Special Issue: Telecommuting: Office Space Without Walls

On the surface, telecommuting is the cure for many workplace and societal ills. From an environmental perspective, telecommuting reduces gas consumption, traffic congestion, and other commuter-related problems. Employers benefit from increased worker productivity, reduced overhead costs associated with providing office space, and are able to retain employees who relocate to another city or state, or who need or want to spend more time at home. Employees benefit from increased flexibility, the ability to utilize the time normally spent commuting on more productive activities, and the opportunity to remain in the workforce despite life changes, such as physical disability.

Telecommuting also has its drawbacks. Employees may feel isolated and may find their careers stalling due to a lack of face time or the inability to communicate their accomplishments effectively to their superiors on a daily basis. Similarly, employers have less control over the activities of their employees and may find it difficult to assess whether the employee is actually performing the job duties. Most importantly, employers potentially expose themselves to liability related to taxes, wages, workers' compensation, privacy, and workplace safety, to name a few areas of potential liability. Fortunately, many problems can be averted by adherence to a carefully thought-out and consistently applied telecommuting policy and/or agreement. See 29 CFR ' 785.23 (providing that an employer and employee may enter into a reasonable agreement about the number of hours worked for which the employee must be compensated where the employee lives and works in the same place and has periods of complete freedom from work).

Independent Contractor Versus Employee

As noted in the seminal work on the subject, The Law of Telecommuting, by Nicole Belson Goluboff. an employer may unknowingly convert an independent contractor into a telecommuting employee, or vice versa, if the situation is not handled properly. See Goluboff, Nicole Belson, The Law of Telecommuting, 21-29 (ALI-ABA 2001 and Supp. 2004). The IRS will determine the tax status of the telecommuting employee by applying the common law 'right to control' test and the IRS 20 factor test. See Goluboff, 23-26. The factors include whether the employee works set hours, is required to work full time, is paid by hour, week or month, is paid for business expenses, is furnished tools and materials, realizes a profit or loss, works for more than one firm at a time, can be terminated or discharged, must comply with instructions on when, where, and how he or she will work, is trained by and integrated into the firm, has a continuing relationship with the firm, must provide services personally, and is not responsible for hiring and paying assistants. See Internal Rev. Srvc. Rul. 87-41 (1987). Notably, location of the work is not determinative.

Legal counsel should be cognizant of how telecommuting may alter the degree of control that the employer exerts over the employee. For example, if an employer does not require the telecommuter to work a set schedule and does not supply any business equipment or supplies, it may seem like the employee is really an independent contractor. On the other hand, if the employer requires that the employee work particular hours in a particular way and supplies the tools to do so, the employer continues to exert control in a manner consistent with an employer-employee relationship. To avoid unintended tax consequences, the employer's telecommuting policy or agreement should address control issues such as when, where, and how the employee will perform his or her duties, whether the employee will be allowed to pursue other work, and whether the employer will supply a work-dedicated computer or phone line.

Wage and Hour

A growing area of telecommuter litigation involves improper payment of overtime for non-exempt employees. This can occur when the employer does not compensate a non-exempt employee for time spent on-call or mid-day travel.

An employer must compensate a worker whose sole job is to be on-call. See Goluboff, 42. However, according to Department of Labor Regulations regarding the 'homeworker's exception,' compensation is not required for 'wait time.' In other words, an employer does not need to compensate an employee for time on-call where the employee is free to pursue activities unrelated to work and only is only required to inform a supervisor as to how he or she can be reached. Id. Whether someone who works from home is free to pursue personal activities will be determined on an individual basis. For example, if the employee is a call center worker and receives frequent calls that require immediate attention, he or she may not have any time to meaningfully pursue personal activities. Id. at 43.

Although employers do not need to compensate employees for their commute to and from work, they may have to compensate for travel that the employee undertakes after he or she has already begun to perform his or her principle activities for the day. In other words, if traveling to a mid-day meeting is the first trip of the day for a telecommuter, such travel time may be compensable if the telecommuter has been working from home all morning. Id. at 45. Once again, whether this type of time is compensable may be governed by an agreement between the employer and employee so as to fall within the homeworker's exception.

