Remote work has become increasingly popular these days. But don’t try it without first analyzing its pluses and minuses, along with the legal and insurance implications involved.
Millions of Americans worked from home as a safety measure during the pandemic. But working remotely is far from new. It has become an increasingly common labor practice that has enhanced productivity and lowered overhead costs for many years.
The numbers tell the story. According to the U.S. Census, 4.9% of U.S. employees worked exclusively from home prior to the spring of 2020. A Gallup survey identified another 30% that worked from home periodically. Two months into the pandemic, Gallup reported that 63% of U.S. employees were working remotely. This was roughly double the 31% doing so just three weeks before.
Although the pandemic made remote work the new normal for millions of Americans, analyzing if it is right for your company and workers is critical. Job tasks and corporate culture may not allow for offsite work. Plus, many people may simply prefer having a designated space to work away from home. Going forward, which path should you take? It depends on your company’s needs and the preferences of your staff. The only way to make a decision is to weigh the advantages and disadvantages of each work style and make an informed decision based on which will work best for all involved. The remainder of this article will discuss the pluses and minuses of remote vs. office work. It will end by discussing the legal and insurance implications of making the move to remote work.
The Benefits of Remote Work
According to The 2020 State of Remote Work, a Buffer and AngelList study, employees highly appreciate the opportunity to work from home (or other offsite location). They said the largest benefit was the ability to have a flexible schedule (32% of employees). The second and third most valued benefits were being able to work from any location (26%) and not having to commute to work (21%). The ability to spend time with family (11%) and to work from home (7%) were the fourth and fifth most highly appreciated benefits of working remotely.
Those weren’t the only employee benefits, though. A GitLab study—The Future of Work is Remote—added several others, including:
- Cost savings (33%)
- Ability to care for family, pets and aging/sick relatives (36%)
- Reduced anxiety/stress (34%)
- Improved health (26%)
- Freedom to travel/relocate (26%)
- Increased options to live where you want (23%)
- Reduced office politics (18%)
Almost universally remote workers value the benefits of spending less time fighting traffic to get to their office and of structuring their workday to facilitate maximum productivity. Eliminating commutes and fostering work/life balance are pressure-relief valves that strongly reduce stress and anxiety. This allows employees to focus on achieving their job objectives by using their time more efficiently and blocking distractions. The end result of this process: lower commuting costs, more enjoyable work days, less absenteeism and higher staff retention.
From an employer’s perspective, the advantages of remote work are compelling. Numerous studies have shown that employees who work at home—or at another offsite location—are substantially more productive than those who work in an office. For example, Global Workplace Analytics found that telecommuters produce roughly 25% more work product than their office counterparts.
Another employer benefit is the ability to recruit for open positions anywhere in the U.S., if not the world. By no longer requiring employees to report to one dedicated office, employers vastly increase the number of labor markets from which they can recruit and hire staff. What’s more, having a remote work force generates significant financial benefits. Remote firms have lower office leasing costs, spend less on office equipment and furnishings and reduce the number of employees who spend too much time at the water cooler. A marked reduction in sick days will also typically lower employer costs by several thousand dollars a year.
Bottom line, Global Workplace Analytics estimates that a typical employer can save about $11,000 annually per half-time remote worker by allowing that person to work at home. The savings result from higher employee productivity, reduced office costs and lower employee absenteeism and turnover. (Calculate your own potential savings here. Registration is required.)
The Disadvantages of Remote Work
Of course, there is a flip side to every coin. According to the Buffer and AngelList study cited earlier, the top five employee disadvantages for remote work are:
- Collaboration and communication difficulties (20% said this was their biggest problem)
- Loneliness (20%)
- Not being able to unplug from work (18%)
- Distractions at home hampering concentration (12%)
- Being in a different time zone complicating team coordination (10%)
Problems mentioned in other research studies include:
- Lack of motivation
- Not being able to network or pursue internal career paths
- Not being able to take earned vacation time
- Difficulty finding a reliable Wi-Fi connection
Although the employer advantages are hard to deny, remote work can have several potential downsides for leaders and owners. One is the additional computer equipment, smart phones and daily use supplies needed to set up employee home offices. Cybersecurity hardware and software also add costs to the equation. Employee collaboration and communication difficulties pose their own challenges as well. The ability to meet face-to-face with employees to informally discuss problems and progress is much harder to do with remote employees. Scheduled check-ins via Zoom are useful to some degree, but don't always adequately replace face-to-face meetings between supervisor and subordinate.
Advantages of Office-Based Work
The employee advantages of working in an office can be powerful. For those who need a bright line between work and leisure time, having an office outside the home can preserve the work/life balance. Another advantage is the ability to have face-to-face meetings and brainstorming sessions with fellow team members. Not only do such sessions foster creative problem solving, they also enhance employee learning. There’s nothing quite like being exposed to other people’s knowledge and points of view to expand one’s professional horizons.
