Legal considerations for managing remote employees - Reuters

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December 20, 2021 - In early 2020, employers throughout the country abruptly shifted entire in-person workforces to remote work — seemingly overnight — as the first quarantine and shelter-in-place orders were implemented. While many believed this would be a temporary measure lasting a matter of weeks, now, almost two years later, it has become clear that remote work is here to stay. Much of the nation's workforce remains working some form of remote or hybrid schedule. The trend is expected to continue, whether out of necessity (as cold months and additional COVID-19 variants emerge) or as an employee benefit and talent retention measure.

As remote work establishes its permanency in the American workforce, managing remote employees has become a key point of discussion among employers, recruiters, and Human Resources professionals. The focus of these conversations is often on techniques for engaging employees, maintaining culture, and performance-managing individuals from afar. Among these discussions, however, it is important not to overlook the potential legal pitfalls. In this article, we will explore some of the potential legal dangers that should be taken into account as employers implement long-term permanent remote and/or hybrid work arrangements.

Wage and hour considerations

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Wage and hour compliance is fraught with vulnerability, and the issue is, if anything, amplified in a remote work setting. Wage and hour violations are often unintentional but can come with steep penalties, liquidated damages, and even government audits. Wage and hour considerations are particularly important when it comes to non-exempt (i.e., overtime-eligible) employees.

While exempt employees are paid a set amount regardless of the amount of work performed by that employee each week, non-exempt employees generally must be paid at least a minimum amount per hour (at least minimum wage for all hours worked and one and a half times the hourly rate for all overtime hours), requiring thorough tracking of all hours worked.

Employers generally capture an employee's regularly scheduled hours without issue, but the real risk comes with small "off the clock" tasks that can add up and are particularly concerning with a remote workforce. Before the shift to remote work, many non-exempt employees did not have access to remote systems or the ability to login from home. There was no concern about an employee reading or answering emails at night when the employee could only access emails in the office. Now, these same employees can likely access company servers anytime from anywhere, and the company still needs to ensure that they are paid for all work performed. Responding to work emails or taking work phone calls outside of the regularly scheduled workday generally needs to be included in the calculation of hours worked and, by extension, compensated.

In order to best protect against potential wage and hour violations, employers should have strong policies concerning hours expectations (e.g., employees can only perform work at scheduled times or for a certain number of hours each week), strictly prohibit off-the-clock work (any work while not clocked-in) and require timely and accurate recording of time.

One key takeaway for all timekeeping policies is that employees must be paid for all hours worked, even if they worked those hours in violation of the policy. For example, if an employee works overtime without authorization, the employee can be disciplined for violating a policy requiring authorization, but must nevertheless be paid for those overtime hours at the applicable overtime rate.

Employers should also make sure that managers are well-trained on these policies and expectations to ensure proper oversight and enforcement of the company's policies.

Out-of-state workers

One of the most difficult issues that comes along with remote workforces is navigating the potential state and local laws that may be triggered when an employee works in a state other than the state where his/her main office is located. When all employees work in a single location, the employer knows they are covered by the laws of that state and locality. When an employee is working from a different state (or in some cases even a different locality), it can cause nuanced issues with which laws apply to the employee.

For example, if an employee previously worked for their employer in a New York office, there was little question that New York's employment laws applied to that employee. If that same employee now works (in the same job) from his/her New Jersey home, a host of New Jersey laws may now be applicable to that employee. This could include New Jersey's anti-discrimination, whistleblower, wage and hour, sick pay and leave entitlement laws. This can become especially complicated if, for example, the states have different minimum wage or salary exemption thresholds, as New York and New Jersey do.

Further complicating the location issue is the fact that, in some circumstances, the company's office location (where the company rarely or never works) is still relevant to the applicability of other laws. For example, an employee is only eligible for leave under the Family and Medical Leave Act ("FMLA") if the employee works at a location that has at least 50 employees within a 75-mile radius.