Issues relating to compensation for on-call time and traveling time should be addressed through telecommuting policies and agreements that detail when work should be performed, the procedures for working overtime, and define the manner in which the employer will provide compensation for on-call time. (See Grossenbacher article infra at page 3.)

Reasonable Accommodation

Under the Americans with Disabilities Act, employers are required to provide reasonable accommodations to otherwise qualified employees who suffer from a disability. Although courts often find that allowing an employee to telecommute is a reasonable accommodation, they have refused to adopt a per se rule. Rather, courts have opted for a case-by-case approach. Whether telecommuting is a reasonable accommodation may depend in part on the employee's living arrangement, job description, and particular disability. For example, in Chan v. Sprint Corp., 351 F. Supp. 2d 1197 (D. Kan. 2006), the court discounted the employee's assertion that telecommuting was not a reasonable accommodation. The employee, who was responsible for scheduling large events, writing presentations, and handling executive projects, was hypersensitive to cigarette smoke and claimed that by failing to enforce its smoking policy (i.e., making sure that no one smoked near doorways and other restricted areas), her employer violated the Americans with Disabilities Act. The employer had provided various accommodations to the employee, including an offer to work from home. The employee refused the offer, claiming it would isolate her and was unfavorably regarded in the employer's culture. The court held that the employer did not violate the Act, and noted that the offer to telecommute was a reasonable accommodation because it afforded the employee ways to avoid or minimize exposure to cigarette smoke.

Allowing an employee to work from home may constitute a reasonable accommodation, but an employer does not fail to provide a reasonable accommodation by denying a request to telecommute. In Vande Zande v. State of Wisconsin Department of Administration, 44 F.3d 538 (7^th Cir. 1995), the court held that an employer is not required to allow an employee to work from home and noted that it would 'take an extraordinary case for the employee to be able to create a triable issue of the employer's failure to allow the employee to work from home.'

However, as technology improves, the courts may take a more liberal view. For example, in Woodruff v. Peters, 482 F.3d 521 (D.C. Cir. 2007), the court reversed summary judgment for an employer that terminated an employee's telecommuting arrangement because his flexible schedule did not overlap with that of his team members. The employee telecommuted after he was injured on the job. Prior to the accident, he had supervised a team that produced educational materials. The employee eventually returned to work, but telecommuted part of the time. When his supervisory duties were not reinstated and his telecommuting arrangement was terminated, the employee filed discrimination and retaliation claims. The court held that the following evidence was sufficient to defeat the employer's summary judgment motion on the discrimination claim: The employer's telecommuting handbook allowed employees to telecommute up to five days a week; the plaintiff's team was 'mostly self-directed,' and the employee had telecommuted for months without incident.

Legal counsel to employers should advise clients to maintain and review job descriptions so that if an employee requests or requires a reasonable accommodation, the employer can make a non-discriminatory decision based on the actual requirements of the job. Further, the employer should carefully consider the terms of its telecommuting policy so that it does not commit the employer to providing a telecommuting arrangement that is overly broad given the needs of the business.

Workers' Compensation

This area of the law varies widely from state to state; however, typically, an employee will be compensated for injuries arising out of and in the course of employment. See Goluboff at 166. This becomes a difficult test to apply in the telecommuting context, especially, when the employee works from home. Some courts have taken a relatively strict view and will only grant compensation if the employer required the employee to work from home. Id. at 167. However, whether an employee was required to work from home will be determined on a case-by-case basis, and some courts have found a compensable injury where an employee is merely authorized to work from home. Id. at 169.

The two views are illustrated by California Insurance Guarantee Association v. Workers' Compensation Appeals Board, 2002 WL 31260291 (Ca. Ct. App. Oct. 4 2002) (unpublished) and Rowan v. University of Nebraska, 207 Neb. 588 (Neb. 1980). Id. at 167 n. 21; Supp. at 108. In Rowan, the Nebraska Supreme Court denied workers' compensation benefits to an art professor who was injured while working in his home studio. The professor was standing on a ladder to open a window, when the window came loose, causing him to fall to the floor. Although the university required him to 'perform creative work,' the court based its decision on the fact that there was no requirement that the professor perform his work away from his employer's premises. The court noted that the employer was not required to assume the risk incidental to the defective window in a private studio.

