News | January 10, 2000

Home-Based Employees: How to Handle the Latest Industrial Revolution

Home-Based Employees: How to Handle the Latest Industrial Revolution

A recent letter, published by OSHA to clarify its stand on working conditions and employer obligations for home-based workers, has started a discussion that will probably last well into the 21st Century. Just what ARE an employer's responsibilities toward home-based workers?

By Sandy Smith

It all started out innocently enough.

An employer in Houston, TX sent the Occupational Safety and Health Administration (OSHA) a letter in August 1997. He requested information about OSHA's policies concerning employees who work from home offices, as his company was moving in that direction.

OSHA spent two years developing a response and sent him a letter of interpretation dated Nov. 15, 1999. All was quiet for a few weeks, then all heck broke loose, as headlines across the country this week screamed "OSHA Rulings Apply at Home" and "Workplace Rules Protect Home Office."

Politicians weighed in on the issue. "The Clinton/Gore administration never runs out of ideas to expand the power of Washington bureaucrats at the expense of working people," said Republican National Committee Chairman Jim Nicholson. "Soon, I expect, there will be federal government inspectors making sure our lunches aren't excessively caloric. I'll have to remember to have OSHA inspectors drop by to make sure the waste basket in my home office is in the right place."

Safety managers wondered if their responsibilities just doubled or tripled in size. Employers wondered if they were facing workers' compensation cases from teleworkers who slipped on their own wet kitchen floors. And does this mean that OSHA compliance officers might knock on the doors of home-based workers, asking to see their computer workstations?

"That's not going to happen," said an OSHA spokesperson with a chuckle. They've got enough to do to keep up with regular inspections at businesses across the country without adding the nearly 20 million residences of employees who work at home, he said.

The outcry was so great that Secretary of Labor Alexis Herman announced Jan. 5 that OSHA was withdrawing the letter of interpretation because although it provided guidance to the employer in Houston, it "caused widespread confusion and unintended consequences for others."

The letter, and the widespread panic and response it generated, has caused Herman to announce that she plans hold a meeting of national business and labor leaders in an effort to open up a dialogue to determine what rules and policies should be enacted and enforced as working conditions—such as more home-based workers—change in the 21st century. She said she plans to ask the National Economic Council to convene an interagency working group, including the Department of Commerce and the Small Business Administration to "examine the broad social and economic effects of telecommuting."

The 21st Century Worker
Just what the heck is a teleworker and why all the fuss?

A teleworker is defined as an individual who regularly works at home, at least part of the time, during regular business hours.

"The entire concept of core business hours and single office locations," said Scot Faulkner, Global Practice Leader for the American Management Association, "will become increasingly obsolete, and that will have huge implications for management."

The AMA this week released the results of a proprietary survey that shows that only 7% of teleworkers at U.S.-based corporations have been formally trained to work outside their normal office environment. Additionally, less than half of these workers have been supplied with the necessary equipment to conduct business from home.

The survey results indicate that few companies have addressed strategic management issues posed by teleworking and suggests that few are in compliance with OSHA's letter of interpretation.

The survey polled 1265 executives of AMA member organizations, which encompass a cross section of industries and company sizes. Over 75% of those polled spend some time working at home during the week, and 41% stated that given the choice they would prefer to work at home more often, even in the face of significant challenges.

In addition to the lack of training, a third of workers operating in telework environments experience a lack of ongoing communication with their superiors. A similar number of managers, 38%, report difficulty maintaining ongoing communication with teleworking employees. Additionally, nearly half of all teleworkers (48%) report that they lack adequate technical support when conducting work from remote locations.

"Companies see that teleworking can significantly improve employee recruitment and retention, and even alleviate the need for new office space, so they jump for it," stated Faulkner. "These statistics show that a great number of organizations are not treating telework with the strategic forethought that it demands." (see sidebar)

The letter that started it all
At least one employer treated the issue with, as Faulkner put it, "strategic forethought."

In his letter to OSHA, the Houston employer said that his company was placing some of its sales executives in home office environments. The home offices, in this case, would typically be a room within the employee's residence and would include a desk, chair, file cabinet, business telephone, desktop or laptop computer, printer, and a fax machine. What, he asked, is the employer's obligation within the home work environment?

A good question, considering that nationwide, the number of telework employees (employees who regularly work at home, at least part of the time, during regular business hours) has increased from 4 million in 1990 to more than 19.6 million in 1999. Those numbers do not include employees who work from home on an occasional basis.

