As employers embrace a hybrid work environment and remote workforce, it can expose them to different liabilities and risks. From employee injuries to business property damage, it’s essential that companies have the right type of protection and understand how to best manage a remote workforce.
The COVID-19 pandemic proved to employers that a remote workforce can work. It showed that there are employee benefits of working from home, like increased productivity and more work-life balance. And for employers, they learned their business operations can continue in a virtual environment.
“Workers have largely shown that their productivity can continue and business operations are sustainable in a remote work environment,” said Heather Savino, underwriting officer and industry lead at The Hartford. “While there are employee benefits of working from home, it also introduces new considerations that warrant insurance coverage reviews.”
Whether you have a fully remote workforce or a hybrid workplace, there are many risk management factors to consider as employees work from home.
What Are the Benefits of Remote Work?
There are many employer and employee benefits of working from home. For workers, it allows for a more flexible work schedule and can result in better work-life balance. In fact, a study found that the three main advantages to a remote workforce for employees was:1
- Work-life balance
- Improved work efficiency
- Greater work control
There are also clear benefits of remote work for employers. Productivity and performance typically increase among a company’s workforce.2 Other benefits include:3
- Better retention among workers
- Profitability and savings
- Higher engagement
Early concerns with working remotely had to do with productivity, but they were largely unfounded according to Andrew Zarkowsky, technology industry practice lead at The Hartford.
“Giving employees the opportunity to work remotely can help businesses retain talent,” Zarkowsky said. “It can also increase the pool of candidates for job openings since employers can search anywhere. This is critical for industries like technology and insurance that are facing a talent shortage.”
Managing Remote Workers With a Work-From-Home Policy
Managing remote workers can get difficult. That’s why a work from home policy is essential. Key areas that you may want to include in your company’s policy are:
- Specific work hours
- Emphasizing the need to take regular breaks
- Adhering to safety procedures
- Technology and services to help keep in touch
Every business is unique, so there’s not a one-size-fits-all work from home policy. If you don’t have a policy yet, a good place to start is to have a conversation with your employees. You’ll be able to see if they’re dealing with any issues while working remotely and get ideas of what to include in your policy.
Creating a Productive and Safe Work Environment for a Remote Workforce
How Much Does It Cost To Create a Remote Workforce?
Although a remote workforce brings many benefits, it also introduces new costs and safety concerns. Employers should plan for increased costs for:
- Short-term rentals, co-working spaces and expediting lease arrangements
- Additional IT staffing to enable transition to networks
- Moving, designing and installation expenses to set-up temporary offices
While prices vary by location, we estimate it costs around $10,000 and $15,000 to set up an employee in a new space.
How Do Employers Create a Safe Workplace for Remote Work?
When it comes to employee safety, remote work can introduce uncertainty. In the office, businesses can ensure workers are using a proper ergonomic setup. Creating a work-from-home safety survey can help employees make sure they have an ergonomic workspace. A proper home workspace can help keep employees safe and reduce their risk of a repetitive stress injury, like carpal tunnel syndrome.
Some employees may not have the opportunity to create a formal workspace. If that’s the case, they may choose to work from an alternate area, like a kitchen table or couch. If they do this frequently, their risk of injury increases. That’s why it’s essential to proactively train employees and make sure they have tips for working ergonomically in different situations. Esto puede incluir:
- Standing up periodically
- Taking regular breaks throughout the workday
- Following the 20/20/20 rule, where a person looks away every 20 minutes at an object 20 feet away for a full 20 seconds to prevent eye strain
Workers’ Compensation Insurance and a Remote Workforce
Employees who work from home still have the same workers’ compensation insurance (WC insurance) benefits as if they worked primarily in the office. This means they can qualify for benefits if they get hurt or sick from their job while working remotely.
Un 2010 court case ruled in favor of an employee who tripped on her dog while getting fabric samples from her garage. She received WC insurance benefits because she was in the process of working for her employer when she got hurt.
Past workers’ compensation cases have shown that laws tend to see home offices no differently than office buildings or storefronts. Your agent or broker can help make sure your business has the right level of workers’ compensation coverage to cover your business’ remote workforce. Be aware that this becomes more complex for businesses with employees located around the country because laws and requirements vary by state.
Because of the complexity, it’s important to partner with an experienced insurance company.