In contrast, the California appellate court in California Insurance Guarantee adopted the workers' compensation commissioner's finding compensating a physics professor who was killed while teleworking from an out-of-state coffee shop. The professor was on sabbatical to produce a research paper. At the time he was killed, the professor was writing the research paper on a laptop provided by his employer. The commissioner found that the employer had defined the time and space limitations by giving the professor a laptop that allowed him to work in a virtual office. Moreover, the employer benefited from the remote working arrangement because the professor was able to work better where he was free from distractions and could obtain childcare.

A case on the extreme end of the spectrum is Schwindt v. Red Roof Delivery, Inc., W.C. 4-009-534, 1992 WL 310079 (Colo. Indus. Cl. App. Off. Sept. 14, 1992), where a restaurant manager was granted workers' compensation benefits for injuries sustained from a fall down the stairway in her home. The employee was authorized, but not required, to work at home, and the accident occurred when the employee moved from the living room, where she had been making work schedules, to her home office.

Attorneys should advise their clients to address the workers' compensation issues created by employees working from home. The employer's worker compensation carrier should be told to provide sufficient coverage for telecommuting employees in all the states where they work. Id. at 177. Additionally, employers should implement telecommuting policies and agreements that designate the areas of the home where work will be performed and the hours of work. Prompt reporting of work-related accidents should also be required by the employer. Further, the employer must be permitted to inspect an employee's work space, particularly after an accident.

Employee's Privacy v. Employer's Property

Telecommuting potentially pits an employee's privacy rights against an employer's property rights. For example, how does an employer recover its electronic or paper files in the possession of an employee after the employee is terminated or passes away? Does the employer have the right to enter the employee's home to recover its property? Assuming that the employer received the employee's consent to enter, how does the employer identify its property when files may have been saved to a personal computer or filed in the employee's personal filing cabinet?

Privacy concerns are exacerbated in the telecommuting context because there is a greater expectation in one's own home than in the office. Id. at 97. As with the other issues identified in this article, the employer and the employee must address privacy and ownership issues through written policies and agreements. The employer may wish to have a policy that only allows employees to work from home on the condition that the employee: 1) gives the employer permission to enter the home and repossess company property; 2) only uses employer-supplied equipment that is marked with the employer's name; and 3) refrains from using company equipment for personal use. Moreover, any policy or agreement must clearly communicate that the employee understands that there is no expectation of privacy in anything stored on or in the employer's equipment.

Conclusion

While telecommuting offers advantages to both employers and employees, legal counsel must advise their clients as to the legal pitfalls. It is important to create a telecommuting policy and/or individual agreements that clearly define the expectations and compensation of the telecommuter.

Rosanna Sattler, a member of this newsletter's Board of Editors, is Co-Chair of Posternak, Blankstein & Lund LLP's Employment Law Group and Litigation Department. She concentrates her practice in the areas of complex civil litigation, employment law, environmental law, insurance coverage and defense, and space law. Nancy Puleo is an associate in the firm's Employment Practice Group and Litigation Department. Laura Otenti also is an associate. Her civil litigation practice includes employment and discrimination matters in Massachusetts and Rhode Island.

Telecommuting simply means working from a distance. It can include working from home or any other alternative work site. This article focuses on the most typical scenario, working from home; however, many of the same issues may also apply to employees who perform work-related tasks away from the office, wherever that may be. This article does not attempt to provide a comprehensive list of every issue that telecommuting presents, but rather, examines some of the most important issues in the following four areas: employee status for tax purposes; wage and hour; reasonable accommodation under the ADA; and workers' compensation.

