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Kenneth W. Di Gia, Michael A. Kalish, Michael F. McGahan, Traycee E. Klein, Peter M. Panken, A. Jonathan Trafimow, and Lauri F. Rasnick, Editors
Epstein Becker & Green, P.C.
Vol. 15, No. 7
July 2008
WORKPLACE ISSUES
2008: the 'perfect storm' for telecommuting?
"In the past year, 22,000 New Yorkers who work on Wall Street have lost their jobs, according to a Crain's estimate. And far more blood-letting is to come. The New York City Independent Budget Office (IBO) forecasts that 33,300 Wall Street jobs
― 17% of the city's best-paid workforce ― will disappear by next year. The IBO estimate, which reflects a 65% increase over the previous projection, approaches the 40,000 local jobs that were slashed when the technology bubble burst
earlier this decade. The cutbacks will reverberate throughout New York's economy, because each Wall Street job creates two others ― in everything from law and accounting to restaurants and bars ― according to the State Comptroller's
Office. While Wall Street represented just 5% of the city's jobs, it generated 23% of its wages in 2006."
― Crain's New York Business May 31, 2008
Dour predictions like those are becoming commonplace not just in New York, but across the United States. The fact is that the country's economic growth has slowed dramatically in recent months, and many economists believe we will experience a
recession during 2008 amid a housing slump and related credit crunch. The month of May represented a fifth consecutive month of job cuts, with roughly 50,000 jobs cut in May after 20,000 losses in April.
It isn't surprising then that many employers are searching for alternate means of reducing overhead while retaining their workforce. Similarly, commuting employees faced with rising gas prices (the national average was more than $4 per gallon when
this article went to press) and less disposable income are searching for ways to remain productive workers while not breaking their budgets on the commute. As we discuss in the next article, long and expensive commutes can contribute to stress-
related health issues, substandard job performance, increased absenteeism or tardiness, and overall decreased productivity. According to the Center for Urban Transit Research, the average American commutes 30 miles to work each day and spends almost
$140 per month on gas for his work commute alone. An estimated 1.35 billion gallons of gasoline could be conserved annually if every U.S. worker with the ability to telecommute did so for just 1.6 days per week, according to a report by the American
Electronics Association.
A slowing economy, high fuel 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. Indeed, in recent weeks, a Suffolk County, Long Island, legislator introduced a bill that invites certain county employees
to compress their summer workweeks into just four days to cut energy use in county office buildings and mitigate high fuel costs.)
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 teleworking employees to manage their own time competently, and their work-product results must still be measured
objectively.
Like other employees, telecommuters are protected by employment 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.
Effective management of the remote workspace
Wage and hour law. The Fair Labor Standards Act (FLSA) requires 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 nonexempt 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.
Accommodation issues. Employers also face a difficult challenge when several employees want to telecommute and you cannot 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), the New York Executive (Human Rights) Law, and various 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."
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 and 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.
Find out more about telecommuting in the subscribers' area of www.HRhero.com. You have access to an HR Executive Special Report on the subject: "How to Make Telecommuting Work for Your Company." Just
log in and scroll down to the link for all the Special Report titles. Need help? Call customer service at (800) 274-6774.
Copyright 2008 M. Lee Smith Publishers LLC
NEW YORK EMPLOYMENT LAW LETTER does not attempt to offer solutions to individual problems but rather to provide information about current developments in New York employment law. Questions about individual problems should be addressed to the
employment law attorney of your choice.
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