Flexible Work Arrangements: A Compliance Checklist

Under flexible work arrangements, employees can change the place where their work is done—for example, by working from home or from a mobile location—or the hours when their work is done, with different work start and end times, job sharing or flexible or compressed workweek schedules.

Employers in the U.S. who have employees in flexible work situations need to consider federal, state and local laws that affect these arrangements.

Wage and Hour Recordkeeping

With telecommuting arrangements, employers must monitor carefully the work hours of employees who are not exempt from federal Fair Labor Standards Act (FLSA) overtime requirements in order to avoid a violation of unpaid overtime. With employees in compressed workweek schedules, employers must adjust the defined workweek so no employee overtime is incurred; they must make sure that their timekeeping procedures incorporate any state daily overtime requirement and maximum hour limitation.

Action steps:

• Require nonexempt telecommuting employees to sign an agreement acknowledging that they are not permitted to work overtime without prior written approval, and require these employees to clock in and out via e-mail or telephone, advised Kristina Klein, an associate with Atlanta-based law firm Troutman Sanders, and Ashley Hager, a partner at the firm who specializes in employment discrimination litigation.
• Have a policy for times when a telecommuting employee is unable to work because of a power outage or technology and equipment failures. Whether the employer must pay for the time employees aren’t working depends on whether the employee is exempt or nonexempt and whether he or she is unable to work because of a technological problem caused by the employer—if the employer’s servers are down, for example—or if the problem is caused by the employee, said Klein and Hager.

Workers’ Compensation

Typically, state workers’ compensation laws do not distinguish between on-site and off-site employees, said Kevin Hess, an associate with law firm Squire Sanders in Columbus, Ohio, who focuses on workplace health and safety. But the determination of whether a telecommuter’s injury at home is compensable depends on the facts of the case and is extremely difficult to anticipate. And, although an employee generally is not covered for an injury when going to and from work, accidents that occur after an employee’s workday has begun often are compensable. This includes travel between worksites, so telecommuters who are injured traveling to their employer’s office might be entitled to compensation, he advised.

Action steps:

• To assess whether an injury occurred in the course and scope of employment, have a policy that allows access to the telecommuter’s home to investigate any injury that occurs while he or she is working at home.
• Conduct inspections of telecommuters’ home offices for safety conditions, including ergonomic safety.
• If employees work at home in states other than the company’s place of business, determine whether those states’ workers’ compensation rules require insurance coverage to be obtained in each of those states.

Workplace Safety

Employers must ensure a workplace free from hazards for home-based employees as well as employees working at other off-site locations. The federal Occupational Safety and Health Administration will respond to complaints of unsafe home workplaces and will fine employers whose employees work in unsafe home worksites, said Hess.

Action step:

• Require home-based employees to comply with workplace safety policies, and keep records of all work-related injuries that occur in a telecommuter’s home office.

Discrimination

Under the Americans with Disabilities Act (ADA), flexible work arrangements may be considered a reasonable accommodation for a disabled employee. To avoid charges of unfair and discriminatory treatment, employers must keep the same conditions of employment for disabled employees in flexible arrangements as for nondisabled employees.

Action step:

• Keep a telecommuting employee’s wages unchanged, and keep insurance and other fringe benefits at the same level and in the same manner as if the employee was not telecommuting, advised Klein and Hager.

Data Security/Employee Privacy

Employers need to protect confidential business and proprietary information while providing remote workers access to such data. Security measures must cover company-owned and employee-owned computers, laptops and mobile devices. Data security is especially critical if the telecommuter works with health information that is covered by the electronic security rule of the Health Insurance Portability and Accountability Act (HIPAA).

Action steps:

• Have a data security policy that clearly details what, if any, company data may be moved to an employee’s personally owned computer or mobile device and how employees must protect confidential business information when they remotely access that information.
• To remove any legal expectation of privacy by telecommuting employees, Klein and Hager recommended obtaining signed acknowledgements that they understand that certain aspects of their employment will be monitored without notice, including computer files, documents prepared or used by the employee in the scope of their employment, and computers and telephone lines during work hours.

Liability Insurance

Third parties who are injured on the telecommuting employee’s property—a delivery person bringing work-related documents to the employee’s home who slips and falls on the steps, for example—may bring a tort claim for injuries against the employer.

Action steps:

• Have liability insurance that covers the employee’s home whenever it is being used for the employer’s business.
• Require telecommuters to maintain homeowner’s or renter’s liability insurance.
• Ensure that telecommuters obtain any home office permit or license required by local zoning laws.

Taxes

Tax issues might arise when an employee works at home in a state other than where the employer’s business is located. Some states have reciprocity agreements so that telecommuting employees do not face double taxation; others do not, and workers then may be subject to two state tax bills on the same wages.

Action step:

• Determine what state and local income taxes are owed for telecommuters who live in a state other than the employer’s state.

Susan R. Heylman, Esq., is a freelance legal writer and editor based in the Washington, D.C., area.

Related Resources:

• Sample Job Sharing Memo of Understanding, SHRM Templates and Tools
• Sample Flextime Policy, SHRM Templates and Tools
• Outline: How to Develop a Compressed Workweek Policy and Procedures, SHRM Templates and Tools
• Factors to Consider Prior to Instituting a Telecommuting Practice, SHRM Templates and Tools

Related Articles:

Tools and Training Prepare Managers for Workplace Flexibility, SHRM Online Benefits Discipline, January 2012

FLSA Inhibits Workplace Flexibility Policies, SHRM Online Benefits Discipline, November 2011

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Workplace Flexibility Resource Page