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Aug 01, 2013

Should Your Employees Telecommute? Part II

By: Paul Ebeltoft

10 Things Your Company Should Consider
(Well, three last time, three more this time… and with more to follow.)

Despite its obvious attractions, telecommuting presents employers with a host of potential legal pitfalls. For the most part, traditional employment laws are no less applicable to the “virtual office” than to the traditional office. In the absence of careful planning, employers’ inability to closely monitor home-based employees and control their working environments can give rise to significant legal exposure.

Be wary of promises that a simple telecommuting policy supported by a simple side-agreement with your telecommuting employees will cover the liability bases. Successfully developing and implementing a compliant and optimally protective policy and employment contract is a significant project for HR professionals and their legal advisers, one which should not be undertaken without complete company buy-in to the concept of allowing or limiting work-from-home options.

This is the second in a series of three articles that will describe ten points to consider when your boss asks HR to help chart a course for your company.

4. Payroll Records

Telecommuting arrangements present challenges for employers’ compliance with hourly recordkeeping regulations. The Fair Labor Standards Act (FLSA) requires employers to pay employees for all hours worked and to keep accurate information regarding hours worked. The FLSA explicitly applies this rule “to work performed away from the premises or the job site, or even at home” and requires employers to count the time as hours worked “[i]f the employer knows or has reason to believe that the work is being performed.” (29 C.F.R §785.12)

Drafting a good agreement setting out the framework for the telecommuting assignment, the number of hours expected to be worked each day or week, how hours are to be recorded, and emphasizing that non-exempt employees are prohibited from working off-the-clock only go so far when the employee is not “present” to supervise. Employers with telecommuters must establish some reasonable mechanism to track those hours and to ensure their accuracy. To avoid costly and intrusive monitoring programs, employers usually rely on the accuracy of data collected by inputs from their employees on pda’s and computers. For like positions, monitoring work output against a norm set by “in-house” employees is effective.

5. Compensation

The federal rules on overtime, waiting time, on-call time, and rest and meal breaks apply to telecommuters as much as they do to employees in the workplace. The FLSA requires employers to compensate non-exempt employees at 1.5 times the applicable compensation rate per hour for all hours worked over 40 in a given workweek. This makes an employer’s obligation to track non-exempt employee hours especially important. Even the tightest work-at-home agreement will not waive the company’s requirement to pay overtime if a non-exempt employee claims to work extra hours and you do not have good hours-worked records.

Do not rely upon making the employee exempt to sidestep FLSA. Determining whether an employee is exempt is a difficult task and state and federal regulatory scrutiny is getting keener. The “exemption” project for each employee starts with a good job description. The employee’s essential duties must fit cleanly into narrow exemption slots described by statute and case law. Even getting this far is tough for HR because supervisors have a difficult time appreciating the powerful management tool that job descriptions provide. Resistance to HR’s pleas for accuracy and specificity is usually intense. None-the-less, the supervisor will wish that she had spent more time on exempt position descriptions when they must defend their first telecommuting overtime lawsuit.

In overtime litigation, courts customarily order the employer to pay employee attorney’s fees in addition to back wages. As statutes of limitation allow delay in making a claim for up to three years, back wages can be large. Unless supervisors monitor time records contemporaneously to the work done, and limit hours when the employee reports too much time worked early in the workweek, the employee-created time sheets will prove the overtime claim. The telecommuting employee is in the best position to verify the accuracy of these. No wonder that overtime collection cases are among the fastest growing labor-law cottage industries.

6. Discrimination

Decisions concerning telecommuting privileges may be subject to scrutiny under a variety of anti-discrimination laws. Employers must apply their telecommuting policies equally, so that employees cannot allege denial of telecommuting privileges because of their sex, age, race, or because of membership in some other protected category. Some employers try to limit telecommuting to jobs whose essential job functions (note again, the importance of well-crafted job descriptions) may be performed off-site. These classifications are tricky. Supervisors unschooled in employment law often demand that “their employees” be given (or be denied) the privilege of working from home. They care little for the daunting task of describing the factors necessary to establish why a job classification in one of your company’s departments is amenable to telecommuting while a job with similar essential functions in another department is not. Policies that are not company-wide are particularly vulnerable to discrimination complaints.

7-10. Look for the last three Points to Consider in
Your Next SAHRA Newsletter

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(Otherwise known as “the fine print”

I make a serious effort to be accurate in my writings. These articles are not exhaustive treatises, though, so do not consider them complete or authoritative. Providing this information to you does not create an attorney-client relationship with my firm or me. Do not act upon the contents of this or of any article on our homepage or consider it a replacement for professional advice.

Reprinted with permission from an article submitted for publication in the August, 2013 Southwest Area Human Resource Association newsletter.