Telecommuting and the Virtual Workplace

Compensating time worked by non-exempt employees at home or otherwise remotely is more challenging because both the federal Fair Labor Standards Act (FLSA) and state wage and hour laws require that non-exempt employees be paid for all hours worked, regardless of where the work is being performed (29 C.F.R. ' 785.12). Use of a virtual workplace by non-exempt employees increases the risk that work performed will go unnoticed ' and unpaid.

One way to combat this issue is to limit the ability of non-exempt employees to work remotely. Some employers go so far as to prohibit non-exempt employees from working from home or from doing work via a BlackBerry or cell phone. Others restrict when and the amount of time a non-exempt employee may work from home.

Prior to approving telecommuting arrangements, employers should give considerable thought to their scope, balancing the advantages of flexibility with the additional burden of capturing and properly compensating all time worked.

Develop a System to Monitor and Record Non-Exempt Employees' Hours

Telecommuting arrangements and work performed remotely create challenges for tracking hours worked by non-exempt employees because an employer's monitoring capability is greatly reduced. Even if the employer takes the position that it did not require an employee to work outside of scheduled working hours, if the employer “suffers” or “permits” the employee to perform work, it must pay the employee for that time.

One recent case, Agui v. T-Mobile USA Inc. (E.D.N.Y., No. 09-2955), highlights the potential risk posed by non-exempt employees using mobile devices to perform work outside of traditional working hours. In Agui, non-exempt employees of T-Mobile sued their employer, claiming that they were not paid for time spent responding to work-related e-mails and phone calls on their company-issued mobile devices outside of their scheduled work hours. The parties recently settled the case on a confidential basis. Agui is likely only the beginning of “BlackBerry litigation.”

To reduce the likelihood of facing claims similar to those alleged in Agui, employers should develop a system to track and record hours, and should inform non-exempt employees of these requirements in a written policy, acknowledged by the employees.

The policy should require non-exempt employees to record all time worked, including the start and end time of all tasks. The FLSA does not mandate the manner in which time worked is recorded (e.g., handwritten vs. computerized records); however, an employer must maintain an accurate record. In general, requiring an employee to track time through the logging on and off of a home computer, both at the start and end of each day, as well as at the beginning and end of each break, has the advantage of creating a specific, contemporaneous record of time worked.

With respect to working from home, the policy should prohibit employees from doing work before they log on to their home computer and after they log off. Similarly, the policy should prohibit employees from doing work from home during their unpaid meal break (which, under the FLSA, should be for a minimum of 30 uninterrupted minutes). The policy should also establish parameters for other rest breaks (generally paid) in accordance with federal and state law.

Employers should also require employees to record their BlackBerry and cell phone use outside of scheduled work hours, including during what would otherwise be an unpaid break. While the FLSA permits an employer not to compensate certain de minimis activities, such an exception is not necessarily available under state wage and hour law and has not been tested by courts in the context of BlackBerry use.

The policy should also require employees to specifically identify when they perform work outside the restrictions stated above. Because short breaks of fewer than 30 minutes between tasks may also be compensable time under the FLSA and applicable state wage and hour laws, employees must be required to record the start and end time of all tasks, as well as all breaks, whatever the length of time.

Managers May Have a Direct Impact on the Compensability of Time Worked From Home

Since an employer must pay an employee if the employer “suffers” or “permits” the employee to perform work, it is critical that managers understand and appreciate their role in accurately recording and compensating time worked by employees from home or remotely.

If a manager is aware that work has been performed remotely outside of the restrictions set by the employer, the time worked of course must still be paid; however, managers retain the flexibility to address the unauthorized work as a disciplinary matter.

Employers should consider limiting or prohibiting managers' ability to contact non-exempt employees at home or during non-traditional working hours, unless during designated time periods established by the employer. Managers should also be sensitive to when work is completed by a non-exempt employee in a timeframe which could only have been accomplished through time worked at home. For instance, suppose an employee leaves work on a Friday afternoon and a project is incomplete. On Monday morning, the employee returns to work and reports to her supervisor that the project is done. It would therefore be reasonable to assume that some work had been performed over the weekend to complete the project. In such cases, managers should be instructed to inquire whether the employee worked over the weekend and, if so, to obtain the necessary time records.

Telecommuting Impacts Other Benefit Entitlements

Employers must also be mindful that telecommuting arrangements and other remote work can impact other employee benefit entitlements, such as unpaid leaves of absence under the Family and Medical Leave Act (FMLA) and the reasonableness of accommodations under the Americans with Disabilities Act (ADA).

