New England Biz Law Update
While initially pursued as a temporary solution to the COVID-19 pandemic, it’s now clear that hybrid employment is here to stay, and remote work policies are part of that new reality.
As of last year, 12.2% of U.S. employees were fully remote, with more than 4.7 million people working remotely “at least half the time,” according to B2B Reviews.
“Businesses need to be competitive in the ongoing battle for talent,” explains Ana C. Shields of Jackson Lewis. “Top tier talent demands flexibility. Businesses who can provide at least some remote work will attract stronger talent in this highly competitive job market.”
Shields also notes that allowing employees to work outside of the office can broaden recruitment opportunities for businesses through new labor markets.
The ability to work remotely is a must for many employees, says Emily E. Iannucci, a partner at Bond, Schoeneck & King. “Having the flexibility of being able to work from home is a very attractive benefit, if not a non-negotiable item for some candidates,” she says, adding that many who entered the workforce during the pandemic have never maintained a schedule that didn’t allow them to work from home. “In many industries, employers who do not offer the option of working remotely in some capacity inevitably have a smaller pool of candidates from which to hire.”
However, offering employees the benefit of remote work often comes with drawbacks, since employing workers outside of a company’s home state can highlight disparities in labor laws. “Employment of individuals who work remotely, and potentially from different states — and even different countries — than the traditional physical worksite can create significant compliance issues for the employers,” says David J. Heymann, managing partner at Meltzer, Lippe, Goldstein & Breitstone in Mineola, New York, referring to regulations for sick or paid leave, overtime rules and rules relating to monitoring of remote work. “The applicability of these laws to an employee will depend on either the employees’ home state or the location of the employer’s office or headquarters.”
The classification of remote workers is another concern for companies, as questions about overtime pay may arise in regard to an employee’s status. “The salary threshold for certain exemptions varies from state to state, and litigation related to the misclassification of telecommuters is on the rise,” Iannucci says. “Employers need to ensure that their non-exempt employees are accurately recording their time worked, and that supervisors are monitoring employees to make sure that they are not abusing the privilege of working remotely, or putting in for overtime that was not authorized.”
Having hybrid or remote employees can also create problems for companies that offer insurance benefits, warns Iannucci. “Employers should consider whether allowing certain employees to work remotely from another state will require the employer to purchase workers’ compensation insurance, unemployment insurance, and short-term disability insurance in that state,” she advises. “Employees who sustain injuries while working from home may be eligible for workers’ compensation insurance.”
Besides legal complications, other challenges may arise from having employees who work outside of the office, one of which is the assimilation of new hires into the office culture of a company. “There is some truth to the phrase ‘out of sight out of mind,’” says Heymann, regarding the onboarding of new recruits. “With respect to newer employees, lack of presence in the office makes incorporating them into the firm far more challenging and is detrimental to their learning experience.”
Shields agrees that managing a hybrid workforce can present potential obstacles for employee retention. “Managing a remote workforce requires creativity to build teams and culture: it is not a ‘one-size-fits-all’ approach,” she explains. “Many employers historically have trained ‘on the job’ almost as an apprenticeship from more experienced staff. This can be challenging in a remote environment.”
“Another challenge is performance management,” Shields adds. “Managers need training to effectively manage their staff in this new remote and/or hybrid model to focus on performance metrics,” she explains. “Flexibility with a focus on productivity is critical to success.”
Still, many companies have found that the benefits of managing a remote or hybrid workforce outweigh the potential pitfalls. Improved employee morale can make a company more productive, according to Iannucci. “Being able to work from home often reduces employees’ stress and improves their work-life balance,” she says.
Additionally, businesses have embraced remote work as a cost-reduction opportunity. “The use of remote workers enables companies to reduce their physical space, thereby helping reduce overhead,” explains Heymann.
To ensure fairness and avoid claims of disparate treatment, establishing a consistent remote work protocol is advised. “Written remote work policies can be extremely helpful in this regard,” says Shields. “For example, if some managers permit remote work and others do not, this perceived lack of fairness can create risk for the organization of claims of employment discrimination.”
As long as remote work guidelines are clearly communicated, a business managing remote employees can take advantage of the results delivered by a happier and more productive staff, Shields says. “It’s very difficult for businesses to walk back an approach that has been successful in terms of productivity.”
