Let's face it: remote, hybrid, and alternative work arrangements are here to stay. That's not necessarily a bad thing. Though many employers already had accepted and adopted remote, hybrid, and alternative work arrangements before the COVID-19 pandemic (and the consequential quarantining that came with it), COVID-19 accelerated the need for workforce mobility and fundamentally changed who we hire and how, when, and where we work.
Remote work during COVID-19 wasn't and isn't a fad. Many companies have swiftly adapted and shifted to this landscape by reassessing their capabilities, building and leveraging infrastructure, and using cost savings to provide their employees with a better, more flexible work experience. Leveraging advancements in technology has given companies more choices in how they operate and where their employees work. Employers have seen that work at scale is achievable with alternative work arrangements, and workers have benefited from being home, feeling safer during the COVID pandemic, and not having to commute. Some companies have gone all-in on remote work, abandoning the brick-and-mortar altogether in favor of a fully virtual workplace.
Given the reception to and success of hybrid, remote, and alternative work solutions, virtual work arrangements are here to stay, and businesses need to embrace them.
As we look to the future, companies must reimagine how and where employees will work. Employers will need to find ways to optimize productivity, afford worker flexibility, attract and retain talent, and enhance wellness. At the same time, they will need to identify and minimize risks and avoid liability that can flow from having a remote work environment.
The Legal Risk and Potential Pitfalls of a Remote Workforce
Risks abound when offering alternative work arrangements or transitioning to a remote or hybrid workforce. These include:
Eligibility
Businesses should clearly define remote work and alternative work arrangements, including permanent and temporary arrangements, setting expectations, and clearly defining the role and job descriptions. Because not all work roles can be performed effectively offsite, alternative work arrangements should be limited to roles that can be performed successfully outside the workplace. Eligibility requirements should be spelled out and an application process established and enforced.
Wage and Hour Laws
Because minimum wage, overtime, and rest and meal break requirements differ from country to country and state to state (and even within states), businesses must familiarize themselves with all applicable laws, ordinances, and regulations, and ensure compliance in every jurisdiction in which their employees work. Employee supervision and tracking time are more challenging with employees offsite. For non-exempt workers in the United States, employers must comply with federal and state wage and hour laws, like the Fair Labor Standards Act (FLSA).
When multiple laws come into play, such as city and state laws, generally the one more favorable to the employee will apply. Another layer of complexity is added when the employer's in-state laws require the payment of a higher minimum wage to workers than the minimum wage requirements of other states, where remote employees may be performing the same work as onsite employees. In those instances, under the same or substantially similar circumstances, the employer may have to pay all workers the same hourly wage to avoid possible violations of anti-discrimination and pay equity laws.
Another issue arises where offsite workers put in extra time. Even if managers instruct employees that they may not work extra hours, a business may still have to pay workers for overtime if they do, in fact, work extra hours. Employers should establish policies prohibiting overtime work without supervisor approval, but employers with remote or hybrid employees must be even more vigilant about policing this rule.
With all employees, but certainly with employees having alternative work arrangements, it is important to establish, implement, and enforce policies and procedures for employees to manage and record their time worked. Work hours should be set, off-the-clock work should be prohibited, prior permission should be required for overtime, and employees should be required to record all hours worked. Especially with remote or hybrid employees, employers should consider using a timekeeping software platform or electronic system to ensure the accurate tracking of employee hours worked.
Workplace Rules for Offsite Workers
Should the same policies and procedures that apply to onsite workers apply to remote and hybrid employees as well? Yes, they should. In fact, there may be a greater need to implement and police certain rules, policies and procedures precisely because an employer has a remote workforce.
Consider, for example, outside business activities. Employees who customarily work onsite might struggle to hold down a second job or side hustle, especially if doing so might violate a company policy prohibiting other employment or outside business activities without prior employer approval. But it's much more difficult for “big brother” to monitor remote employees and prevent them from running their side gig while on-the-clock.
Another issue could arise surrounding the use of alcohol, smoking, or other drugs (even if lawful and prescribed). If an employee onsite is prohibited from drinking an alcoholic beverage during business hours, what about the remote employee working from home? If an employer has a no-smoking policy in the office, what about the hybrid employee working from his or her home office? If the employer prohibits an employee from showing up at work under the influence of a legitimately prescribed drug that affects or impairs the employee's condition, then, subject to ADA considerations of course, what of the employee who takes the prescription drug at home during regular working hours?
Generally speaking, employers should make clear that employees having remote and alternative work arrangements are obligated to comply with all company policies, procedures, and guidelines outlined in the company's employee handbook. However, employers with alternatively situated employees must think through many new, previously unthinkable situations, and must determine whether each and every policy in the employee handbook applies equally to remote employees and, moreover, employers must determine whether new policies and procedures must be written specifically for those employees.
Anti-Discrimination Laws
Discrimination can take place in obvious and subtle ways, both in person and in the virtual world. There are a host of federal and state anti-discrimination laws that still apply despite the remote setting, and businesses must comply with all anti-discrimination laws, rules, and regulations wherever their remote employees are working.
