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January 2012
When the Employer’s Business is in the Employee’s House
By Gary Smith

When the Employer’s Business is in the Employee’s House

     When an employee works from home or otherwise “telecommutes” to the office, you, as an employer, may not think much about how employment laws still impact the “workplace.” The employee’s rights and responsibilities still apply whether they are working in the office or somewhere else.

     For example, you need to make certain you track your employee’s hours of work for wage and hour issues, overtime issues and what time overall should be compensable when the employee is ready to work but is not able for some reason (such as a lack of Internet access). Also, you must consider whether telecommuting should be offered as a “reasonable accommodation” for a disability.

     As a part of providing workers’ compensation insurance, you may want to be able to inspect home offices for safety standards. While the Occupational Safety and Health Administration will not hold you responsible for the employee’s home office, your insurance will still be covering the employee. In addition, the state may impose some additional requirements on the employer for the conditions of the employee’s workspace at home.

     You must have an agreement or specific policies in place to deal with telecommuting. Also, you should have specific protocols and policies to deal with the security of information the employee will have or have access to while telecommuting. These may include specific software, systems, equipment or other procedures to maintain confidentiality and privacy. The policies should also govern what rights you have to the employee’s computer, email and other electronic records.

     In general, most, if not all, of the employment laws apply equally at home or at the business’ location. In many ways, having employees work “on-site” is easier for employers to manage. However, even if people are working “on-site,” many jobs offer the ability to or even require working “after hours” at home. Make certain you address the “part-time” telecommuter as well.


Unemployment Tax Credit Restrictions

     Employers in states where the state has had an outstanding federal unemployment insurance loan for at least two years may not be able to claim the maximum amount of state unemployment tax credits on their 2011 federal unemployment tax return. Among those 23 states are North Carolina and South Carolina. However, South Carolina may not be on the final list of states where you cannot claim the full credit.

     For amounts paid to a state unemployment tax fund, employers can normally claim a credit of up to 5.4 percent of the 6 percent paid in 2011 (or 6.2 percent for the first half of 2011). The credit employers can claim is reduced by .3 percent each year beginning after a state has had a loan from the federal government outstanding for two consecutive years.

     As with all legislation currently, be sure to check for updates if Congress decides to act to eliminate the reduction.


The FMLA and Sick Time

     What happens if an employee gets sick while on leave pursuant to the Family and Medical Leave Act? Can the employee claim sick leave pursuant to the employer’s policies for the time he or she was sick?

     The answer depends on your employment policies. You can require that sick, vacation or other paid leave be taken concurrently with the FMLA leave so that employees do not have the ability to take 12 weeks of unpaid leave in addition to any other leave provided. However, if your policies do not resolve the issue, an employee whose illness does not qualify for the FMLA may be able to claim sick leave in addition to FMLA leave so that more than 12 weeks of leave are available.

     Practically, if your policies are not clear on the issue, it may be better for the business to allow the employee to use the leave instead of dealing with a potential claim and investigation for violating employment laws.


Prohibited Employment Practices

     As claims with the Equal Employment Opportunity Commission climb, it becomes even more important that every employer be aware of what they can and cannot do with regard to potential, current and former employees.

     Examples of prohibited practices from the EEOC include:

     You cannot advertise for jobs in any way that shows a preference or discrimination. This includes wording like “recent college graduates” or other terminology that would suggest preferences for people based on age, gender, disability, genetic information, race, religion or national origin.

     You cannot use recruitment practices that would tend to discriminate, like relying on word-of-mouth recruitment by your employees who are predominately male or of a certain age or national origin.

     You cannot take into account any discriminatory category in deciding about making job referrals or providing (or refusing to provide) references.

     You cannot make employment decisions based on stereotypes about employees.

     In making any decisions, you must be consistent in the way you treat all employees all the time.

     You cannot fire an employee for complaining, no matter how much they complain.

     You should avoid any questions or investigations about potential employees that would tend to reveal the employee’s race, religion, disability or other information that falls within a discriminatory category. This includes asking for a photo of the employee.

     Your dress code should be modified as needed to accommodate religious beliefs, ethnic clothing, disability and the like.

     You cannot make the work environment such that a person believes they have to quit.


     Content contributed by Wishart, Norris, Henninger & Pittman, P.A., which partners with owners of closely-held businesses to provide comprehensive legal services in all areas of business, tax, estate planning, succession planning, purchases and sales of businesses, real estate, family law, and litigation. For more information, contact Gary Smith at 704-364-0010, follow on Twitter @glawnews, or visit




Gary Smith is an attorney at Wishart, Norris, Henninger, P.A.
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