Virtual or telecommuting

Business owners need to be on the lookout for the legal issues of a new type of employee.
Call them telecommuters, independent contractors or even virtual employees, the numbers of people who collect paychecks from business but spend little or no time at the office address are growing.
Improvements in technology have fed the growth. According to Find/SVP, a New York market researcher, the number of telecommuters nearly tripled from 4 million in 1990 to 11 million in 1999. That number is expected to grow to 14 million this year.
Rick Bland, an attorney working out of his home in Lafayette, said employers need to be aware of the legal issues that arise when using non-traditional employees.
“Labeling” is one place an employer can get in trouble. What you specifically call a work-at-home employee is more important than you might think. A business’ responsibilities for an independent contractor are very different than those for an employee.
“These are more than just labels,” Bland said. “If the actual relationship is more like employer/employee, you (the employer) pay withholding taxes. If they are an independent contractor, then they bill you.”
Ten years ago Microsoft Corp. struggled with this issue. According to reports, when the company’s payroll taxes were audited by the IRS in 1989 and 1990, the IRS determined that a number of employees who were classified as independent contractors actually were performing the duties of employees. Criteria for the determination included that the manner in which they did their jobs was controlled by Microsoft and that they also were given office supplies. As a result, Microsoft was required to pay back payroll taxes and overtime for the workers.
The issue didn’t die with the IRS.
“A lawyer went the next step and said if they are employees for tax purposes, then they were also employees for benefit purposes,” Bland said. Microsoft eventually lost the suit in an appeal called Vizcaino v. Microsoft Corp.
Other common employment issues that could follow the employee into their home work environment include worker’s compensation and OSHA regulations.
“If some employer had 100 percent cyber employees, the OSHA thing would probably apply. The government might be requiring that employers fix their home offices,” Bland said. He added he knew of no case, however, where a home office had been involved. “It would arguably apply that it has to be made safe.”
A labor issue that already has seen some court time, and may see a lot more in the upcoming years, is that of who owns work products like software, Bland said.
He further recommended that employers protect themselves with written contracts describing job duties, methods for tracking hours and insurance issues. As with any employee, employers should adhere to the Fair Labor Standards Act for telecommuters.
Probably because there are so many different ways to telecommute, company policies for telecommuters are far from standard.
At Cisco, a networking company headquartered in San Jose, Calif., where 6,000 of the companies’ 24,000 worldwide employees have company-installed high-speed access to their homes set up by the company, everything the employee needs is on the Internet. Laptops are in heavy use. Managers and employees on almost every level telecommute.
According to Abby Smith, a Cisco pubic relations manager, it works as a matter of course. “Sometimes it just makes more sense to go directly to a meeting if it’s next to your house,” she said. “Traffic in Silicon Valley is one of the issues.”
Closer to home, Hospital Shared Services finds that using non-traditional workers is a good way to provide 24-hour nursing coverage. The company provides nurses to hospitals and other businesses throughout the metro area. It employs only two workers who might be considered telecommuters. Both work part time (less than 40 hours a week), and both are required to spend only 12 hours a week in the office.
Job duties are performed using company-issued cell phones and log sheets. They must attend the same orientations as regular staff.
Sally Martinez, assistant director of staffing, said their policies basically include “treating them the same as office staff. “