As onrushing technological changes continue to disrupt our society, the concepts of how we work and, more particularly, where we work, are not immune from that disruption. Forbes Magazine reports that 11 percent (8,000 employees) of Xerox’s employees now work remotely 100 percent of the time. At Aetna, as many as 43 percent of its employees telecommute (in some form) while 20,000 Dell employees telecommute. This sector of the workforce will only expand and, like many disruptive technological changes, will challenge how we measure, regulate, and compensate work, requiring reexamination of yardsticks developed when workers clocked in at a factory gate, took a mid-shift meal break, and traveled home at the end of the work day.

“Working remotely” or “telecommuting” has obvious attractions for many employees and employers, often for different reasons, and there will be increasing pressure to expand its scope. But fitting this square peg into the current legal round hole is challenging and, to be successful, requires smart, multi-disciplinary advance planning and, just as important, continuous monitoring and reappraisal. In this first piece of a two-part article, we examine some of the major legal concerns that face employers who are considering, starting, or expanding their offsite workforce.

Developing a Policy Is Essential

Some employers develop telecommuting practices accidentally (e.g., a valued employee relocates with his spouse to another city). Employers should avoid developing a policy with this approach and instead plan ahead, ultimately developing a well-planned program with input from many disciplines such as IT, tax, wage and hour, insurance, ergonomics, privacy, legal, and labor.

There are many reasons for expanding telecommuting: It is viewed as a “benefit” to certain employees; a business advantage to many employers; a defensive measure to retain or attract key or hard-to-attract employees; a means to operate in different locations; and even a cost saving measure. Employers must also remember that the Equal Employment Opportunity Commission argues that, on occasion, working from home must be considered as a reasonable accommodation option, even if the employer has no existing telecommuting program. However, as we have previously noted, federal courts of appeal have concluded that regular, on-site attendance is often an essential function of many jobs and, in those circumstances, an employer is not required to offer the employee the option to work at home.

Jurisdictional Questions Must Be Considered

Some of the preliminary questions surrounding telecommuting challenges involve possible jurisdictional issues. Working remotely may permit the employee’s work location to be in a different state from the employer’s business. It must therefore be determined which state laws will regulate the work and to which state the employee will owe taxes. Moreover, the employer must check if the employee may be working in a state that insists that, because of this activity, the employer must pay state corporate taxes. (At least New Jersey and Virginia make that claim.) Indeed, telecommunication advances permit employees to work remotely from other countries, which introduces a whole other phalanx of additional complications. The employer should check whether local zoning laws or property restrictions inhibit or ban “commercial” activity in the employees’ homes.

Measuring and Regulating the Work

Once the jurisdictional questions have been settled, it is time to work on the nuts and bolts and, for many employers, the most challenging aspect of telecommuting. For non-exempt employees, work is measured and compensated by time – the amount of hours the employee is or is not “at work.” In more traditional contexts, the time an employee spends working is relatively easy to measure and monitor: a supervisor is present to observe; a time clock, or more commonly, an electronic time device, precisely records when the employee is at work and when he is not, and co-workers are present. An employer who wants to rely on more than a telecommuting employee’s say so must get creative and develop technological methods to substitute for the traditional time clock. Indeed, the Department of Labor gives no breaks to an employer and explicitly applies its rules “to work performed away from the premises or the job site, or even at home”; employers must count the time as hours worked “[i]f the employer knows or has reason to believe that the work is being performed.”

In the more heavily regulated states (e.g., California), the employer must ensure that the remote worker “receives” appropriate meal and rest breaks, has the requisite number of days off and enjoys the many other protections afforded employees. Generally, the governing employment laws will be those of the state in which the employee works, not the law where the employer’s business is located. In all situations, employers who require employees to be available such that they are on “standby,” and who “call them back” from standby, must think through the implications of such policies and practices in the context of an employee working from home to ensure they are not exposed to significant back pay claims including class action claims.

These are only some of the issues employers must navigate when assessing the increasing need to address telecommuting.