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The Risks of Working from Home

There is a strange phenomenon occurring in the U.S. economy. On the one hand, millions of Americans are out of work. On the other, many companies report a desire to hire but claim they cannot find qualified workers. The logical conclusion is that the skilled employees that businesses currently employ are more valuable than ever. And that makes talent retention imperative. After salary and title incentives, the one career perk that most people covet is flexibility.

Companies have recognized this and are increasingly allowing their employees to work from home. In addition to keeping employees content, there are many other benefits for companies. But there are also downsides that too few companies acknowledge, according to Paul Braun, managing director of Aon Global Risk Consulting's casualty claims. 

RM: What are the greatest risks facing companies that allow employees to work from home?

Paul Braun: There are OSHA requirements for working from home. I don't think that a lot of people understand that. If there is an injury, it can become a workers compensation claim, so you have that exposure. Obviously different states have different exposures, but the reality is that most injuries from home are going to be covered under your workers compensation policy.

But I think the biggest thing is setting up guidelines and criteria so that people understand the remote employee's working hours. Is there some flexibility in that or is it 9-to-5? And how are you attempting to manage the person from afar?

RM: Since most people who don't need to be on site generally will be working on computers rather than, say, building a brick wall, would most of the workers comp claims come from ergonomic injuries?

Braun: They are going to be focused on the ergonomics. So companies need to ask themselves: who is inspecting your home-based work environment? Does anyone know that you're not working on your kitchen table? OSHA is currently not doing any inspections of employees' home offices. And they're not necessarily holding the employer liable. But the end result is the same if there is an injury.

RM: It would likely be easier for employees to lie about injuries if they're not being supervised.

Braun: That's exactly one of the challenges. And there are related things that you wouldn't necessarily think about. If you're going to have somebody working from home, there are some questions that the employer has to ask: "To the best of your knowledge, is the space free of asbestos-containing materials?" Well, what if the employee is working out of an old basement?

Or, "Is the environment free of indoor air-quality problems?" "Is the space free of noise hazards?" "Is there a drinkable water supply?" "Are there lavatories available with hot and cold running water?" These are the kind of things one would assume, but there are so many unknowns related to the work environment. How about, if you go out for a sandwich on your lunch break, are you covered for an injury?

RM: I would think that a workers comp policy would have to cover that. For example, say you're living in Boston and it's winter. If you're on your way to work and you fall down your porch stairs because of ice, that wouldn't be a workers comp issue. But if you're going out for lunch while working from home and you slip on that same ice and break your leg, that probably is covered.

Braun: And another thing is compliance with the Americans with Disabilities Act. I'm just saying that there are a lot of things that people need to think of when they go down this path rather than simply saying "OK, you can work from home today." 

Because so many organizations are now doing it, putting some recommended guidelines in place is clearly something someone needs to think about. Each company needs to put a policy into place. 

It would be interesting to call people and ask them what percentage of their workforce is working from home and then ask them what their company policy is. You're probably going to get some blank stares. If I'm an underwriter, I certainly would like to know that [information]. How many employees are working from home and what are the company's policies for allowing people to work from home?

RM: Technology seems to be another hurdle for many companies. It's expensive if you have to equip so many people with laptops and other gadgets. And how secure does everything need to be? Do you need to encrypt everything? What happens if the employee goes to Starbucks and has his computer stolen while he goes to the bathroom?

Braun: Absolutely. Just having company information in somebody's house is a risk. Years ago, it used to be a real issue if someone was taking company information home. Some companies had policies prohibiting it. Well, you're doing a lot more than that right now when you allow people to work from home. You're giving unsupervised employees direct access to company networks.

RM: Overall, when it comes to working remotely, are companies properly weighing the upside vs. the risk?

Braun: There are obviously a lot of advantages. I don't think anyone has any issues with the advantages. You save office space. You can retain key employees because they don't have to waste their day commuting for two hours. You get a better resource. There are major green benefits. 

But there is the downside, too. And it must be addressed. 

Risk Management Magazine and Risk Management Monitor. Copyright 2022 Risk and Insurance Management Society, Inc. All rights reserved.National Law Review, Volume I, Number 333

About this Author

Senior Editor

Jared Wade is the senior editor of Risk Management magazine and the Risk Management Monitor blog.