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What You Need to Know about Hiring Virtual Workers Small Business

Posted by Darryl V. Pratt | Jun 27, 2019 | 0 Comments

As a small business owner, you may be considering using virtual workers to expand your workforce. A virtual worker is an employee who uses technology to complete their duties outside of the traditional workplace setting.

Many businesses today find this workforce model quite attractive for several reasons. For one, having a virtual business work model allows employers to reduce the cost of housing all their workers in a physical location, thereby drastically reducing overhead. Additionally, employers find that hiring virtual workers allows them to expand their search for talent beyond geographic limitations. This means that an employer can choose from a wide range of potential prospects and select the individual(s) who are best suited for the position, regardless of the applicants' physical locations.

Another benefit of a virtual workforce is the flexibility provided to employees. Many virtual workers and those hoping to become virtual workers express great pleasure in the ability to work from home or in other non-traditional environments, like a coffee shop. Certain studies also suggest that this flexibility results in increased productivity amongst employees.

Nevertheless, remember that virtual workers are workers first. Many of the same regulations that apply to regular workers apply to virtual workers too. Moreover, there are a few additional risks that arise when a business owner adopts a virtual workforce. Here are a few essential considerations to keep in mind when hiring virtual workers for your business.

  1. Wages & Hours. As an employer, you are responsible for complying with the federal and state laws that regulate wages and hours. The most prominent federal regulation in this area is the Fair Labor Standards Act (FLSA). It dictates matters pertaining to a host of issues--the federal minimum wage, payment for overtime, and rules regarding child labor to name a few. Failure to comply with these regulations could expose you to increased legal liability and severe      fines.
  2. Classification as an Employee or Independent Contractor. As with regular workers, employers should be cautious about how they classify workers. When setting up your workforce, pay attention to how much autonomy your workers really have.  How much control you exercise over your workers is still very relevant to this determination, even if the workers are not in a centralized location.  Ensure that your payroll systems reflect the proper classifications.
  3. Workplace Safety & Workers Compensation. Having a virtual workforce does not excuse employers from complying with regulations regarding workplace safety. Although an employer may be unable to exercise as much control over a virtual worker's physical environment, an employer should still take steps to ensure that employees understand safety expectations. Additionally, employers should create and communicate policies that support workplace safety.
  4. Privacy and Security. The protection and security of private data are always of great importance, however, in virtual workforces where sensitive information is likely to be shared over wireless networks, it must become a top priority. Employers are increasingly subject to rules that govern the collection and distribution of data. Those who fail to create and enforce policies regarding how technology is used and how information is shared will violate such rules      and face significant litigation and compliance risks. 
  5. State and Local Regulations.  For the most part, state law is aligned with the regulations mentioned above, but there are many instances where state law imposes stricter requirements. If your workforce is spread out over many states, you will need to determine which specific jurisdictions your business is subject to, and follow those laws. States like Texas, Massachusetts and California are  known for enacting laws that favor workers and usually have higher standards for employers. As a result of these deviations, it is of critical importance to really understand the state laws you're subject to as the employer of a virtual worker.

The use of a well-developed employee handbook is helpful in any work environment but can be especially valuable in a virtual one. A company handbook can document and explain the fundamental policies described as they pertain to your workforce regardless of where virtual workers complete their duties. 

We Are Here to Help

If you are on the verge of hiring virtual employees and would like assistance navigating the various rules or developing a company handbook, we are here to help. We can keep you informed and advise you about the best method to legally build your workforce. To set up a consultation with a Business Law attorney at Pratt Law Group, call our office today at (972) 712-1515 today.

About the Author

Darryl V. Pratt

With over twenty (20) of experience as a dual-licensed Attorney and Certified Public Accountant, Darryl V. Pratt has practiced law in all areas of corporate and business law, non-profit law, estate planning, probate, guardianship, asset protection planning, bankruptcy (Chapters 7, 13 and 11), real estate, and taxation.

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