Written By:

Olivia Goodkin, Esq. and Wendy Lane, Esq.

Rutter Hobbs & Davidoff

Los Angeles, CA

As workplace technology continues to advance and the price of gasoline soars, employers can expect employees to more frequently request to work remotely from their homes. Before employers agree to such arrangements, they should be aware of a number of employment issues that can arise in connection with telecommuting employees.

Accurate Compensation for Time Worked
California law requires that non-exempt employees be compensated for all time during which an employee is subject to the control of an employer. When an employee is working from home, there may be a greater tendency for the employee to combine work and personal tasks during the “workday” and/or to work during hours other than regular business hours. Employers may also have a dangerous tendency to expect employees to be “on duty” via computer or phone during their meal period or outside of regular business hours, subjecting the company to overtime pay requirements, or to be
less vigilant in monitoring the time-keeping practices of employees who work at home.

Employers should enact policies for non-exempt employees which (1) set regular business hours; (2) clearly communicate that telecommuting non-exempt employees are expected to work during regular business hours but are not expected to monitor e-mails or voicemail during their meal and rest breaks or outside of regular business hours; (3) remind telecommuting employees not to engage in overtime work (more than 8 hours a day in California, or 40 hours in a workweek) without the express, written authorization from a designated supervisor; (4) remind telecommuting employees to keep track of their hours worked and meal times and take meal and rest periods as required by law; and (5) prohibit employees from otherwise engaging in personal matters during business hours, including, but not limited to, primary child care or home health care giving.

When possible, employers should require employees to log in and out through their computers as part of their timekeeping records. Employers should also consider requiring employees to perform work by remotely accessing the company’s server through a VPN (Virtual Private Network) so that the employers can monitor their e-mails and computer usage. However, because employees in California have a right to privacy, employers should not monitor employee computer use without first advising employees in writing, such as in an employee handbook policy, that their computer usage will be monitored during business hours.

Employee/Independent Contractor Classifications
Misclassification of an employee as an independent contractor can result in the violation of a number of laws, including the wage and hour and workers’ compensation laws mentioned above. Companies have a tendency to classify salaried workers who primarily work from home as independent contractors based on the perceived extra “freedom” that those persons are afforded. However, employers should be mindful that place of work and salary versus hourly pay are only two of many factors that should be considered in evaluating whether a worker may properly be classified as an independent contractor. One of the most important factors is the degree of control and supervision by the company over the manner and method of performing services. Individuals who primarily work from home can still receive considerable direction, control and supervisory oversight from their managers via e-mail, phone calls, and occasional in-person meetings, and thus may, in fact, be employees based on these and other factors.

Reimbursement of Expenses
California Labor Code Section 2802 requires employers to “indemnify” employees for all “necessary expenditures . . . incurred by the employee in direct consequences of the discharge of his or her duties . . . ” This means that employers must pay for all expenses incurred by employees, such as supplies purchased for the business. Expenses range from gasoline and parking, to business lunches and home computers.

For the telecommuting employee, an employer arguably has an obligation to pay for the home computer and home telephone line, but the issue is blurred when computers and telephones are used for both personal and business purposes. The most common scenario occurs when an employee already has a computer and telephone. In that case, the employer would be responsible for any expenses in excess of those that would otherwise be incurred for personal use, e.g., telephone charges related to business calls, paper and toner costs, or perhaps a Wi-Fi, satellite or other connections or upgrades for the computer that increases the efficiency of the employee.

Automobile expenses must be covered by the employer if the employee drives to visit customers, vendors or runs errands for the employer. Companies are not required to reimburse employees for the drive from home to the office. Thus, if part of the arrangement for the telecommuting employee is to attend a company meeting on-site, the employee is not required to be reimbursed for the drive to and from the company.

Security and Monitoring Measures
Employees who use home computers to access company documents and computer systems from home can put the company’s computer network at greater risk for viruses and other security breaches. Telecommuting employees should be reminded to abide by security and
confidentiality policies and procedures when working from home and should further be required to install (and keep current) virus-protection and other necessary security software.

In sum, while working from home can benefit both companies and their employees, attention needs to be paid to compliance with labor laws and the practical challenges of a remote workforce.

For more information on Rutter Hobbs & Davidoff, please visit Rutterhobbs.com or the International Society of Primerus Law Firms.