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Five Telecommuting Issues for Employers

Is telecommuting right for your business? Yahoo and Best Buy recently reconsidered the answer to this question, resulting in a media uproar supporting telecommuting employees. But what legal issues do employers face with telecommuting?

Following are five key issues employers should consider:

  1. Wage and hour compliance. Employers covered by the Fair Labor Standards Act must monitor and accurately record all hours worked by non-exempt employees and follow minimum wage and overtime requirements. Keeping track of compensable hours worked, including when breaks or meals periods should be paid, can be difficult.
  2. Work locations across state lines. Generally, labor and employment laws of the state where the employee’s home is located apply. But what about state income taxes on wages? Depending on state law, some employees face double taxation. How about corporate taxes? A New Jersey court recently ruled that a Maryland company had to pay New Jersey’s Corporation Business Tax because it had one lone telecommuting employee working out of her New Jersey home.
  3. Workers compensation. If a telecommuter is hurt while working at home, the employer potentially faces the same liability as if the accident happened in the workplace. Employers may want to reserve the right to conduct a home safety inspection.
  4. Confidentiality. Liability for disclosure of sensitive information remains with the employer. Security measures should be taken to protect company data, files, trade secrets and other proprietary information, especially if the telecommuter has access to sensitive information like personal health information covered by HIPAA.
  5. Application to the ADA. Telecommuting may be a reasonable accommodation under the Americans with Disabilities Act. A federal court in Illinois found an employer might have violated the ADA by denying a disabled employee’s request to telecommute.

Awareness of possible legal issues regarding telecommuting employees enables employers to plan for solutions. If you have questions regarding these or other telecommuting issues, please contact a member of the Labor and Employment Practice team.