In a recent appellate court case, Erdman v. Nationwide Insurance Co., 582 F.3rd 500 (3d Cir. 2009), the court determined that the hours an employee works from home count toward the 1,250 hour eligibility requirement for FMLA leave, where the employer knew or had reason to know that work was being performed at home. This case highlights the importance of confirming if and to what extent an employee is performing work at home and to what extent a supervisor has knowledge that the work is being performed, prior to an employer denying an employee's eligibility for FMLA leave.

Working from home may also impact how an employer calculates the amount of FMLA leave used by an employee. When an employee takes leave under the FMLA, an employer may encourage (either overtly or subtly) the employee to stay informed of on-going work related matters. A diligent employee may also do so on his or her own. To the extent an employee works from home or otherwise remotely while he or she is on FMLA leave (with the possible, limited exception of certain de minimis tasks), this likely counts as time worked. Therefore, it must be paid, and may not be counted against an employee's FMLA leave entitlement.

To confront these issues, employers should consider prohibiting such work from being done while on FMLA leave. In the event an employee does work while on FMLA leave, an employer should require the employee to accurately report such time to his or her supervisor.

Telecommuting arrangements may also be imposed upon employers that are exploring the extent to which they must accommodate individuals with disabilities. Both the courts and the Equal Employment Opportunity Commission (EEOC) have taken the position that in some instances, an employer may be obligated to accommodate an individual's disability by permitting the individual to work from home, so long as it may be done without creating an undue hardship for the employer. Humphrey v. Memorial Hospitals Association, 239 F.3d 1128 (9th Cir. 2001); EEOC, “Work At Home/Telework as a Reasonable Accommodation” (2005). Importantly, even if an employer has a general policy that does not permit any of its employees to telecommute, the employer may be required to modify this policy as a reasonable accommodation and permit a qualified individual with a disability the opportunity to telecommute.

Notably, where the employee's presence at the workplace is an essential function of the job, courts have held that telecommuting is not a reasonable accommodation. Cortez v. Raytheon Co., No. 08-CV-00801-K, 2009 U.S. Dist. LEXIS 91112 (N.D. Tex. Oct. 1, 2009); see also Mason v. Avaya Communications, 357 F.3d 1114 (10th Cir. 2004). Demonstrating that the employee's physical presence is an essential function, however, is the employer's burden, and is driven by the specific requirements of an individual's position, including the level of interaction between colleagues and individual oversight required. It is important that employers “get it right” from the outset: once an employer has permitted an employee to telecommute, it will be difficult to later argue that on-site presence is an essential function, even with altered job requirements. See Jacobs v. Marietta Memorial Hospital, 2010 WL 749897 (S.D. Ohio Feb. 23, 2010).

Certainly, an outright ban on telecommuting may be difficult to justify as technology continues to develop. Moreover, such inflexibility may violate the ADA. Conversely, an employer that permits significant telecommuting flexibility should appreciate the impact this will have if it later contends that telecommuting is not a reasonable accommodation with respect to a particular employee. In anticipation of potential accommodation requests, employers should specifically provide in their telecommuting policies that the decision as to whether and to what extent a telecommuting arrangement is available is dependent upon the essential functions of an individual's position as well as other business needs.

Conclusion

As more employers consider and permit telecommuting arrangements, and lines between home and the traditional workplace continue to blur, it is crucial that employers take a proactive approach to managing the virtual workplace by creating a framework in which such arrangements are permitted. Clear policies, consistent enforcement and adequate oversight by employers of such telecommuting arrangements are necessary components to minimizing the potential exposure of such arrangements under various employment laws.

Linda B. Hollinshead is a partner in the Philadelphia office of Duane Morris LLP. Christopher D. Durham, a member of this newsletter's Board of Editors, practices in the same office in the area of labor and employment law.

iPhones, BlackBerries, Wi-Fi hot-spots and wireless networking have made the “virtual workplace” a reality. For many employers, advances in technology increase employee availability and productivity during nontraditional work hours. For employees, being able to work from home creates better work-life balance. In a recent survey, 81% of respondents stated they would take advantage of the ability to telecommute from home, if the option was made available to them. (Workplace Options Inc.) Does that mean that the flexibility of a “virtual workplace” is always an attractive option for employers? Not necessarily. The virtual workplace and telecommuting arrangements create a number of potential pitfalls for employers that do not follow the “traditional” workplace model. When employers have employees who do not “power off” their BlackBerries and leave work at work, there are a number of important issues they must consider to manage the virtual workplace.