Hybrid and remote work arrangements may raise a variety of inequality issues due to “out of sight/out of mind scenarios.” Efforts should be made to support collaboration and inclusion of those working off-premises, ensure fair assignment of work, and provide equal opportunities for advancement. Employers should establish clear policies to address all forms of inequality, harassment, and discrimination and provide impartial rights to training, support, work assignments, and promotions for all onsite and offsite workers. Utilizing Zoom, Google Meet, Teams, or another online communications platforms and online document sharing tools improves inclusion, interaction, and collaboration.
Of course, Zoom, Google Meet, Teams, and other online platforms provide yet another avenue for harassment, discrimination, and retaliation. Thus, it is important for employers to find ways to monitor this virtual traffic to prevent and police harassment and discrimination in their remote workplace the same way they would in their physical, onsite work environment. Also, all employees, including remote employees, should undergo anti-harassment and anti-discrimination training and should be required to read, acknowledge, and abide by the company's anti-harassment and anti-discrimination policies.
Workers' Compensation
Employees working remotely can still be injured on the job, and businesses can be held legally responsible for workers' compensation coverage in the same way they would be if the injury occurred onsite in the course of employment. Some courts have made this quite clear, holding that a home office is an extension of the employers' onsite workplace.
State requirements vary regarding workers' compensation coverage, so an injured employee's specific state's laws will need to be reviewed. Workplace injuries in the remote environment create a whole host of new issues for employers and workers' compensation carriers, like extensions of the doctrines of frolic and detour in a remote environment. Imagine, what if an employee slips on the floor in their own home while leaving their desk in a home office to use their home bathroom? Or what of the employee who hurts himself on the home treadmill while running during a Zoom meeting?
By establishing offsite workplace safety guidelines and perhaps even conducting inspections of offsite workplace premises (where feasible), businesses can ensure a safe environment and limit exposure to liability.
Home Office Equipment
Other considerations include how equipment needs will be handled. Will the employer provide allowances or reimbursements for home office furniture, equipment, and supplies? How about the level and availability of technical support remote workers can expect? Note that some states require businesses to reimburse employees for home office-related expenses. The FLSA requires reimbursement or coverage of business-related expenses if the expenses would cause the employee's wage to fall below the appliable minimum wage threshold. Of course, pay equity comes into play again if certain benefits are provided only to the remote or hybrid workforce. And, for disgruntled employees having an axe to grind, reclaiming the company laptop and any other employer property can be that much harder when it comes to fully remote employees. This is a nice segue into…
Cybersecurity, IP Protection & Privacy
… protecting an employer's intellectual property (IP) and, perhaps more importantly, the employer's sensitive or protected customer, client, or patient information. Cybersecurity and data privacy issues are amplified with employees working remotely, especially if they are working in public places or have the ability to print information remotely on a home or other remote printer. It is especially important to establish clear guidelines and data security measures surrounding the remote employees' obligation to protect intellectual property, trade secrets, and other proprietary and confidential information. Employers should make clear that the use of equipment, software, and supplies is limited to authorized persons (and perhaps only on certain, company-provided, authorized devices) and may only be used for company business. The use of personal devices and personal email for work, and the use of work equipment for non-work-related purposes should also be prohibited. Furthermore, the use by others of any employer-provided work equipment should be prohibited.
With remote workers, protecting an employer's IP and any sensitive, proprietary, or confidential information of the company's customers, clients, patients, consumers, vendors, etc. presents a minefield of concerns that must be navigated with great care, as numerous federal and state laws and regulations, as well as company reputation and goodwill, can be implicated by a data breach, which may be more challenging to prevent with a remote workforce.
Taxes
Some states require employers to withhold unemployment and state income taxes in the state in which the employee is located (instead of where the employer's home office is located). Further, in some instances, remote working employees may be subject to income tax in both the state where they are living and working and the state where the employer operates. Employers need to be mindful of these potential tax consequences if employees work out of state. Having employees working remotely in other states may impact tax withholdings and obligations, and also can trigger new corporate tax obligations.
Employers of remote workers should establish a clear policy stating that remote employees are solely responsible for determining individual income tax implications of maintaining a home office or other remote work location. Additionally, employers should consult with experienced tax professionals for specific guidance on tax risks, implications, and protections.
Dispute Resolution
Crap happens. Employment disputes are inevitable. And when disputes arise, employers generally prefer to litigate those employment disputes in their home states.
While some laws may require that certain employment disputes be filed and litigated in the state where the employee is domiciled, employers should – whenever possible – predetermine where and how disputes with their employees are litigated. This can be critical with a remote workforce, as the employer could, in theory, be hailed into court and subject to the laws of wherever its employees are situated. Employers, and especially those with remote workforces, should consider whether employment-related disputes should be subject to mandatory arbitration or, at the very least, governed by choice of law and forum selections agreements.
Conclusion
While remote work arrangements may reduce real estate costs for businesses, enable talent acquisition on a global scale, and can result in a happier workforce, and while this legacy of COVID-19 may be here to stay, these arrangements raise numerous challenges, legal implications, and potential pitfalls. In considering and establishing remote work arrangements, employers must take a multi-disciplinary approach that includes and reflects the concerns of HR, legal, IT, security and privacy, regulatory compliance, labor and employment, and tax professionals alike, among others. Businesses can steer clear of the issues identified in this article and prevent disputes from arising by creating, clearly communicating, and implementing comprehensive remote work policies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