“At The Hartford, we have claims representatives, nurse case managers, legal counsel and auditors around the country who understand local laws and regulations,” Savino noted. “As a top tier carrier for workers’ compensation, we can help navigate this unique landscape.”
Classifying Remote Workers Correctly
It’s important for employers to classify their remote workers correctly. Different codes and states have different rates. These guidelines can help:
- If an employee works at a home more than 50% of the week, they should be coded as 8871 in their work-from-home state.**
- If an employee works in the office more than 50% of the week, they likely should be coded according to their in-office responsibilities, such as 8810, 8723, 8743 or a similar office code in the state where their office is located.
Work with your agent or broker to make sure you’re using the correct classification for your remote workforce.
Pay Structure, Monopolistic States and Other Requirements for a Remote Workforce
As employers embraced a remote workforce, it wasn’t uncommon for an employee’s virtual office to be in a different location than their in-office setting. It’s important for employers to make sure their payroll structure is accurate for those employees. For example, an employee working in Boston who is now living and working from their home in New Hampshire may need to have their payroll shifted to New Hampshire.
Businesses in monopolistic states face a different situation because these states view coverage differently. By rule of thumb, if you have someone working remote in a monopolistic state, you may need a standalone policy in that state. There are four monopolistic states:
- Dakota del Norte
It’s also essential that employees know about their employer’s workers’ compensation program and benefits that are available to them. Many states require businesses to post workers’ compensation notices. These give employees important information about who they should call if they get hurt and what their rights are. Post workers’ compensation notices on the internet and email them to all remote workers so they’re aware.
Creating More Collaboration in a Remote Workforce
Zarkowsky said he believes that businesses may want to bring their employees back to the office to help foster innovation. That’s why it’s important to encourage collaboration in a remote workforce, but it can be difficult to do so. In fact, one of the disadvantages to remote work for employees is inadequate tools and equipment.4
“Reducing affinity distance between remote workers is critical for a company’s success,” Zarkowsky explained. “Companies can use collaboration tools and encourage in-person meetings between teams, but this can expose a business to liability risks. So, businesses need to think about the pros and cons of each approach they take.”
Technology can make it easier for remote employees to work with each other, but there are risks involved. Whether it’s video conferencing software or cloud-based programs, companies that rely on this technology can face a significant business interruption risk if it doesn’t work properly.
Asking employees to travel to meet in person can also put companies at risk. That’s why it’s important to review insurance coverages and policies to make sure employees have protection. Companies can also ask for contracts and certificates of insurance from property owners to help with risk transfer.
Keep Proprietary Data and Confidential Information Safe With a Remote Workforce
Businesses who have employees working remotely across the country could be at an increased risk for the mishandling of proprietary data and confidential information. Make sure you have a privacy and information protection policy and training for your employees.
Consider the following tips for your employees to help maintain network security and protect company information while working remotely:
- Unplug Alexa/Google or any other device that can “listen in” while you’re on Skype or Microsoft Teams calls. This will help avoid the potential for sensitive company information (e.g., account numbers, company plans, etc.) to be compromised.
- Do not forward emails that contain attachments, highly restricted or company confidential content to personal email accounts. This can potentially expose your company to the unintentional disclosure of this information.
- Avoid reading, talking about or leaving confidential or highly restricted company information in any unsecured work-from-home area.
- Lock or logoff and secure your work device when not in use.
- Shred documents with sensitive information as appropriate.
Insurance Considerations for a Remote Workforce
Protecting Business Property With a Remote Workforce
While your employees are working from home, it’s likely they’re using company-owned:
- Docking stations
- Telecom equipment
Make sure your business has the right large business insurance coverage in place to help protect company property in a remote workforce. This type of equipment is your business’ property, so it may have coverage under your large business property insurance policy. It’s a good idea to check your policy’s details because there may be coverage limits.
Reviewing Business Income Coverage
Business income insurance is one of the essential coverages that many traditional brick-and-mortar businesses need. The same is true for businesses with a remote workforce. If an employee loses data or a server in a corporate building gets damaged, it can have devastating impacts on your company. Some things to consider include:
- Lost or damaged electronic data
- Computer server interruptions
- Cloud computing interruption
- Utility service disruptions
It’s important to remember that shifting to a remote workforce may affect your business’ income coverage. For example, coverage limits may be lower if 80% to 100% of employees work from home. Don’t forget to think about the operational changes that remote work can bring. If a covered loss were to impact a business’ operations, restoration can take longer in a remote work environment. So, it’s essential for businesses to work with their agent or broker to determine what limit amount is appropriate for their company.
