Rise in telecommuting prompts concerns over workers'-compensation insurance

CNY Business Journal (1996+), Jul 28, 2006 by Palmateer, Paige

SYRACUSE - A 2004 Time Off & Disability Programs Survey conducted by Mercer Human Resource Consulting reported that 16percent of companies offered a formal telecommuting program widely available to employees while 43 percent of companies encouraged policy managers to offer the option to employees at their own discretion. The remaining 41 percent of companies lacked any telecommuting policy.

The percentage of companies offering telecommuting to employees has further increased in the past two years, creating a popular trend that presents advantages for businesses, but also worries employers who fear being held liable if an employee is injured while working at home.

There is no special law that delineates when the employer is responsible for injuries sustained by a telecommuting employee, says Jacqueline Jones, a labor and employment attomey at Mackenzie Hughes LLP, a regional law firm based in Syracuse. Court decisions regarding workers' compensation are often influenced by precedents established in other cases to determine when a telecommuting injury is the responsibility of the employer.

"If the injury occurred while the employee was working out of a home office, it is covered under workers'-compensation insurance," Jones explains. "However, if the employee took a break and is injured while attending to a personal matter, the employer cannot be held liable."

An employer can be held liable for employee injuries sustained during the course of traveling to another work site or on an errand. "If the employee attends to personal business after that errand and is injured, some courts will still hold the employer liable [compensable]," Jones says. "The thought on that situation is the employee would not have gotten injured if they had not been on the employer's errand in the first place."

Jones encourages employers to formulate a policy reflecting management expectations regarding telecommuting. "The policy should provide clear outlines as to when the employee is considered to be working as opposed to personal time," Jones explains. "Employers should also inspect the home-office work site and ensure work-office standards are met."

The Occupational Safety and Health Administration (OSHA), enforces safe workplace requirements, but does not conduct inspections of home offices. Therefore, employers who wish to avoid telecommuting liability, should train employees about preventing injury at home. Some businesses also require that employees working from home conduct a periodic safety check.

Jones has found that most employers opt to retain liability insurance in addition to workers'-compensation insurance. "Liability insurance protects the employer in the event of an employee accident," she says. "But what happens when the employee's child picks up the computer cord and gets electrocuted? Liability insurance protects the business in these unforeseen situations."

The numerous factors such as number of employees and the type of business conducted at various small companies make it difficult to price employer's liability insurance. "It's completely wide-ranging, depending on the type of work you do," says Kelly Steckel, a marketing representative at Syracuse-based insurance firm Bailey & Haskell Associates, Inc. "For example, the base rate for an office worker is 36 cents per $100 on the payroll, while a nurse is $6 per $100 on the payroll. These figures change each year and the liability insurance is based on the likelihood these employees will get hurt while working."

Steckel also notes that auto insurance is an important consideration for businesses with telecommuting employees. "If an employee hits a school bus while running a work errand, both employee and employer can be sued," he says.

George Faulkner, a principal at Mercer Human Resource Consulting, focuses on the question of network security that makes many employers hesitant to allow telecommuting.

"Employers do have to set up general policies regarding data security because employees working from home might have sensitive data on the hard drive or easily accessed through a network connection," Faulkner explains. "There are so many gray areas regarding telecommuting - good, comprehensive liability coverage is the best defense an employer has against accidents."

Faulkner adds that employers should also take into account the trust they have in specific employees when offering telecommuting options.

"The general rule with telecommuting is that it is not a cut and dried thing," he says. "Employers need to have confidence in the ability of the worker to be on their own."

The benefits of a telecommuting arrangement are myriad - a reduction in office space and overhead, the retention of employees who need job flexibility, an increase in productivity, less absenteeism, increasing recruitment, and happier employees - but Jones stresses the importance of accurate time sheets.

"Under the Fair Labor Standards Act, employers need to make sure an at-home employee is complying with the correct number of hours worked per week and possible overtime."