HR Management & Compliance

Telecommuters: Why They’re Suing Their Employers

Telecommuting may be a dream job, but for employers it can turn into a legal nightmare. Here’s why telecommuters are suing, and how to avoid getting sued.

Every day, while most of us are still stuck on the expressway, more than 12 million U.S. employees are already at work, after making the shortest commute it’s possible for them to make.

It’s the distance from the bedroom to their home office.

Welcome to the world of telecommuting … working from home for an employer in a distant location and keeping in touch by phone, fax, and computer.

It’s a growing world, up 40 percent in a single year, according to the employment organization, WorldatWork, and for many telecommuters, it’s a dream job. There are no costly commuting expenses and possibly reduced child care costs. Surroundings are comfortable and casual, and you get to say “honey, I’m home!” the moment you turn off the computer. Why, then, are so many telecommuters suing their employers?

That’s right, suing. Over wage and hour issues. Reimbursement of travel costs on days they do have to come in. Even, potentially, over safety matters.


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The lawsuits are neither small nor cheap. Farmers Insurance was hit with a $90 million jury verdict when its home-based adjusters took the company to court over overtime issues. IBM settled a similar case for $65 million. And other giants such as Cigna Healthcare are embroiled in similar actions.

The crux of the issue is control. Without direct on-site supervision, employers simply don’t have it over how many hours employees work, whether they’re following company policy, and even whether home offices are properly set up so that workers don’t lose client information or injure themselves using ergonomically unsound equipment.

The solution appears to be in thinking through and implementing a set of solid policies to resolve the issues above, at the start of any telecommuting relationship. Here’s what the experts suggest:

–Wage and hour. Institute exact written agreements of when the worker will be on the job and when not; do not allow overtime without prior approval; and put in place some time-tracking mechanism such as computer login-logout tracking or a requirement to call in when starting and finishing work. These measures are especially essential when dealing with nonexempt workers.

–Enforce work schedules. “The mere promulgation of a rule against [unwanted overtime] is not enough,” says a report from the law firm, Morgan-Lewis & Bockius, LLP. “Management has the power to enforce the rule and must make every effort to do so.”

–Travel expenses. Establish beforehand whether employees are responsible for paying their own transportation costs when coming into the office. The general rule is that once workers have done the first “principal activity” of the workday, they’re on the clock when they’re on the road. If the trip in is the first thing, however, it’s more likely a commute to work, and not reimbursable.


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–Equipment. Who owns the equipment a telecommuter uses at home? If it’s yours, be sure there’s a policy with permitted use and required care spelled out. OSHA has no plans to inspect home offices, but you should still insist on (and offer to pay for) office furniture, keyboards, and the like that are ergonomically sound. Also, establish beforehand who will pay the costs of using the equipment. The U.S. Patent Office is now reimbursing home workers for their Internet expenses, with appropriate controls on how the service is used, reports the law firm, Duane Morris. Finally, have a procedure in place for the disposition of company equipment if the worker leaves your employ.

–Proprietary information. The same restrictions should apply at home as in the office. Be sure employees take appropriate measures to secure vital data, such as installing a proper firewall on their computers, and offer to pay for these measures.

–ADA interface. The EEOC considers telecommuting a reasonable accommodation for people with disabilities who cannot come to a central worksite. However, attorneys warn that you need to have a strong case for why they’re doing so, or you risk discrimination charges from other employees not allowed to telecommute.

“Telecommuting-related litigation is likely to grow in tandem with the telecommuting phenomenon unless companies are careful to treat all their employees equally,” says employment law attorney Sara Goldsmith Schwartz. “If companies treat [telecommuters] more like regular employees, there will be less litigation.”


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