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Telecommuting: Tips for Managing Employees Who Work From Home

by Brian Molinari

The ripple effect of stunning job losses since the recession that began in December 2007 have become commonplace across the United States. And it continues: the global pharmaceutical giant Eli Lilly has just announced plans to cut 13.6% of its workforce, roughly 5,500 workers. During the 20 months from December 2007 through July 2009, the total number of mass layoff events exceeded 40,000. Employment continued to decline in August 2009 (-216,000), the number of unemployed persons increased by 466,000 to 14.9 million, and the unemployment rate rose by 0.3 percentage point to 9.7%.

As if the economy was not enough strain on employers and employees, there is also news of a “second wave” of the H1N1 swine flu pandemic that is expected to hit this fall and winter. According to disease experts, more communities may be affected by both the new H1N1 swine flu and the seasonal flu in coming months than last spring. To make the flu threat even worse, a study out this week said that people may spread swine flu for a week or more after the symptoms first appear.

A slowing economy, another swine flu pandemic, fuel/commuting costs, the popularity of “go-green” workplaces, employers’ need to reduce overhead, time-strapped employees under stress with tighter budgets — are we in the “perfect storm” to revisit whether telecommuting is a worthwhile option? (Other efforts to cope in this economy include four-day workweeks, carpools, and transportation subsidies. For example, in August 2008, Utah began a mandatory 4-day workweek for most state workers..)

Audio Conference: New Ways to Make Telecommuting Work: A Win-Win for Employees and Employers

What is telecommuting?
One of the pioneers and strongest advocates of telecommuting for primarily emergency planning purposes, the federal government’s Office of Personnel Management, defines the terms “telework, telecommuting, and flexiplace” as synonyms that refer to:

A work arrangement in which an employee regularly works at an alternate work site such as the employee’s home, a telecommuting center (Telecenter), or other alternate work site. A telecommuting alternate work site is any facility, in which the employee works, which saves that employee a more lengthy commute (distance-wise and/or time-wise) to a main work site. For more information, go to www.telework.gov.

With the ability to communicate and transmit documents and information electronically via e-mail, phone, or fax, telecommuting can offer seamless productivity in certain professions.

Just because employees are “out of sight” doesn’t mean their performance is ignored. On the contrary, there’s enormous trust placed in telecommuting employees to manage their own time competently, and their work-product results must still be measured objectively.

Like other employees, telecommuters are protected by labor laws governing overtime pay , discrimination, retaliation, and benefits. Thus, an “out of sight, out of mind” approach to managing telecommuting employees isn’t advisable. Let’s take a closer look at the unique overtime, accommodation, and workplace safety challenges you face with telecommuting employees.

HR Guide to Employment Law: A practical compliance reference manual covering 14 topics, including overtime, discrimination, health benefits, and documentation

Effective management of the remote workspace
Wage and hour law. The Fair Labor Standards Act (FLSA) requires non-exempt employees to be paid overtime for any hours they work over 40 in a workweek, regardless of whether they work at the office or at home. It may become difficult to monitor the number of hours worked by non-exempt telecommuting employees. Indeed, class-action wage and hour lawsuits are cropping up around the country as employees seek overtime compensation for hours they claim they worked at home. In addition to what types of jobs are considered exempt from the FLSA’s overtime requirements, questions have risen about when the workday begins and ends and which portions of the day (or evening) are compensable work time.

While the FLSA’s “homeworker exception” may allow you to pay an employee according to a reasonable compensation agreement instead of the Act’s specific hourly rate requirements under certain circumstances, it applies only if the employee has periods during the day when he’s free from his job duties and there is an agreement about the number of hours worked. The exception is inapplicable to an employee who works a standard eight-hour day/40-hour week and works consistently throughout the day. You can avoid disputes by defining the scope of the work and permissible hours, requiring employees to submit time sheets and get overtime preapproved, and implementing rules requiring employees to monitor and record work-related activities such as logging on or off a computer.

Wage and Hour Compliance Manual

Accommodation issues. Employers also face a difficult challenge when several employees want to telecommute and you can’t accommodate all of them. As a rule of thumb, jobs that are information-based, predictable, or portable, require minimum supervision and face-to-face contact, or demand more than typical privacy are suitable for telework. Developing a written policy outlining your company’s criteria for being selected to participate in telecommuting is paramount. Certainly, the prudent employer will consider employee need.

For example, the Americans with Disabilities Act (ADA) and various state and local laws require reasonable accommodation of an otherwise qualified employee’s disability. The Equal Employment Opportunity Commission (EEOC) has issued a guidance memorandum under federal law suggesting that employers should at least consider telecommuting as a form of reasonable accommodation if the disabled employee can perform the essential functions of the job. (See www.eeoc.gov/facts/telework.html.) Thus, refusing a disabled employee’s request to telecommute when a similarly situated nondisabled employee’s same request was granted can be problematic.

In addition to addressing employee eligibility, your telecommuting policy should describe the duration of the arrangement, criteria for performance measurements, provision of equipment and technical support, ownership of physical and intellectual property, and any requirements for in-office appearances. An employee’s shift to telecommuting shouldn’t ordinarily affect his classification as an “employee.”

Learn more about the ADA and accommodations with the ADA Compliance Manual

Workplace safety. The Occupational Safety and Health Administration (OSHA) doesn’t have any regulations governing telework in home offices. The agency issued a directive in February 2000 stating that it won’t conduct inspections of employees’ home offices, won’t hold employers liable for employees’ home offices, and doesn’t expect employers to inspect their employees’ home offices. (See OSHA Directive CPL 2-0.125 for more information.)

OSHA will conduct inspections of other home-based work sites, such as “home manufacturing operations,” only when it receives a complaint or referral that indicates a violation of a safety or health standard that threatens physical harm or that an imminent danger exists, including reports of a work-related fatality. The scope of the inspection in an employee’s home will be limited to his work activities. Note, however, that the OSHA directive deems employers responsible for home work sites if there are hazards caused by materials, equipment, or work processes that the employer provides or requires to be used in an employee’s home.

Taxes. Other issues include taxation. Last year, the federal Telecommuter Tax Fairness Act of 2007 was introduced to prohibit states from imposing an income tax on the compensation of a nonresident individual for any period in which she isn’t physically present in or working in the state or from deeming a nonresident individual to be present in or working in the state on the grounds that (1) she is present at or working at home for convenience or (2) her work at home fails a “convenience of the employer test” or any similar test. The bill is pending before the Subcommittee on Commercial and Administrative Law.

Bottom line
Current technology, health, environmental, economic, and even legal conditions provide some of you with powerful incentives to permit and even encourage telecommuting. However, the “out of sight” telecommuter doesn’t make traditional workplace legal issues disappear. You must plan and manage your telecommuting programs to avoid legal risks. A key first step is to develop clear policies setting forth the scope and procedures of your program so that both you and the telecommuting employee maximize its potential benefits and minimize the potential risks.

Audio Conference: Stay-at-Home Staff: Supervisor Skills That Make Telecommuting Work