LCAs and Home-Based Employees (“Teleworkers”)

Summary: If the employee works from home for a short period (less than 30 days) then an Labor Condition Application (LCA) is probably not required. Also if the employee is getting paid but not actually providing any services (on the bench) an LCA is probably not required for the home location. However, if these two situations do not apply, teleworkers should be covered by an LCA for the place of residence, and receive the rate of pay stated in that LCA for that place of employment.

For many purposes, the Department of Labor considers home-based employment (“telework”) as an employee benefit.[1] In effect, it is the employee’s choice and benefit to work for home. Consequently, an employer permitting telework is not burdened with additional labor rules, such as OSHA compliance, as a result of employee choice to work from home. The looser standards for teleworkers apply even if work from home is imposed by the employer, rather than the employee choice. In fact, in many cases, an employer may impose home-office expenses on the employee, without reimbursement.[2]

How does a telework arrangement affect employee compensation? If telework is being provided as a reasonable accommodation for a qualified individual with a disability, or if required by a union or employment contract, then the employer must pay the same hourly rate or salary, whether working at home or at the office. If these do not apply, the next level of inquiry for standards governing pay for the teleworker is the Fair Labor Standards Act, which requires employers to pay of the hours worked and to pay at least the minimum wage.

In the FAQs on telework, the DOL website states: “If the Service Contract Act (SCA) or state or local laws regulating the payment of wages also apply, nothing in the FLSA or its regulations or interpretations overrides or nullifies any higher standards provided by such other laws or authority.”[3]

The laws and authorities surrounding the Labor Condition Application (LCA) certainly provide a higher wage standard than the FLSA. An employer hiring a worker under an LCA must pay the higher of either the company’s internal average rate of pay of the position (the “LCA actual wage”) or the industry average rate of pay (the “LCA prevailing wage”). In every case, this is considerably higher than the federal minimum wage required by the FLSA.  And there is the possibility that an employer and employee could collude to create a home-based place of employment in order to pay a lower wage than the prevailing wage covering the place of residence. For example, the company headquarters may be located in a low prevailing wage area but the employee may reside in a high wage area.

The DOL rules require an LCA for the job site and job site is defined as the location where the employee is present. It is not where the services are received. For LCA purposes, it is likely that the DOL will say the place of employment for on-line services, is the place where the employee is physically present, not the client site nor employer’s headquarters.

If the employee works from home for a short period (less than 30 days) then an LCA is probably not required. Also if the employee is getting paid but not actually providing any services (on the bench) an LCA is probably not required for the home location. However, if these two situations do not apply, teleworkers should be covered by an LCA for the place of residence, and receive the rate of pay stated in that LCA for that place of employment.