workspace.
The benefits of a telecommuting agreement are perhaps most obvious when considering the potential impact of workers’ compensation laws. The mere fact that an employee has been injured away from the home office does not prevent him or her from receiving workers’ compensation benefits, so long as the injury occurs in the course of employment. Yet, as applied to the telecommuting arrangement, the workers’ compensation laws present employers with exposure that is difficult to assess, much less control. Since a telecommuting employee both lives and works at his or her place of employment, it is difficult to determine whether an injury that occurred at home was actually sustained in the course of employment.
Accordingly, employers are well advised to adopt some form of a telecommuting agreement or policy. Such an agreement should include several key provisions, including: (1) a provision designating a particular area of the employee’s home as his or her workspace; (2) a provision designating certain hours as work hours; and (3) a provision that permits the employer to inspect the employee’s premises upon reasonable notice or, in the case of an injury, immediately after such injury was sustained.
The distance between telecommuters and employers makes it tempting for employers to adopt an “out of sight, out of mind” approach. However, such an approach ignores the legal realities of the telecommuting arrangement. Employers must be mindful that their legal obligations reach well beyond the traditional workplace. They should take particular care, whether through the use of telecommuting agreements or otherwise, to ensure that, by allowing employees to telecommute, they are not creating the sort of legal exposure that offsets the benefits of telecommuting.