However, for purposes of this analysis, the FMLA regulations specifically indicate that for remote employees the applicable "worksite" is not the employee's home, but rather the "office to which they report and from which assignments are made." In other words, in some scenarios, the "office" location still matters and in other circumstances, the employee's work location matters. While this may seem contradictory, employment laws are often construed liberally in favor of the employees, and courts and agencies will often adopt interpretations that serve that end-goal.

Finally, employers need to be aware of potential tax implications of employees working out of state. Not only does work from other states potentially impact proper withholdings, but the employee's work from that state has the potential to trigger corporate tax obligations in jurisdictions where the employer does not actually maintain a location. Employers should be aware of this potential issue and consult tax professionals for specific guidance.

Recordkeeping and performance management

Remote employees are still expected to comply with company policies, meet performance expectations, and face discipline, up to and including termination, when they fail to meet their required standards. Even without face-to-face meetings or in-person conversations, appropriately performance managing remote employees is extremely important for any employer to defend against claims of discrimination, harassment, or other unfair treatment in a future dispute. Timely, thorough documentation is always important evidence of an employer's reasoning in employment disputes and can mean the difference between a defensible case and a risky litigation.

For this reason too, it is extremely important for managers to understand that performance management and discipline must continue with the same degree of formality in a remote work setting, even if the method of documentation changes (i.e., documentation by email instead of handwritten note). Employers should ensure that their managers have all of the tools they need to remotely evaluate, review, and discipline their subordinates, and that they are trained in any new technologies or systems for this purpose.

The same documentation consideration is also true of any harassment, discrimination, or other complaints or investigations that occur with remote employees. Managers should be trained to recognize informal remote complaints (for example, through informal instant messaging systems) and must immediately report them to the appropriate individual(s) at the company. All investigations, even if done remotely, must be conducted and documented thoroughly.

Employee cost reimbursement

As employees continue to work remotely, many are paying the costs of items historically provided by their employers. These include paper, pens, printers, monitors, desks, office chairs, internet, phone, and other office supplies. These increased costs to employees may need to be reimbursed, depending on the jurisdiction. California, for example, requires employers to reimburse employees for necessary business expenses they incur. For employees working from home, this can include physical supplies as well as phone, internet, and other utility bills (or a portion of such bills).

Other jurisdictions are silent or vague on the requirement to reimburse. But even in jurisdictions without an explicit requirement to pay for these expenses, employers should be particularly cautious of any situations where the cost of these items might effectively bring the employee's pay rate below the minimum wage (for non-exempt employees) or salary exemption threshold (for exempt employees). In these cases, employers should consider reimbursing some or all of these expenses to avoid a potential wage and hour violation.

Notice and posting requirements

There are a whole host of federal, state, and local laws requiring employers to "post" and/or disseminate written notifications to employees informing them of certain legal rights. Many employers fulfill these notice requirements by posting the information in a common break room, lounge, or lunch area. Employers are not relieved of their posting or notice requirements simply because employees are remote. The traditional physical posting, however, may not suffice for remote employees.

While every law is different, in many instances, intranet postings and/or email circulation of the notices will suffice to meet an employer's obligations. Employers should confirm the specific requirements for their applicable jurisdictions and determine a compliant manner to "post" or disseminate such notices.

Conclusion

The last two years have drastically changed the way many people work and their vocational expectations going forward. The shift to remote work has also benefited many companies and industries that have found more efficient and profitable ways to perform work that was previously done in-person. As employers focus on integrating some degree of remote work into the overall culture of the company, it is important not to lose sight of the potential legal pitfalls that can trap an unsuspecting employer.

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Westlaw Today is owned by Thomson Reuters and operates independently of Reuters News.

Mark Goldstein

Mark Goldstein is a partner in the Labor & Employment practice at Reed Smith in New York. His practice is focused on helping companies manage their workplace needs, and he counsels clients on day-to-day and big-picture workplace issues. He can be reached at MGoldstein@reedsmith.com.

Saranne Weimer

Saranne Weimer is an associate in Reed Smith's Labor & Employment Group in Princeton. She represents employers in state and federal courts, including defending class and collective actions. She can be reached at SWeimer@reedsmith.com.

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