According to the letter of interpretation sent to the employer, "the OSH Act applies to work performed by an employee in any workplace within the U.S., including a workplace located in the employee's home. All employers, including those which have entered into ‘work at home' agreements with employees, are responsible for complying with the OSH Act and with safety and health standards."

Even when the workplace is in an employee's home, "the employer retains some degree of control over the conditions of the ‘work at home' agreement," says OSHA. "An important factor in the development of these arrangements is to ensure that employees are not exposed to reasonably foreseeable hazards created by their at-home employment."

If one reads only those two paragraphs, it is easy to see where people could get the idea that OSHA would soon be knocking on the doors of teleworkers, asking to see their OSHA 200 logs and checking to make sure the electrical sockets in the home office weren't overloaded.

Business Responds
The U.S. Chamber of Commerce, which represents both large and small business owners across the country, denounced the OSHA letter earlier this week.

"It's outrageous," said Bruce Josten, executive vice president of the Chamber. "This runs completely counter to employers' efforts to give workers greater flexibility and counter to the administration's own emphasis on families. Parents of small children, workers with long commutes, elderly and disabled workers have expanded their ability to be productive employees through telecommuting. At-home workers will not welcome government or business inspections of their home work sites."

According to the Chamber, what it called "OSHA's effort to regulate every worker in every workplace—including the worker's home—is government regulation run amok. …Opening a worker's own front door to government regulation and litigation will dampen employers' enthusiasm for this kind of flexibility."

The point of the letter of interpretation was not to regulate home working conditions, counters OSHA, but rather to emphasize that every employee, no matter where they work, deserves a safe and healthy workplace. Most employers agree with that position, said Keith Lessner, vice president of Safety and Environmental, American Alliance of Insurers, which is a national trade association representing 317 property/casualty insurance companies that supply insurance and risk management advice to some of the nation's largest employers.

"Most employers, regardless of state or federal regulations, feels some sort of obligation to protect employees. Not just because it reduces liability and insurance costs for them, but because it's the right thing to do," said Lessner.

He encouraged employers to contact their insurance providers to find out what types of materials they can provide that offer guidance for safety and health issues related to teleworkers. A number of employers have taken advantage of their insurance carriers' risk management division to conduct workplace assessments to reduce risks and improve work stations for home-based employees, said Lessner. The problem occurs, he noted, when agencies like OSHA become overzealous in their attempts to regulate workplace safety and disregard the efforts made by employers.

"Few object to OSHA's mission in promoting workplace safety," said Lessner. Yet, he added, "there remains a considerable amount of concern about how reasonable OSHA has been and will be in fulfilling its mission."

A healthy workplace vs. a healthy home
According to OSHA, employers are responsible only for "preventing or correcting hazards to which employees may be exposed in the course of their work." Employers are required to provide a safe and healthful workplace, not a safe and healthful home.

Wondering just how far you need to go to protect home-based workers? OSHA says employers should "exercise reasonable diligence" to identify hazards associated with particular home work assignments, and should provide any necessary training, personal protective equipment, or other controls "appropriate to reduce or eliminate the hazard." Employers are also responsible for ensuring that work materials they supply pose "no hazard under reasonably foreseeable conditions of storage or use by employees."

And as for OSHA knocking on the doors of teleworkers, you can pretty much forget about it. A statement released Jan. 4 by Secretary of Labor Alexis M. Herman makes it very clear that, as she says, "the federal government has neither the desire nor the resources to investigate private homes in America."

The only time OSHA has investigated a private residence was to investigate sweatshop-type working conditions in the garment and other industries. The agency said it would also investigate work-related fatalities occurring in home-based workplaces. Any OSHA enforcement visit must be conducted in compliance with the Fourth Amendment, which requires that OSHA obtain either consent to inspect or a judicially issued search warrant.

Employer Responsibility and Liability
The Houston employer wondered if employers were responsible for conducting periodic compliance inspections in the home, which may include safety, health, fire, and environmental issues. OSHA's answer, much to the relief of employers everywhere, was "no."