Limit Access to the Virtual Workplace

When the CFO checks e-mail messages on her BlackBerry and makes a few work-related phone calls from home, this is simply part of her job (and, few would dispute, a necessary one). This is because exempt employees (those who perform exempt responsibilities under both federal and state law) are paid a mandatory guaranteed minimum salary for all hours worked in a workweek, regardless of where or when those hours are worked.

Compensating time worked by non-exempt employees at home or otherwise remotely is more challenging because both the federal Fair Labor Standards Act (FLSA) and state wage and hour laws require that non-exempt employees be paid for all hours worked, regardless of where the work is being performed (29 C.F.R. ' 785.12). Use of a virtual workplace by non-exempt employees increases the risk that work performed will go unnoticed ' and unpaid.

One way to combat this issue is to limit the ability of non-exempt employees to work remotely. Some employers go so far as to prohibit non-exempt employees from working from home or from doing work via a BlackBerry or cell phone. Others restrict when and the amount of time a non-exempt employee may work from home.

Prior to approving telecommuting arrangements, employers should give considerable thought to their scope, balancing the advantages of flexibility with the additional burden of capturing and properly compensating all time worked.

Develop a System to Monitor and Record Non-Exempt Employees' Hours

Telecommuting arrangements and work performed remotely create challenges for tracking hours worked by non-exempt employees because an employer's monitoring capability is greatly reduced. Even if the employer takes the position that it did not require an employee to work outside of scheduled working hours, if the employer “suffers” or “permits” the employee to perform work, it must pay the employee for that time.

One recent case, Agui v. T-Mobile USA Inc. (E.D.N.Y., No. 09-2955), highlights the potential risk posed by non-exempt employees using mobile devices to perform work outside of traditional working hours. In Agui, non-exempt employees of T-Mobile sued their employer, claiming that they were not paid for time spent responding to work-related e-mails and phone calls on their company-issued mobile devices outside of their scheduled work hours. The parties recently settled the case on a confidential basis. Agui is likely only the beginning of “BlackBerry litigation.”

To reduce the likelihood of facing claims similar to those alleged in Agui, employers should develop a system to track and record hours, and should inform non-exempt employees of these requirements in a written policy, acknowledged by the employees.

The policy should require non-exempt employees to record all time worked, including the start and end time of all tasks. The FLSA does not mandate the manner in which time worked is recorded (e.g., handwritten vs. computerized records); however, an employer must maintain an accurate record. In general, requiring an employee to track time through the logging on and off of a home computer, both at the start and end of each day, as well as at the beginning and end of each break, has the advantage of creating a specific, contemporaneous record of time worked.

With respect to working from home, the policy should prohibit employees from doing work before they log on to their home computer and after they log off. Similarly, the policy should prohibit employees from doing work from home during their unpaid meal break (which, under the FLSA, should be for a minimum of 30 uninterrupted minutes). The policy should also establish parameters for other rest breaks (generally paid) in accordance with federal and state law.

Employers should also require employees to record their BlackBerry and cell phone use outside of scheduled work hours, including during what would otherwise be an unpaid break. While the FLSA permits an employer not to compensate certain de minimis activities, such an exception is not necessarily available under state wage and hour law and has not been tested by courts in the context of BlackBerry use.

The policy should also require employees to specifically identify when they perform work outside the restrictions stated above. Because short breaks of fewer than 30 minutes between tasks may also be compensable time under the FLSA and applicable state wage and hour laws, employees must be required to record the start and end time of all tasks, as well as all breaks, whatever the length of time.

Managers May Have a Direct Impact on the Compensability of Time Worked From Home

Since an employer must pay an employee if the employer “suffers” or “permits” the employee to perform work, it is critical that managers understand and appreciate their role in accurately recording and compensating time worked by employees from home or remotely.

If a manager is aware that work has been performed remotely outside of the restrictions set by the employer, the time worked of course must still be paid; however, managers retain the flexibility to address the unauthorized work as a disciplinary matter.

