Remote Work Arrangements: The Upsides, Downsides and Legal Sides

When the COVID-19 pandemic swept the nation in early 2020, businesses had to swiftly shift business models and determine how work could be accomplished while keeping their employees safe, healthy, and socially distant.  One of the largest changes in the 2020 workforce was employers’ use of remote work arrangements – otherwise known as “teleworking.” 

While at first blush the use of remote working arrangements seems like a “no brainer,” with numerous advantages for both the employee and employer, there are downsides that must be considered.  In addition, there are hidden legal issues to be identified, explored in advance, and carefully analyzed, to avoid unwanted surprises down the road.

Let’s take a look at the vast amount of advantages offered by telework:

  • Increased employee productivity
  • Increased employee mental health/morale
  • Cut down on employee commuting (time and dollars)
  • Employers can save thousands of dollars per employee on office costs/expenses
  • Reduces carbon emissions (environmental)
  • Economy benefits as employees have more free time to spend and shop more
  • Flexible work arrangement seen as an employee benefit
  • Employee relations / engagement
  • Company leaders can still manage the business effectively      

On the other hand, there are a handful of downsides, which should be carefully weighed against the upsides:

  • Employees can feel isolated (no in-person contact with coworkers or customers)
  • Motivation may be lost, and performance may suffer 
  • Communication may not be as effective or clear – certain messages can be lost if not transmitted in person
  • Difficulty in managing a home environment when others around and distractions
  • Confidentiality and security concerns in an at-home work environment

Before a business determines whether it can or should offer employees a work-from-home alternative, it is best to understand the array of legal issues and determine if a teleworking arrangement is still a viable one. 

Time tracking

Many employees are considered non-exempt from the Fair Labor Standards Act (FLSA) and are entitled to be paid on an hourly basis for all hours “suffered or permitted to work.”  This means if they perform work – even when those hours are not assigned or authorized – they are entitled to be paid for it.  In addition, for employers subject to the FLSA, they must pay their non-exempt workers overtime on hours worked over 40 in a workweek.  The federal Department of Labor issued guidance on August 24, 2020, discussing employers’ duty to track compensable hours worked of remote workers.  Employers will need to consider whether they will monitor employees’ computer time or some other method to determine “hours worked” – such as requiring daily or weekly time sheets from those workers. 

Performance management

With employees no longer in the office or workplace with their manager, performance management can become trickier.  Businesses will need to consider how employees will demonstrate productivity and turn in their work product.  Managers are well advised to establish employee to-do lists, indicating the frequency of required reporting in, as well as having regular check-ins with employees and the team. Managers should also identify measurable productivity goals and establish priorities and deadlines. Finally, supervisors/managers should still conduct performance reviews on their employees, and organizations will need to determine how they will be conducted (Zoom? Phone? In-person?) and when they will be conducted. 

Home office space

Several issues need to be considered as employees carve out a space in their homes from which they will be working.  First, the employer needs to establish with the employee what space is considered the actual “office” so that workers’ compensation exposure can be limited in the case of an on-the-job accident or injury.  The whole house or apartment should not be considered the workspace!  

Next, the employer needs to identify what business-related expenses are being incurred by the employee.  South Dakota law (SDCL § 60-2-1) requires employers to indemnify employees for what they “expend or lose in direct consequence of the discharge of duties.”  Consider items such as computer, internet connection, printer, paper, office supplies, electricity, hardware/software, desk/chair/stand-up desk, and cellphone.  If the employer is providing items to the employee, it should take an inventory of those items.  Employers also need to consider IT and technology support, who will manage it, and what the procedures will be to ensure smooth operational flow.  


Managers need to be clear and up-front with employees about the manner and method of expected communication (e.g., email, Zoom call or phone call?) and what is the expected frequency.  Also, managers should let employees know if they will be required to come into the office or workplace and when.

Remote work agreement/policy

Employers should consider using a formal remote work agreement, which the employer and employee will both sign and date.  The advantage of this approach is that it will memorialize the understanding of the parties, details can be provided, and expectations established.  Employers should be careful not to promise an indefinite at-home work arrangement, but instead put a time limit on it (which can be extended, if needed).  Finally, employers should implement a telecommuting policy and procedure so that guidelines and rules are clearly established and communicated. 

Many recent research studies have concluded that remote working is here to stay for the long-term, and many employees desire to continue working remotely, at least part of the time.  Each business will need to evaluate the pros and cons of going remote (or continuing remote work arrangements) and whether it makes business sense to allow employees the opportunity and flexibility of working from home.  Employers will need to evaluate the job role being considered and the reasonable expectations for the job.  In sum, employers will need to balance flexibility and the potential upsides with needed employee productivity and performance, as well as costs and legal compliance considerations.  To be sure, remote working arrangements can continue to be a strategic advantage for certain businesses as the pandemic continues on into 2021, and beyond.       

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