There is no general requirement in OSHA's standards or regulations that requires employers to routinely conduct safety inspections of all work locations. However, certain specific standards require periodic inspection of specific kinds of equipment and work operations, such as:

  • ladders (§1910.25(d)(1)(x)) and §1910.26(c)(2)(vi));
  • compressed gas cylinders (§1910.101(a));
  • electrical protective equipment §1910.137(b)(2)(ii));
  • mechanical power-transmission equipment (§1910.219(p));
  • resistance welding (§1910.255(e)); and
  • portable electric equipment (§1910.334(a)(2)).

"If an employer of home-based employees is aware of safety or health hazards, or has reason to be aware of such hazards, the OSH Act requires the employer to pursue all feasible steps to protect its employees," says OSHA. One obvious and effective means of ensuring employee safety would be periodic safety checks of employee working spaces, but such inspections are not required.

And OSHA is not the only agency that might be involved in the safety and welfare of home workers. Depending on what kind of business the "at home" employer is engaged in, he or she may have additional responsibilities under other federal labor or environmental laws, as well as under state laws of general applicability, such as public health, licensing, zoning, fire and building codes, and other matters.

And since employers must report work-related injuries and, in most cases, pay out workers' compensation and medical costs for home workers as if the injury occurred at one of the companies' facilities, it pays an employer to check up on those workers periodically.

Home workers and OSHA 200 Logs
According to the letter of interpretation, employers are not required to maintain an OSHA 200 Log for each home, but work-related injuries and illnesses that occur to employees working at a home location are recordable on the employer's OSHA 200 Log. "Injuries and illnesses that result from an event or exposure off the employer's premises are work-related if the worker was engaged in work-related activities or was present as a condition of his or her employment," according to OSHA. These criteria must be applied to employees who work at their homes."

If an employee was injured or became ill while performing normal living conditions (e.g., eating), the case would not be considered work-related. For example, when an employee who works at home doing typing develops carpal tunnel syndrome, it must be determined whether the employee's work duties in any way caused, contributed to, or aggravated the condition. If so, the condition is considered work-related for OSHA recordkeeping purposes.

"When we look at the distinction between promoting injury prevention and paying for injuries, we see some broader issues than just OSHA or its telecommuting interpretation or its ergonomics proposal," Lessner pointed out. "From the perspective of the insurance industry, some of these issues, such as causation, are very important. We believe it is critical to look beyond this interpretation or the ergonomics rule to the much bigger picture at issue, and that is how best to ensure a safe environment for workers without excessive costs and regulatory burdens for the employer community."

How OSHA and shareholders such as employers, insurers, and labor leaders will work together to create a safe work environment for teleworkers remains to be seen. One thing is certain: this issue is just starting to heat up.

"We are steadily becoming a nation of teleworkers," said AMA's Faulkner. "The [OSHA letter of interpretation is] another signal that all companies will require some structure and methodology as they move into a teleworking environment."

As for that employer in Houston, who seems shell-shocked over the public response to a letter he wrote two years ago, he said that he's glad OSHA replied to his letter "whether it took two years or two months." He passed the OSHA letter of interpretation along to his attorneys and his human resources staff, who along with him will decide how to best handle the issue of safety for teleworkers. "Right now," he said, "we're still looking into our options."

And what about you? Have you asked yourself: Is my company ready for the 21st Century employee?

How Can You Help A Teleworker?

More and more businesses are sending workers home—to work out of home offices, spare bedrooms, basements and attics. These workers, commonly referred to as "teleworkers," are one of the fastest growing segments of American employees.

In response to this growing segment of American workers, the American Management Association (AMA) is working to identify best practices that companies can use as benchmarks to develop telework programs that will increase productivity. These best practices address the underlying difficulties many companies have found with telework programs and include:

  • Providing adequate operational support to teleworkers, including hardware, software, and remote access capability.
  • Establishing clear requirements and expectations for employees and managers by stipulating hours, assignments, and output expectations.
  • Preparing managers to supervise teleworkers through communication and performance monitoring, instead of physical proximity and observation. Encouraging teleworkers to meet with their family members to set ground rules for their new work style.
  • Selecting employees for teleworking based on self-motivation, ability to work independently, familiarity with job requirements, and success in the current position.

"These practices should help ensure that companies can reap all of the clear benefits of teleworking while avoiding some of the less noticeable, but commonly encountered, difficulties," said Scot Faulkner, Global Practice Leader for the American Management Association.

The American Management Association is the world's leading membership-based management development organization. AMA offers a full range of business education and management development programs for individuals and organizations in Europe, the Americas, and Asia. Those interested in program information or membership can visit the AMA Website at