With many businesses looking to cut costs and save on overhead and many workers seeking increased flexibility, in-house counsel need to be prepared to handle the legal and practical considerations of implementing a mobile workforce program.
Ideally, one senior executive should champion the initiative. The fundamental cultural, operational and logistical issues associated with a mobile workforce program likely will challenge even those who are committed to the idea in principle. Having a top-level executive spearheading the effort can help keep the program on track as the legal department identifies and addresses legal issues the program implicates.
In-house counsel also will need input from far more stakeholders than those in the executive suite. Moving a large percentage of employees out of the office touches almost every facet of a business. People in facilities management, human resources, information technology, recruiting and procurement all will have questions about how the program will impact them. To fully understand the legal issues raised by a mobile workforce program, the legal department will need input from leaders from each functional area. Getting it will reduce resistance when addressing those legal issues.
One of the legal-department’s many tasks in implementing the program will be reminding those in leadership that managers will need to focus more on results and less on when and where people perform work. Notably, a 2011 flexible-working report, Dave Sumner Smith’s “10 Tips to Ramp Up Mobile Worker Productivity,” indicated that 40 percent of companies felt only senior staff were trustworthy enough for some level of work flexibility.
As in-house counsel begins to advise on the eligibility structure for the program (e.g., only top executives, only top performers, etc.), he or she should consider the potential effect on employee morale and the perception that only certain employees get to work from home. With some employee populations in certain states, that perception may be enough to set off a union campaign or other form of collective action.
While an exhaustive discussion of the legal issues posed by a mobile workforce program is beyond the scope of this article, here are four high-level legal issues likely to be implicated by any mobile workforce program.
1. Confidential information: A mobile workforce presents at least two unique risks to a company’s confidential information: inadvertent disclosure associated with the mobile use of laptops, tablets and smart phones; and theft associated with the ability to transfer and store large amounts of data on mobile technology.
In addition to nondisclosure and appropriate nonsolicitation and noncompetition agreements, in-house counsel should develop the mobile workforce program to explicitly address protections for information outside the work place. Those safeguards should include any limits on where employees can and cannot work on sensitive information (e.g., on airplanes).
2. The Fair Labor Standards Act and hours worked: In-house counsel should stress that, under 29 C.F.R. §785.11, an employer must pay non-exempt employees for all hours worked. In fact, under 29 C.F.R. §785.18, even breaks of 20 minutes or less must be paid.
Monitoring the hours that remote employees work requires a measure of trust. An employer may need to be willing to tolerate the potential for some degree of over-reporting of hours worked, while managing extreme instances through discipline for inefficiency if an employee’s work product does not match his or her hours. However, in-house counsel should develop processes to ensure employees do not underreport their time, so as to minimize the risk of an after-the-fact suit alleging hours worked but not reported.
In-house counsel should advise employers who choose to solve these challenges by excluding nonexempt employees from the program to consider carefully the potential employee relations implications of such a decision.
3. Safety: The Occupational Safety and Health Administration stated in its Directive No. CPL 2-0.125, Home-Based Worksites, that it will not conduct inspections of employees’ home offices, will not hold employers liable for employees’ home offices and does not expect employers to inspect employees’ home offices.
Notwithstanding OSHA’s policy position, employees working in an isolated, unsupervised home office may have a higher-risk of work-related illness and injury than their site-based counterparts. Indeed, the Telework Learning Center’s 2007 study of 380 teleworkers found that 38 percent reported experiencing work-related discomfort, soreness or pain while teleworking. Researchers further found that 32 percent purchased all of their own office equipment and noted that, without training, participants may make poor ergonomic choices when selecting equipment. In fact, 82 percent of the teleworkers surveyed indicated they had not received teleworker safety training.
Of course, assuming too much control over an employee’s home work space can lead to premises liability claims in the event of an in-home injury to the employee or a third party, so in-house counsel should take a balanced approach to giving advice.
Separately, those in charge of the company’s risk management function may be concerned that an employee working at home can claim too easily that any injury sustained in the home actually was incurred in the connection with the job. When advising risk management on potential mechanisms for reducing fraudulent claims, the legal department should remember that hostility toward workers’ compensation claims (e.g., overly aggressive or onerous requirements for demonstrating the validity of the claim imposed by the employer) can constitute evidence of retaliation in workers’ compensation proceedings. It is often best to let the workers’ compensation carrier decide whether any given claim is valid.
4. State law variances: State employment laws differ in many respects from those in Texas, including overtime, break requirements, minimum wage, final paychecks, and vacation accruals and payouts. In addition, states may have laws that directly affect the cost associated with setting up and maintaining home offices.
A Texas general counsel may be surprised to learn, for instance, that California Labor Code §§2802(a) and 2804 require employers to indemnify employees for expenditures required to do their jobs and declare void any agreements to the contrary. Likewise, having an employee in a state may constitute a business entry into the state and give rise to various tax obligations.
Given these issues, the legal department should make sure the mobile workforce policy and procedures require employees to obtain permission before moving from one state to another, so that attorneys can assess whether entry into the state will create any new legal issues for the business.
Mobile workforce arrangements can be a win-win situation for employees and employers. Like any other workforce initiative, proper planning and execution are critical to ensuring actual success.
Finally, however popular mobile work may become, each company should consider whether a dispersed workforce is right for its business, culture, employees and customers before embracing the latest transformation of the modern workplace. With the proper guidance from in-house counsel, they will be well-prepared to do so.