Key Considerations for California Employers When Drafting a Remote Work Agreement

More than two years have passed since the start of the pandemic, and many workers continue to work from home in some capacity. In fact, companies are offering remote positions as a hiring incentive to increase their job candidate pools. Before agreeing to remote work arrangements with new hires or current employees, especially those who are hourly and nonexempt, companies may want to consider certain factors to ensure that the arrangements will be feasible.

These factors may include whether an employee will be working in a location where the company can ensure compliance with applicable state and local employment laws, whether the employee can maintain the same quality and quantity of work product while working remotely, and whether the employee can obtain access to company data and maintain the confidentiality of such information.

California employers that conclude a remote work arrangement is viable may want to keep the following ten questions in mind when preparing an individualized, remote work agreement.

1. Where will the remote employee be working?

It can be a significant administrative burden for a company to ensure compliance with state and local laws where remote employees reside and work if the laws differ from those of the company’s location. Different employment laws may apply, including state and local minimum wage ordinances, sick leave and sick pay laws, predictive scheduling laws, and other paid and unpaid leave laws. To tackle the compliance challenges remote employees’ relocation requests can pose from the start, employers might consider adopting an approval process that requires a careful review of the laws applicable to the primary home address where the remote employee will be working to confirm that the company can feasibly manage the employment relationship in compliance with applicable local laws.

2. Has the employee obtained prior written approval for any change in the remote location?

Consider having employees request, in writing, to work remotely or relocate to a different state or city before they commence any work in that new location. Employers may want to remind employees in writing that the company retains the discretion to approve or reject any requests to move to a different state or city and that their employment remains at will.

3. Does the remote employee’s home office qualify as the employee’s principal place of business?

To help ensure that expense reimbursements are not taxable income, employers may want to consider adding language to the remote work agreement requiring that the employee confirm and represent that he or she is exclusively and regularly using a separate, designated area of his or her home or remote work location for work activities. Also, the remote work agreement could require the employee confirm that he or she has no other fixed location where the employee conducts work for the company.

4. How will the remote employee’s job performance be evaluated?

Employers may also want to consider addressing performance expectations in the remote work agreement. For instance, the agreement might include a provision clarifying that the remote employee will be expected to maintain the same work product requirements and performance standards as if the employee was working in the office, including duties, responsibilities, and amount of time worked.

5. What discretion will the company maintain about the remote work arrangement?

The company may want to consider including a provision in the remote work agreement that clarifies that the company retains ultimate discretion as to the implementation and continuation of the arrangement. This may include language that the remote worker’s physical presence at the company’s location will be required on occasion to maintain direct client and customer engagement, complete projects, and attend other meetings.

6. What are the remote worker’s timekeeping requirements?

Remote work arrangements can pose unique wage and hour compliance issues, including the potentially higher risk of nonexempt remote employees working off the clock. To help mitigate that risk, employers may want to consider adding language to remote work agreements that instructs remote workers to accurately record all of their time worked—to the minute—and to never work off the clock. Additionally, employers may want to consider directing employees to immediately notify the human resources department if, at any time, they believe that they did not record all time worked.

7. What are the meal and rest break policies for remote employees?

Since 2021, the California Supreme Court issued three decisions pertaining to the meal and rest breaks required under state law that significantly raised the liability risks for companies that fail to document their compliance with these rules. If the timekeeping records show discrepancies in meal periods (e.g., short, late, or missed breaks) then there is a rebuttable presumption of a violation. For each meal and rest break violation, the employer must pay nonexempt employees a premium wage at the regular rate of pay (the base hourly rate) and the premium payment must be reported on the wage statement like all other “wages” earned. In light of this case law, companies may want to consider adding language to remote work agreements requiring employees to take their meal and rest breaks and providing reporting channels if work duties prevent them from taking those breaks.

8. What expenses will be necessary for remote workers, and thus reimbursed?

Employers might consider providing a detailed list of company-provided equipment and supplies that the remote worker will need to perform the essential functions of the job, along with expenses that are not reimbursable. Employers may also want to consider designating a human resources representative to manage the expense reimbursement program, including reimbursement requests, payments, and resolving any disputes.

9. What is the remote employee’s obligation to protect company equipment?

Employers that provide company equipment and devices (like laptops and smartphones) may want to remind employees that such equipment is company property and that company equipment and devices must be preserved in a secure location and protected from damage and destruction. Employers might also consider reminding employees that they have no expectation of privacy in their communications and use of company property.

10. What will be the remote employee’s obligation to protect company information?

A company’s confidential, proprietary, and trade secret information is stored on its systems and devices—and likely on the devices of remote employees. Employers may want to expressly require remote employees to take steps to ensure that there is no improper use or disclosure of company trade secrets or proprietary information and that their devices will remain secure from access by people not employed by the company. The agreement might also provide the name and contact information of the company’s IT professional who is responsible for ensuring that remote workers have functional equipment that adequately restricts access to company systems.

Having a detailed written agreement that covers the terms and conditions for each and every remote work arrangement can help ensure that each arrangement promotes employee engagement and retention, while also maintaining high performance standards for the company.

Reprinted with permission from the June 7, 2022, issue of The Recorder. © 2022 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.