Working at Home: Employees or Contractors?

January 29th, 2007 by

Over 12 million American workers perform their jobs away from the office: many work out of their homes, perhaps commuting occasionally to the office for mandatory meetings. The benefits of working at home are pretty obvious: you can set your own hours (at least to some degree); you don’t have to worry about traffic and bad weather; and no one cares how long you take for a coffee break. No wonder so many people prefer this work option. It’s a no brainer.
Well, the no brainer has become a brainer. We read at that class action lawsuits have been filed in California, Colorado, Missouri, New Jersey, New York and Ohio. The suits allege that at-home work arrangements violate basic labor laws: no pay for overtime work; no severance pay; no travel reimbursement for mandatory trips to the office; and no pay for being on “stand by” while computers are down. The fundamental issue is the nature of the employer-employee relationship. Are at home workers subject to overtime and related regulations (“non-exempt”) or more like supervisors and managers (exempt from these regulations)? Most employers assume that these employees are exempt, simply by the nature of their workplace. But that’s not necessarily the case.
It’s deceptively easy to view at-home workers as “independent contractors” because they function, well, independently. The distance from the customary worksite leads to ambiguity. Nonetheless, home employees are still employees, whether exempt or not, and companies should take steps to clarify their status. That means treating at-home workers the same as worksite-based employees. Not treating them identically – that is simply not feasible – but establishing clear and explicit groundrules, preferably in the form of a written agreement. The optimum time for doing this, of course, is before the work at home begins:
: develop timesheets which document hours on task (these can usually be incorporated into the log on /log off process)
: require approval for any proposed overtime
: set ergonomic standards for at-home workstations (see below)
: clarify in writing the benefits available to at home workers, including travel reimbursement, sick leave and severance pay (Be prepared to explain any differences in the benefits involving commuting employees)
: outline the explicit criteria for exempt and non-exempt employees, so the at-home worker understands his or her status
Workers Comp at Home
Then there is the subject near and dear to the Insider’s heart: the status of workers comp coverage for at home workers. Employers might be tempted to exclude at home workers from this benefit, but this is not an option. The payroll for at home employees gets rolled into the workers comp premium calculation. Employees are covered by workers comp while they are “in the course and scope of employment.” In other words, they are covered while working at home, even if they set their own hours and despite the fact that they have no direct supervisors. This raises some intriguing issues: what if I slip and fall or trip over a box in my home office? What if my work station is ergonomically risky? What if I burn myself making a cup of coffee? What do I report to my manager and how?
There are no easy answers here. But one thing is sure: with over 12 million at-home workers, work-related injuries are going to occur. The “work at home” culture – with its many benefits – will continue to grow. At the same time, management needs to learn how to manage employees who are definitely out of sight, but, one hopes, not out of mind.