Many employers allow their employees to work from home or a remote work site. While an estimated 12 million employees telework more than eight hours per week, that statistic fails to describe adequately the extent to which telecommuting has become a way of life. See Tahmincioglu, Eve: The Quiet Revolution: Telecommuting. msnbc.com, Aug. 19, 2007, available at http://today.msnbc.msn.com/id/20281475/ (last visited June 10, 2008). The reality is that approximately 45 million employees perform some part of their job away from the office thanks in large part to advances in remote access technology. See Qualters, Sheri: Telecommuters Are Reaching Out to Sue Their Employers. The National Law Journal, Dec.15, 2006, available at http://www.law.com/jsp/LawArticlePC.jsp?id=900005552578. The ubiquitous hand-held devices allow employees to be 'on-call' to receive work-related communications 24 hours a day wherever they are. Many employers also have software that allows remote access by home computer to e-mails, databases, desktops, programs, and whatever else an employee typically needs to perform the job. Because teleworking can also be as simple as completing paperwork at home after hours or working from a satellite office, most employers have “telecommuters.'

Pros and Cons of Telecommuting

On the surface, telecommuting is the cure for many workplace and societal ills. From an environmental perspective, telecommuting reduces gas consumption, traffic congestion, and other commuter-related problems. Employers benefit from increased worker productivity, reduced overhead costs associated with providing office space, and are able to retain employees who relocate to another city or state, or who need or want to spend more time at home. Employees benefit from increased flexibility, the ability to utilize the time normally spent commuting on more productive activities, and the opportunity to remain in the workforce despite life changes, such as physical disability.

Telecommuting also has its drawbacks. Employees may feel isolated and may find their careers stalling due to a lack of face time or the inability to communicate their accomplishments effectively to their superiors on a daily basis. Similarly, employers have less control over the activities of their employees and may find it difficult to assess whether the employee is actually performing the job duties. Most importantly, employers potentially expose themselves to liability related to taxes, wages, workers' compensation, privacy, and workplace safety, to name a few areas of potential liability. Fortunately, many problems can be averted by adherence to a carefully thought-out and consistently applied telecommuting policy and/or agreement. See 29 CFR ' 785.23 (providing that an employer and employee may enter into a reasonable agreement about the number of hours worked for which the employee must be compensated where the employee lives and works in the same place and has periods of complete freedom from work).

Independent Contractor Versus Employee

As noted in the seminal work on the subject, The Law of Telecommuting, by Nicole Belson Goluboff. an employer may unknowingly convert an independent contractor into a telecommuting employee, or vice versa, if the situation is not handled properly. See Goluboff, Nicole Belson, The Law of Telecommuting, 21-29 (ALI-ABA 2001 and Supp. 2004). The IRS will determine the tax status of the telecommuting employee by applying the common law 'right to control' test and the IRS 20 factor test. See Goluboff, 23-26. The factors include whether the employee works set hours, is required to work full time, is paid by hour, week or month, is paid for business expenses, is furnished tools and materials, realizes a profit or loss, works for more than one firm at a time, can be terminated or discharged, must comply with instructions on when, where, and how he or she will work, is trained by and integrated into the firm, has a continuing relationship with the firm, must provide services personally, and is not responsible for hiring and paying assistants. See Internal Rev. Srvc. Rul. 87-41 (1987). Notably, location of the work is not determinative.

Legal counsel should be cognizant of how telecommuting may alter the degree of control that the employer exerts over the employee. For example, if an employer does not require the telecommuter to work a set schedule and does not supply any business equipment or supplies, it may seem like the employee is really an independent contractor. On the other hand, if the employer requires that the employee work particular hours in a particular way and supplies the tools to do so, the employer continues to exert control in a manner consistent with an employer-employee relationship. To avoid unintended tax consequences, the employer's telecommuting policy or agreement should address control issues such as when, where, and how the employee will perform his or her duties, whether the employee will be allowed to pursue other work, and whether the employer will supply a work-dedicated computer or phone line.

Wage and Hour

A growing area of telecommuter litigation involves improper payment of overtime for non-exempt employees. This can occur when the employer does not compensate a non-exempt employee for time spent on-call or mid-day travel.