Commercial Auto Insurance Policy Changes
Making changes to a commercial auto insurance policy can have a big impact on how coverage works. Let’s say a business shifts from owned or hired auto usage to a non-owned auto exposure. This can put them at more risk on the road. Por ejemplo:
- Does the employee have the right insurance coverage and limits?
- Has the vehicle been maintained and is it safe to drive?
- Do you know if any of your employees have poor driving records?
If the employee gets in an accident while driving for business, your company could be held liable. Allowing employees with poor driving records to drive in the course of employment could increase your liability.
Since the start of the pandemic, travel behaviors have changed significantly. Employees may have given up their car and personal insurance as they embrace alternative forms of transportation. As employees begin to travel more, you also need to reassess your business’:
- Personal auto insurance requirements
- Rental car company contracts
- Policies for ride sharing/hailing and use of alternate mobile (scooter) companies
Working with an agent or broker can help ensure you have the right coverage for your remote workforce.
Protecting Idle Properties as More Employees Work From Home
The pandemic has had a big impact on how a business’ real estate gets used. If employers have shifted to a hybrid work environment, buildings may be less occupied or vacant than they were prior to the pandemic. If this happened, it’s important to realize that businesses may have to continue their lease agreement for a location.
It’s also a good idea to create a vacant property management process. This can help reduce a business’ risk for losses due to:
- Water damage
- Daños a la propiedad
Getting Used to the New Normal
It’s clear that the pandemic has had lasting impacts on the workforce and will require employers and employees to get used to the new normal. Some businesses have moved away from the traditional model of going into an office full time after the pandemic. Whatever decision you make for your company and employees, it’s essential that you do your due diligence.
“The pandemic will be the biggest catalyst to change in the workforce. Businesses moving towards a hybrid work environment or a full-time remote workforce need to have a thorough strategy in place,” Savino explained. “It’ll require a multi-faceted approach to ensure employees are safe – and that the business can operate successfully.”
** 8871 is not available in CA, DE, MA, MI, MN, MT, NJ, OR, PA, TX, OR, WI
1,4 U.S. National Library of Medicine National Institutes of Health, “Six Key Advantages and Disadvantages of Working From home in Europe During COVID-19”
2,3 Forbes, “5 Proven Benefits of Remote Work for Companies”
This article provides general information, and should not be construed as specific legal, HR, financial, insurance, tax or accounting advice. As with all matters of a legal or human resources nature, you should consult with your own legal counsel and human resources professionals. The Hartford shall not be liable for any direct, indirect, special, consequential, incidental, punitive or exemplary damages in connection with the use by you or anyone of the information provided herein.
Ciertas coberturas varían según el estado y es posible que no estén disponibles para todas las empresas. All Hartford coverages and services described on this page may be offered by one or more of the property and casualty insurance company subsidiaries of The Hartford Financial Services Group, Inc. In TX, this insurance is written by Sentinel Insurance Company, Ltd., Hartford Casualty Insurance Company, Hartford Lloyd’s Insurance Company, Property and Casualty Insurance Company of Hartford, Hartford Underwriters Insurance Company, Twin City Fire Insurance Company, Hartford Accident and Indemnity Company and Hartford Fire Insurance Company. En Arizona, Nuevo Hampshire, Washington y California, el seguro es redactado por Hartford Accident and Indemnity Company, Hartford Casualty Insurance Company, Hartford Fire Insurance Company, Hartford Insurance Company of Illinois, Hartford Insurance Company of the Midwest, Hartford Lloyd’s Insurance Company, Hartford Underwriters Insurance Company, Maxum Casualty Insurance Company, Maxum Indemnity Company, Navigators Insurance Company, Navigators Specialty Insurance Company, Pacific Insurance Company, Property and Casualty Insurance Company of Hartford, Sentinel Insurance Company, Ltd., Trumbull Insurance Company y Twin City Fire Insurance Company. The Hartford® is The Hartford Financial Services Group, Inc. and its subsidiaries, including Hartford Fire Insurance Company.