House rules: before you let your people work at home, find out what you're liable for—and cover your bases

Entrepreneur, July, 2004 by Jane Easter Bahls

TWENTY MILLION AMERICANS AVOID traffic and water cooler gossip several days a week, choosing instead to do their work at home. Armed with a computer, phone and fax, they find there's no need to be present at the office every day. Indeed, contrary to the image of telecommuters in pajamas catching up on the soaps, many employers find that telecommuting employees are not only happier, but also more efficient and productive.

If some of your employees work from home or you're thinking of allowing such an arrangement, be sure your discussions include issues of safety and liability. On the one hand, after a media firestorm in January 2000, the U.S. Labor Department withdrew an advisory letter claiming that, under OSHA, employers were responsible for the safety of all work environments, including the home. "We believe that the Occupational Safety and Health Act does not apply to an employee's house or furnishings," said Charles Jeffress, then assistant secretary of labor, in Congressional testimony. "OSHA will not hold employers liable for work activities in employees' home offices." Nor will OSHA be out inspecting home offices, unless there's been a severe injury or death related to the telework.

On the other hand, an employee who develops carpal tunnel syndrome or back problems from working in a poorly designed home office may well file a workers' compensation claim. And if the employee's teenager destroys the hard drive on a company-owned computer, you'll want a policy on who's responsible for company property in the home.

You can address all these issues in a telework agreement that covers office arrangements, hours, responsibilities and who pays for what. The agreement should also address safety, security of company property and proprietary information, workers' compensation and insurance. The arrangements can make all the difference between being liable for workers' comp on injuries in a given room during stated hours and being responsible for anything that happens to an employee anywhere at home 24 hours a day.

Consider making an initial visit to the telecommuter's home to see what the office is like and whether the furniture is reasonably ergonomic. Are there obvious dangers, such as a computer cord stretched across the route to the kitchen? Is the employee expecting to be able to work full time from home while caring for small children?

Does your standard business insurance policy cover liability for injuries outside the office? Suppose a client visiting a sales rep at her home office falls and severely injures her back. Or suppose an employee working from home uses e-mail to launch a campaign of sexual harassment against employees at the office. While these are unlikely scenarios, you'd better make sure they're covered.

Likewise, does the employee's homeowner's policy cover damage to company property used in the home? If not, make sure it's covered on your business policy.

Even more important is being careful about which employees you allow to telecommute. Those who are self-starters, responsible and loyal to the business are less likely to use the privacy of the home office to defraud the business or neglect their duties.

JANE EASTER BAHLS is a writer in Rock island, Illinois, specializing in business and legal topics.