Employers should consider limiting or prohibiting managers' ability to contact non-exempt employees at home or during non-traditional working hours, unless during designated time periods established by the employer. Managers should also be sensitive to when work is completed by a non-exempt employee in a timeframe which could only have been accomplished through time worked at home. For instance, suppose an employee leaves work on a Friday afternoon and a project is incomplete. On Monday morning, the employee returns to work and reports to her supervisor that the project is done. It would therefore be reasonable to assume that some work had been performed over the weekend to complete the project. In such cases, managers should be instructed to inquire whether the employee worked over the weekend and, if so, to obtain the necessary time records.

Telecommuting Impacts Other Benefit Entitlements

Employers must also be mindful that telecommuting arrangements and other remote work can impact other employee benefit entitlements, such as unpaid leaves of absence under the Family and Medical Leave Act (FMLA) and the reasonableness of accommodations under the Americans with Disabilities Act (ADA).

In a recent appellate court case, Erdman v. Nationwide Insurance Co. , 582 F.3rd 500 (3d Cir. 2009), the court determined that the hours an employee works from home count toward the 1,250 hour eligibility requirement for FMLA leave, where the employer knew or had reason to know that work was being performed at home. This case highlights the importance of confirming if and to what extent an employee is performing work at home and to what extent a supervisor has knowledge that the work is being performed, prior to an employer denying an employee's eligibility for FMLA leave.

Working from home may also impact how an employer calculates the amount of FMLA leave used by an employee. When an employee takes leave under the FMLA, an employer may encourage (either overtly or subtly) the employee to stay informed of on-going work related matters. A diligent employee may also do so on his or her own. To the extent an employee works from home or otherwise remotely while he or she is on FMLA leave (with the possible, limited exception of certain de minimis tasks), this likely counts as time worked. Therefore, it must be paid, and may not be counted against an employee's FMLA leave entitlement.

To confront these issues, employers should consider prohibiting such work from being done while on FMLA leave. In the event an employee does work while on FMLA leave, an employer should require the employee to accurately report such time to his or her supervisor.

Telecommuting arrangements may also be imposed upon employers that are exploring the extent to which they must accommodate individuals with disabilities. Both the courts and the Equal Employment Opportunity Commission (EEOC) have taken the position that in some instances, an employer may be obligated to accommodate an individual's disability by permitting the individual to work from home, so long as it may be done without creating an undue hardship for the employer. Humphrey v. Memorial Hospitals Association , 239 F.3d 1128 (9th Cir. 2001); EEOC, “Work At Home/Telework as a Reasonable Accommodation” (2005). Importantly, even if an employer has a general policy that does not permit any of its employees to telecommute, the employer may be required to modify this policy as a reasonable accommodation and permit a qualified individual with a disability the opportunity to telecommute.

Notably, where the employee's presence at the workplace is an essential function of the job, courts have held that telecommuting is not a reasonable accommodation. Cortez v. Raytheon Co., No. 08-CV-00801-K, 2009 U.S. Dist. LEXIS 91112 (N.D. Tex. Oct. 1, 2009); see also Mason v. Avaya Communications , 357 F.3d 1114 (10th Cir. 2004). Demonstrating that the employee's physical presence is an essential function, however, is the employer's burden, and is driven by the specific requirements of an individual's position, including the level of interaction between colleagues and individual oversight required. It is important that employers “get it right” from the outset: once an employer has permitted an employee to telecommute, it will be difficult to later argue that on-site presence is an essential function, even with altered job requirements. See Jacobs v. Marietta Memorial Hospital, 2010 WL 749897 (S.D. Ohio Feb. 23, 2010).

Certainly, an outright ban on telecommuting may be difficult to justify as technology continues to develop. Moreover, such inflexibility may violate the ADA. Conversely, an employer that permits significant telecommuting flexibility should appreciate the impact this will have if it later contends that telecommuting is not a reasonable accommodation with respect to a particular employee. In anticipation of potential accommodation requests, employers should specifically provide in their telecommuting policies that the decision as to whether and to what extent a telecommuting arrangement is available is dependent upon the essential functions of an individual's position as well as other business needs.

Conclusion

As more employers consider and permit telecommuting arrangements, and lines between home and the traditional workplace continue to blur, it is crucial that employers take a proactive approach to managing the virtual workplace by creating a framework in which such arrangements are permitted. Clear policies, consistent enforcement and adequate oversight by employers of such telecommuting arrangements are necessary components to minimizing the potential exposure of such arrangements under various employment laws.

Linda B. Hollinshead is a partner in the Philadelphia office of Duane Morris LLP. Christopher D. Durham, a member of this newsletter's Board of Editors, practices in the same office in the area of labor and employment law.