An employer must compensate a worker whose sole job is to be on-call. See Goluboff, 42. However, according to Department of Labor Regulations regarding the 'homeworker's exception,' compensation is not required for 'wait time.' In other words, an employer does not need to compensate an employee for time on-call where the employee is free to pursue activities unrelated to work and only is only required to inform a supervisor as to how he or she can be reached. Id. Whether someone who works from home is free to pursue personal activities will be determined on an individual basis. For example, if the employee is a call center worker and receives frequent calls that require immediate attention, he or she may not have any time to meaningfully pursue personal activities. Id. at 43.

Although employers do not need to compensate employees for their commute to and from work, they may have to compensate for travel that the employee undertakes after he or she has already begun to perform his or her principle activities for the day. In other words, if traveling to a mid-day meeting is the first trip of the day for a telecommuter, such travel time may be compensable if the telecommuter has been working from home all morning. Id. at 45. Once again, whether this type of time is compensable may be governed by an agreement between the employer and employee so as to fall within the homeworker's exception.

Issues relating to compensation for on-call time and traveling time should be addressed through telecommuting policies and agreements that detail when work should be performed, the procedures for working overtime, and define the manner in which the employer will provide compensation for on-call time. (See Grossenbacher article infra at page 3.)

Reasonable Accommodation

Under the Americans with Disabilities Act, employers are required to provide reasonable accommodations to otherwise qualified employees who suffer from a disability. Although courts often find that allowing an employee to telecommute is a reasonable accommodation, they have refused to adopt a per se rule. Rather, courts have opted for a case-by-case approach. Whether telecommuting is a reasonable accommodation may depend in part on the employee's living arrangement, job description, and particular disability. For example, in Chan v. Sprint Corp. , 351 F. Supp. 2d 1197 (D. Kan. 2006), the court discounted the employee's assertion that telecommuting was not a reasonable accommodation. The employee, who was responsible for scheduling large events, writing presentations, and handling executive projects, was hypersensitive to cigarette smoke and claimed that by failing to enforce its smoking policy (i.e., making sure that no one smoked near doorways and other restricted areas), her employer violated the Americans with Disabilities Act. The employer had provided various accommodations to the employee, including an offer to work from home. The employee refused the offer, claiming it would isolate her and was unfavorably regarded in the employer's culture. The court held that the employer did not violate the Act, and noted that the offer to telecommute was a reasonable accommodation because it afforded the employee ways to avoid or minimize exposure to cigarette smoke.

Allowing an employee to work from home may constitute a reasonable accommodation, but an employer does not fail to provide a reasonable accommodation by denying a request to telecommute. In Vande Zande v. State of Wisconsin Department of Administration , 44 F.3d 538 (7 th Cir. 1995), the court held that an employer is not required to allow an employee to work from home and noted that it would 'take an extraordinary case for the employee to be able to create a triable issue of the employer's failure to allow the employee to work from home.'

However, as technology improves, the courts may take a more liberal view. For example, in Woodruff v. Peters , 482 F.3d 521 (D.C. Cir. 2007), the court reversed summary judgment for an employer that terminated an employee's telecommuting arrangement because his flexible schedule did not overlap with that of his team members. The employee telecommuted after he was injured on the job. Prior to the accident, he had supervised a team that produced educational materials. The employee eventually returned to work, but telecommuted part of the time. When his supervisory duties were not reinstated and his telecommuting arrangement was terminated, the employee filed discrimination and retaliation claims. The court held that the following evidence was sufficient to defeat the employer's summary judgment motion on the discrimination claim: The employer's telecommuting handbook allowed employees to telecommute up to five days a week; the plaintiff's team was 'mostly self-directed,' and the employee had telecommuted for months without incident.

Legal counsel to employers should advise clients to maintain and review job descriptions so that if an employee requests or requires a reasonable accommodation, the employer can make a non-discriminatory decision based on the actual requirements of the job. Further, the employer should carefully consider the terms of its telecommuting policy so that it does not commit the employer to providing a telecommuting arrangement that is overly broad given the needs of the business.

Workers' Compensation

This area of the law varies widely from state to state; however, typically, an employee will be compensated for injuries arising out of and in the course of employment. See Goluboff at 166. This becomes a difficult test to apply in the telecommuting context, especially, when the employee works from home. Some courts have taken a relatively strict view and will only grant compensation if the employer required the employee to work from home. Id. at 167. However, whether an employee was required to work from home will be determined on a case-by-case basis, and some courts have found a compensable injury where an employee is merely authorized to work from home. Id. at 169.

