Dr. Jekyll and Mr. Hybrid: Navigating the New Work Environment

While some industries have already returned to the office, other employers are considering hybrid work schedules as part of their return-to-the-office plans. In some cases, employees can opt in to such a schedule at their own volition, while other employers require that employees be present in the office on certain days or for a certain percentage of the time.

Here are some factors that employers in the United States should keep in mind as they continue to welcome employees back into the workplace:

Masks.  The Centers for Disease Control and Prevention (CDC) recently issued renewed guidance suggesting that even fully vaccinated employees resume wearing masks in the workplace. State and local governments have issued renewed directives as well. The Occupational Safety and Health Administration (OSHA) continues to recommend social distancing in the workplace, even with masks or facial coverings.

Employers should be mindful of employee health conditions that may require an accommodation under the Americans with Disabilities Act (ADA) if the employee cannot wear a mask or facial covering. Employers should continue to monitor changes in government and agency guidance and requirements in jurisdictions where they have employees.

Sick leave.  Returning to the office may mean that more employees require sick leave for themselves or to care for their family members as a result of contracting Covid-19, or for other reasons. The American Rescue Plan Act, which went into effect on March 1, extended paid sick time and family leave credits that were originally provided in the Families First Coronavirus Response Act and were set to expire on March 31.

The American Rescue Plan Act allows employers with fewer than 500 employees to claim up to $12,000 (an increase from the previous limit of $10,000) for eligible sick and family leave provided to each eligible employee in a tax year. The credit can be claimed for time necessary to receive and recover from the Covid-19 vaccine and may be used if employees contract Covid (including the delta variant). After March 31, the credit will be structured as a refundable tax credit against the Medicare payroll tax.

Expense reimbursement.  Hybrid work schedules allow employees to spend part of the week in the workplace and to work from home for the balance of the week. In a number of jurisdictions, such as California and Illinois, employers are required by state law to reimburse employees for at least some work-related expenses that are necessary for conducting the employer’s business (and which benefit the employer), such as cellphone costs, internet costs, and office supplies. Even in jurisdictions where reimbursement is not mandated by law, employer best practices include repaying employees for reasonable costs that reflect the mandatory business usage of equipment in the employee’s home.

Where working from home is optional, however, employers may not be required to reimburse employees for these expenses. Reimbursement requirements might pose a burden for employers whose equipment costs are duplicated in the hybrid work model.

Regardless, employers should understand the reimbursement requirements in the jurisdictions where they have employees and decide how they want to address employee expenses as part of a hybrid work schedule. Then, employers should provide employees with a detailed policy explaining which expenses will be reimbursed, under what circumstances, for what amounts, and reporting requirements for reimbursement. As an alternative, employers may want to provide a stipend to compensate employees for these costs, or some portion thereof.

Reimbursable commute.  It may seem counterintuitive to reimburse an employee for what seems to be the employee’s commute, but that could happen. When an employee travels from home to the work location, the commuting time is usually not reimbursable under employer expense policies, and state laws that require business expense reimbursement do not extend to commuting costs. By contrast, when employees travel from one work location to another work location, the time or mileage is generally reimbursable under company polices and state laws that require business expense reimbursement. Working from home can change this dynamic.

When employers allow employees to work from home, they should decide whether and how often the employee may be required to come to the office. When providing offer letters, employment agreements, remote work agreements, or the like, employers—particularly where the plan is for a hybrid work schedule—should consider what work location will actually be the employee’s primary work location. If the home location is designated as the primary work location, asking the employee to come to a different physical work location may create a reimbursable travel expense under an employer policy or even state law.

Taxable fringe benefits.  Employers may decide to provide employees working from home with perks like food delivery for meetings or company events. As a general rule, these types of fringe benefits will be considered taxable income. Under some circumstances, however, there may be a position that food provided for a business meeting may be tax-free, even when delivered to the employee’s home.

Similarly, although a payment for an employee’s commute from home to the office would generally be taxable to the employee, there could be work-from-home situations where the employee’s tax home is their residence, resulting in tax-free reimbursements of travel expenses. Employers should consult their tax advisers when dealing with these types of benefits and reimbursements.

Dependent care flexible spending account changes.  Employees who work hybrid schedules may have changing child care needs. Employers who provided on-site child care may consider implementing dependent care flexible spending account programs for employees, if they do not have these programs already. In addition, under last year’s Consolidated Appropriations Act, employers who already offer dependent care flexible spending accounts to their employees may allow employees to change their election in 2021 for any reason, provided that the employer’s cafeteria plan is amended to allow such changes.

Security and data protection concerns.  As employees go back and forth between the workplace and their home, there is an increased risk that they will be accompanied by confidential information. Therefore, it is important that employers put the requisite security safeguards in place to ensure that any confidential data is protected. Such safeguards may be fashioned in various forms, such as cybersecurity measures, restrictions on what kind of paperwork can be taken out of the office, or telecommunication and data transfer policies.

Privacy concerns.  Against the backdrop of the pandemic, employee health and safety have been spotlighted in an unprecedented manner. Employers have supplemented hybrid work models with various initiatives, including an increased focus on mandatory vaccinations, mandatory testing for nonvaccinated individuals, and interactive applications that allow for self-certification of fitness and exposure to infections.

However, as employers gather such data, they should also put in place privacy measures to both comply with state privacy law requirements and avoid any residual risks such as media fallout. For example, the California Consumer Privacy Act (CCPA), if applicable, requires notice of the data collection. New York mandates cybersecurity measures to protect such data. Therefore, any efforts by employers to tighten workplace safety will have to be colored by consideration of such privacy legislation.

Employers may decide that allowing their employees the flexibility to choose whether to work in the workplace or from home may be the most productive return-to-work plan while the pandemic lingers and beyond. They should be continue to be vigilant to changing workplace requirements, however, and unexpected implications of the new arrangements. Appropriate policies and training for employees are a best practice to implement these new strategies.

Michael Hepburn is a partner at Eversheds Sutherland (US) in Washington, D.C., and he counsels clients on a broad range of compensation, employment, and benefits issues. Experienced in employee benefits, executive compensation, and employment law, he advises clients on the design, administration, and termination of retirement and welfare plans.

Bonnie Burke is a staff attorney at the firm in Atlanta, and concentrates her practice on federal, state, and local employment laws; wage-and-hour matters; employee classification; workplace policies, including remote working, return-to-work considerations, hiring, and termination issues; cross-border employment arrangements; assessment of litigation and regulatory risk; employee health and safety matters; furlough and layoff matters; and employment issues related to mergers, acquisitions, and other business transactions.

Deepa Menon is an associate at the firm in Washington, D.C. She focuses her practice on federal, state, and local employment laws, cross-border employment arrangements, employee privacy matters, employment issues related to mergers, and many other topics.

Laura Taylor is an associate in the firm’s Washington, D.C. office. She focuses her practice on employee benefits and executive compensation matters.

From: Corporate Counsel