Building and maintaining a team culture is also much more feasible in an office setting than remotely. Being able to share ideas over lunch or to socialize with colleagues after work builds team cohesion and morale, which has the added benefit of raising productivity.
Even though many businesses have adopted flexible schedules in recent years, those who require employees to report to an office likely have stricter expectations about start and stop times and break durations. For employees who have trouble with time management, working in an office can be highly beneficial, if not job preserving.
Another benefit is having the opportunity to develop interpersonal skills. When you work in an office, you’re in close contact with colleagues all day long. This helps you polish the way you speak, resolve interpersonal conflict and behave socially, an opportunity remote employees may miss out on.
A final advantage of working in an office is being able to do intra-company networking. Since you’re likely to come into contact with supervisors and executives from other departments, you’ll have the ability to speak with and get to know them, as they will with you. If you ever decide to apply for a new position within the company, you’ll have the benefit of already being on the hiring manager’s radar.
For employers of a certain mindset, requiring employees to report to an office gives them the ability to closely monitor and control their work. This presumably prevents employees from making mistakes, engaging in forbidden practices or using company resources for personal projects. Also, some supervisors define their professional worth in terms of how many people they oversee. For such individuals, office-based teams can become powerful vehicles for self-affirmation.
Disadvantages of Office-Based Work
Office work can mean employees spend an hour or more each day commuting to and from work. Plus, it may impose artificial structures on people’s time that complicates dealing with personal issues. For example, parents often dread school snow days because it requires taking paid-time off (PTO) to care for their children.
From an employer’s perspective, office workers may find it much more difficult to stay focused on their work. Higher noise levels, chatty colleagues and the temptations of water-cooler/coffee-machine gossip can undermine the productivity of even the most dutiful employee.
Higher overhead costs may be the biggest employer disadvantage of office work. The need to lease and outfit office space inflates the cost side of the income statement and serves as an anchor to firms wanting to respond quickly to a distant marketing opportunity. Firms that operate with remote teams can more easily establish a presence elsewhere without having to absorb the costs of closing and opening offices.
Given the pluses and minuses just discussed, it’s not hard to see why increasing numbers of employers are moving toward remote work. It boosts productivity, slashes costs and results in a highly motivated and satisfied work force. However, if you decide to move in this direction, carefully review the advantages and disadvantages, while considering the legal and risk management implications you’ll face.
Legal Considerations of Remote Work
Before you shift all or part of your company to remote work, get legal counsel to make sure you don’t step on a legal landmine. Here are some things to watch out for:
- Fair Labor Standards Act (FLSA): This federal law requires that employees must receive at least the minimum wage and may not be employed for more than 40 hours in a week without receiving at least a time-and-a-half pay rate. Determining what to pay employees requires knowing the number of hours they worked. This isn’t a problem for exempt employees. But for non-exempt staff, you must know how many hours they put in, which can be difficult to track if they’re working remotely.
- Discrimination/disability concerns: For disabled workers receiving American Disability Act (ADA) accommodations, it’s essential to offer them the same opportunities your in-office employees receive. Failure to do so could bring a discrimination lawsuit.
- Worker safety: Allowing a worker to operate from a home office doesn’t free you from complying with worker-safety regulations. Always make sure remote employees have a safe environment from which to work and provide them with training or equipment upgrades to remediate health-and-safety deficiencies.
- Data security: It’s important to remind offsite employees of their data security obligations. Not only should you equip them with the hardware and applications needed to assure network safety, also put them through robust cybersecurity training if you haven’t already.
- Worksite closures: When your office or offices are closed due to bad weather or some other problem, determine how you want to handle your remote employees. Should they also shut down or just work as usual? In the latter case, you will incur wage liabilities under FLSA.
Finally, when moving toward remote work, remember to consider the insurance implications. Here are three major ones:
- Remote employees must receive worker’s compensation coverage just like your office workers do. This will cover their work-related illnesses or disabilities and shield you from any ensuing litigation.
- Adding remote workers to your general liability insurance is important. It will protect you in case they damage third-party property or injure a client or visitor to their office space. If you neglect to do so, you may be liable for covering those costs.
- Remote employees who might harm a client through their professional negligence need errors and omissions (E&O) coverage. This will indemnify their mistakes, while preserving company assets. Plus, your insurer will cover incurred legal fees, settlements and court-mandated judgments.
In short, allowing employees to work remotely is an excellent way to respond to external challenges. But never add remote workers without fully assessing the pluses and minuses involved and addressing the legal and insurance issues that accompany novel work arrangements. Without mitigating your risks, transitioning to remote work might cause a legal or financial quagmire you’ll come to regret.