The two views are illustrated by California Insurance Guarantee Association v. Workers' Compensation Appeals Board, 2002 WL 31260291 (Ca. Ct. App. Oct. 4 2002) (unpublished) and Rowan v. University of Nebraska , 207 Neb. 588 (Neb. 1980). Id. at 167 n. 21; Supp. at 108. In Rowan, the Nebraska Supreme Court denied workers' compensation benefits to an art professor who was injured while working in his home studio. The professor was standing on a ladder to open a window, when the window came loose, causing him to fall to the floor. Although the university required him to 'perform creative work,' the court based its decision on the fact that there was no requirement that the professor perform his work away from his employer's premises. The court noted that the employer was not required to assume the risk incidental to the defective window in a private studio.

In contrast, the California appellate court in California Insurance Guarantee adopted the workers' compensation commissioner's finding compensating a physics professor who was killed while teleworking from an out-of-state coffee shop. The professor was on sabbatical to produce a research paper. At the time he was killed, the professor was writing the research paper on a laptop provided by his employer. The commissioner found that the employer had defined the time and space limitations by giving the professor a laptop that allowed him to work in a virtual office. Moreover, the employer benefited from the remote working arrangement because the professor was able to work better where he was free from distractions and could obtain childcare.

A case on the extreme end of the spectrum is Schwindt v. Red Roof Delivery, Inc., W.C. 4-009-534, 1992 WL 310079 (Colo. Indus. Cl. App. Off. Sept. 14, 1992), where a restaurant manager was granted workers' compensation benefits for injuries sustained from a fall down the stairway in her home. The employee was authorized, but not required, to work at home, and the accident occurred when the employee moved from the living room, where she had been making work schedules, to her home office.

Attorneys should advise their clients to address the workers' compensation issues created by employees working from home. The employer's worker compensation carrier should be told to provide sufficient coverage for telecommuting employees in all the states where they work. Id. at 177. Additionally, employers should implement telecommuting policies and agreements that designate the areas of the home where work will be performed and the hours of work. Prompt reporting of work-related accidents should also be required by the employer. Further, the employer must be permitted to inspect an employee's work space, particularly after an accident.

Employee's Privacy v. Employer's Property

Telecommuting potentially pits an employee's privacy rights against an employer's property rights. For example, how does an employer recover its electronic or paper files in the possession of an employee after the employee is terminated or passes away? Does the employer have the right to enter the employee's home to recover its property? Assuming that the employer received the employee's consent to enter, how does the employer identify its property when files may have been saved to a personal computer or filed in the employee's personal filing cabinet?

Privacy concerns are exacerbated in the telecommuting context because there is a greater expectation in one's own home than in the office. Id. at 97. As with the other issues identified in this article, the employer and the employee must address privacy and ownership issues through written policies and agreements. The employer may wish to have a policy that only allows employees to work from home on the condition that the employee: 1) gives the employer permission to enter the home and repossess company property; 2) only uses employer-supplied equipment that is marked with the employer's name; and 3) refrains from using company equipment for personal use. Moreover, any policy or agreement must clearly communicate that the employee understands that there is no expectation of privacy in anything stored on or in the employer's equipment.

Conclusion

While telecommuting offers advantages to both employers and employees, legal counsel must advise their clients as to the legal pitfalls. It is important to create a telecommuting policy and/or individual agreements that clearly define the expectations and compensation of the telecommuter.

Rosanna Sattler, a member of this newsletter's Board of Editors, is Co-Chair of Posternak, Blankstein & Lund LLP's Employment Law Group and Litigation Department. She concentrates her practice in the areas of complex civil litigation, employment law, environmental law, insurance coverage and defense, and space law. Nancy Puleo is an associate in the firm's Employment Practice Group and Litigation Department. Laura Otenti also is an associate. Her civil litigation practice includes employment and discrimination matters in Massachusetts and Rhode Island.