Since March of last year, millions of Americans have worked from home, on at least a part-time basis. For many of these employees, it has been their first meaningful experience with telework (which was historically limited to special accommodations or select remote workers). Because work from home has proven to be a benefit that numerous employees wish to continue, many employers are now implementing formal and more permanent “work from home” programs for the first time. The current level of telework is unlikely to continue as the pandemic abates, but many workplaces are unlikely to return to the pre-2020 structure in which employees largely were expected to be physically present in the office five days each week. Accordingly, employers should be mindful of the legal issues that are likely to arise as teleworking continues and becomes a more permanent arrangement.
Application of State Laws
Employees generally are subject to the laws of the places where they work on a daily basis. Importantly, this rule applies if employees are working from home in a city, county, or state that differs from where their employer is located.
Some examples of various local laws about which employers should be aware include:
- Leave requirements (e.g., paid family leave or paid leave for domestic violence victims)
- Special accommodation requirements (e.g., lactation breaks for nursing mothers or leave to attend jury duty)
- Minimum wage
- Paid Time Off carryover/forfeiture restrictions
- Mandatory sick leave requirements
- Overtime/Meal & Rest break requirements
- Expense reimbursement requirements
In addition to local wage & hour laws regarding overtime and PTO, employers should also ensure they are compensating employees correctly under applicable federal law. Treatment of employee compensation differs depending upon whether the employee is an “exempt” (typically salaried) or “nonexempt” (typically hourly) employee. Specifically, “exempt” employees must receive full pay for any week in which they perform any work with few exceptions, while “nonexempt” employees must be paid only for hours they actually work. It is thus critically important for employers to track hours for nonexempt employees working from home, and to put procedures in place to ensure employees are not engaging in off-the-clock work, such as responding to emails, phone calls and text messages after hours.
Another major potential landmine for employers is local tax laws. The default rule for state income tax withholding is that the employer should withhold tax for the state in which the work is performed. It must be noted that several states, including New York, have what is called the “convenience of the employer” rule that sources wages to the usual place of employment unless the performance of work “of necessity, as distinguished from convenience” obligates the employee to provide services outside the state. A similar rule was the subject of litigation at the U.S. Supreme Court in New Hampshire v. Massachusetts, a case the Court declined to hear.
If the now remote employee works in the same state where she or he worked in the office, then telework will result in no additional tax liability issues. If the employee has relocated to a different state, however, an employer may be required to withhold income tax from wages for the employee’s state of residence. Employers should familiarize themselves with state and local requirements to ensure compliance with any and all applicable tax laws.
Another issue receiving heightened awareness during the pandemic relates to expense reimbursement laws. These laws’ relevance has significantly increased as the pandemic forced employees to create home office environments that function as effectively as their ordinary workspace. Such expenses may include costs incurred on tangible items such as office supplies or printers as well as services like cell phone data plans and home high-speed internet access.
Several jurisdictions—including most notably California and Illinois—have adopted laws which require employers to reimburse some portion of telework-related expenses incurred by employees. For example, for intangible expenses such as cell phone and internet use, employers must pay for “some reasonable percentage” of the employee’s bill, based on work-related use. This can be accomplished by providing a reasonable flat fee to reimburse employees. That employees purchase a data plan, cell phone, and high-speed internet access at home irrespective of their employment does not absolve employers of their reimbursement obligations under these laws. And note that many state and local statutes relating to expense reimbursement include fee shifting provisions in the employees’ favor, so employers should familiarize themselves with the various laws and confirm their reimbursement policies comply.
Even employers who do not ordinarily permit their employees to telework may have previously allowed certain employees to work from home as an accommodation for a temporary or partial disability. The Equal Employment Opportunity Commission has, for two decades, expressly recognized teleworking as a reasonable accommodation when an employee’s job, or at least part of it, can be performed at home without causing significant difficulty or expense.
The Americans with Disabilities Act (ADA) does not require employers to offer telework as an accommodation in every situation. Rather, employers should engage in a meaningful interactive dialog with employees to determine what accommodation will allow the employee to perform the essential functions of the job without creating undue hardship for the employer. Employers that permit telework, however, should be prepared to allow employees with disabilities an equal opportunity to participate in the program as those without disabilities. Additionally, the ADA’s reasonable accommodation obligations may require an employer to waive certain eligibility requirements or otherwise modify its telework program for someone with a disability. For example, an employer may ordinarily require employees to work at least one year before they are eligible to telework. But, if a new employee needs to telework because of a disability, and the job can be performed at home, the employer will need to contemplate waiving its one-year rule. Employees who receive an ADA-related accommodation in the workplace (such as ergonomic chairs or schedule adjustments) may also be entitled to similar accommodations when working from home.
Work from Home Policies
Any employer intending to permit its employees to telework—even on a limited basis—should have a written policy, either stand-alone or incorporated into the employer’s company handbook. Employers may also wish to consider updating their technology and timekeeping policies to address issues related to work from home.
An effective telework policy should be guided by the following considerations:
- Record in writing and clearly define what employees are eligible and, if the policy is only temporary, the expected duration of the arrangement;
- Set forth in explicit and unambiguous terms the employer’s expectations and the employee’s responsibilities;
- Confirm the employer retains the ability to revise the policy’s duration and scope;
- Detail how hours are to be recorded by nonexempt employees;
- Clarify expectations regarding frequency and method(s) of communication expected from employees;
- If applicable, identify what technology and/or supplies will be provided to teleworking employees and explain any reimbursement process;
- Include provisions regarding network security and protection of confidential information; and
- Remind employees that they must continue to comply with existing company policies even when working from home.
A written telework policy should also include a place for employees to acknowledge their receipt, review, and understanding of the policy. Employers should retain signed acknowledgements in each employee’s personnel file (or in a database if signed electronically).
Related Issues—Workplace Safety
Another ongoing consideration for employers instituting a hybrid work model is compliance with workplace safety requirements related to COVID-19. For most of the pandemic, guidance on workplace safety from the federal Occupational Safety and Health Administration (OSHA) or its state counterparts was heavily influenced by contemporary CDC guidance (or state interpretations of CDC guidance) and various patchwork executive orders. This frequently complicated employer compliance efforts, particularly for employers with multi-state workforces.
Some state agencies did issue plans or standards related to COVID-19—most notably Virginia and California. Additionally, at least one state—New York—passed a law directing its state regulatory agencies to issue infectious disease exposure prevention standards for all work sites.
More recently, after a long wait, OSHA issued an Emergency Temporary Standard (ETS) related to COVID-19 that sets forth minimum safety standards for the workplace. This ETS, however, applies only to healthcare settings, so most employers remain unaffected. Those employers that do fall under the ETS’s purview should review the ETS to ensure compliance.
For most workplaces and industries, work from home is shaping up to be the wave of the future. Employers must be prepared to adapt by adopting sound telework policies and practices. A written work from home policy that takes into account relevant considerations can provide potential benefits to both employees and their employers, but only if it is well drafted, properly implemented, and consistently enforced.
Originally published in the August 2021 PLI Chronicle. Reprinted with permission. For more information, check out the authors’ program, Work from Home Considerations: What Employers Should Know, available from PLI Programs On Demand.