Insurance Industry Telecommuting in the Era of the Cloud

Insurance Industry Telecommuting in the Era of the Cloud

The explosive growth of tablet computers, smartphones, social media, and cloud computing has (generally) enriched our personal lives. It has also created the opportunity for many insurance industry employees to work productively from home. This has led to a demand from employees for a variety of telecommuting options. Employers must adapt to this new reality or risk losing top employees to competitors with flexible work options. Telecommuting policies should be carefully crafted, however, given the variety of legal risks that come with employees working from home. These include the following:

Discrimination. If an employer is not clear on who gets to work from home, employees denied the ability to telecommute might conclude that they have been unlawfully discriminated against. For example, a manager might let a favorite employee work from home during a disability leave, but a year later, another manager in the same company based in a different city might deny a similar request from a pregnant employee. Differential treatment can be tough to explain absent a clear policy.

Wage and Hour. Employers that don’t properly record hours worked at home can find themselves in a difficult position if an employee brings a claim for overtime, “off the clock” work, or other unpaid wages. Insurance industry employees often have responsibilities away from the office. If an employee drives to a client site after starting work at a home office, such time might be hours worked. In addition, home-based workers in the industry are often classified as independent contractors, creating the usual risks that come with misclassification. And class action claims have been filed over failure to reimburse for home-based expenses like printer ink and paper. Similar wage issues abound with work from home.

Workers’ Compensation. An employee injured taking out trash that includes both personal and work items could argue that the injury is a covered claim. And the risk of fraud increases when the only witness is the family cat. Employers could also be sued for injuries suffered at the employee’s home by visitors, clients, and family members.

Privacy rights. Home-based privacy rights can easily clash with the employer’s need to monitor. For example, insurance industry employers often monitor client calls for quality control purposes. An employer attempting to monitor a home-based business computer or telephone line faces risks including consent, scope, and notification under federal and state law.

Cyber Risk. GoDaddy, Yahoo!, WalMart and the White House—all are recent victims of hacking. A culture where many consider the Anonymous movement admirable, combined with the ubiquity of iPhones, iPads, and similar technology, means that the old security rules no longer apply. Weakly secured home offices pose a huge risk, as reams of confidential policy information could be downloaded in a matter of minutes. A laptop stolen while an employee grabs a quick latte could lead to the exposure of client contact information, prices, and renewal information. Remote logins and increasing use of “the cloud” only increase these risks.

Disabilities. Employees occasionally request telecommuting as a disability accommodation. Employers that adopt a telecommuting policy arguably create a precedent that home-based work can be a reasonable accommodation, whether full or part time.

Insurance. Telecommuting equipment can damage home property. Homeowner policies might be inadequate or might carry exclusions related to home-based work.

Out-of-state employees. Employees sometimes telecommute from out-of-state. The laws of each state involved must be considered. Given these and other potential risks, creating a written policy in advance makes sense. Considerations when crafting a policy include:

Define telecommuting. The legal definition of “telecommuting” is not static. Employers can define this concept to meet their specific needs, in accordance with applicable law. For example, one company might define telecommuting as one day a week, while another might allow it only when business is slow.

Decide on eligibility. Positions that require minimal supervision or no team interaction might be a good fit for home-based work. Other factors include length of employment, performance, reliability, and distance from the employer’s main office. Absent written eligibility standards, the risk of differential treatment claims rises.

Decide how performance will be evaluated. Without in-person supervision, measurable performance standards and regular performance reviews become critical. An unaccountable home based employee can quickly sabotage sales numbers.

Document employee requests. To reduce discrimination exposure, require employees to submit requests to telecommute in writing.

Centralize decision making. Inconsistent standards increase perceptions of favoritism and can lead to lawsuits. One person should have historical knowledge of all telecommuting requests, to ensure that the policy is applied fairly.

Secure systems. Consider implementing software that allows video conferencing (and confirmation that the employee is actually at home, not poolside in Las Vegas). Determine who will pay for and own home office equipment.

Educate supervisors. At the outset, time records, consistent monitoring, and measurable performance goals are critical. As trust builds, more leeway might be given. In addition, supervisors must learn how to properly compare telecommuters to office-based co-workers, and how to ensure that telecommuters remain a part of the team.

Consider “core” time. Requiring employees to be available during set hours enhances productivity and reliability. You don’t want to be dialing multiple numbers to schedule an impromptu meeting or to make sure an employee responds to an urgent client request.

Employers should carefully craft a telecommuting agreement to be signed by employees. In addition to addressing the topics above, consider including provisions on the following issues:

  • home office inspection rights (safety, investigations, equipment audits, etc.), addressing expectation of privacy issues;

  • contact with the main office: frequency of reporting, availability of workspace, support staff, parking issues, etc.;

  • procedures for receiving and submitting assignments;

  • telephone procedures (answering calls, use of home number, dedicated business lines, voice mail, right to monitor, etc.);

  • performance evaluations;

  • work schedules, overtime, breaks, and time records;

  • ownership and return of property;

  • protection of property and confidential information from damage, misappropriation, and theft;

  • security issues, including anti-hacking software, firewalls, passwords, and related matters;

  • tax issues;

  • home office lighting, furniture, and equipment;

  • disability issues/telecommuting as a reasonable accommodation;

  • the internet, intranet, e-mail, and computer use, and ability to monitor;

  • workers’ compensation reporting;

  • responsibility to abide by employee handbook and other policies;

  • use of employer property for reasons other than work; and

  • insurance coverage.

In the digital era, telecommuting raises increasingly complex legal issues. With proper planning, however, insurance industry employers can offer home-based work options to employees and capitalize on the benefits of a flexible workforce. 

[This article is not intended to provide advice on specific legal matters, and should not be relied on as legal advice. You should direct questions regarding specific situations to legal counsel.] The authors, Dana Kravetz and Spencer Hamer, are partners in the Los Angeles office of Michelman & Robinson, LLP.

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