Work has been transformed in 2020 by the COVID-19 pandemic, and businesses are running to catch up. Many in our survey plan to increase their recruitment of individuals with technology skills, and some will want to do that on a flexible basis. Here, we look at the legal hazards of hiring contingent workers and the risks of new ways of working.

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Q. Which of the following, if any, had you executed in the two years prior to COVID-19 (2018-2019)?

Q. Which are you planning to execute in the next two years?

Misclassify employees at your peril

If you use contingent workers such as freelancers, independent contractors and consultants and tax authorities and regulators deem them to be employees, you can be forced to pay employment-related taxes owed in addition to penalties.

And contingent workers might independently or collectively seek rights and benefits if they believe they should be classified as employees.

This risk is particularly complex for companies operating in multiple countries, because the law varies across jurisdictions. Californians, for instance, voted in November 2020 that freelance workers could continue to be classed as independent contractors rather than employees. But regulators in other jurisdictions may apply different rules.

A remote workforce can put information at risk

If you hire employees to work on sensitive technology projects, your confidential information could go with them if they move on to a rival company.

Confidentiality risks like this need to be especially closely managed in jurisdictions and industries where it is common for workers to use personal devices or non-work systems to communicate. Today, the risk is higher across the board because of the shift to remote working caused by the COVID-19 pandemic.

Put enforceable non-compete clauses and confidential information protections in place when employees are recruited to work on sensitive technology projects. These are now more difficult to enforce because employees are now more likely to be working from a jurisdiction that is not covered in the clause. So be specific about where non-compete clauses can be enforced and use language that ensures enforceability in a number of jurisdictions.

“Non-competes are getting more difficult and expensive to enforce in the U.S. And the move to remote working will make this even more difficult.”

Michael DeLarco | Partner, Hogan Lovells

Monitoring productivity: proceed with caution

The shift to remote working means more employers are deploying technology that evaluates employee activity and productivity.

But if they do not carefully consider which data they track and how it is used and stored, they could be at risk of employee claims and investigations by privacy regulators. In certain European markets, businesses must work very closely with works councils to clarify which data is tracked and what it is being used for.

“Employee monitoring is a hot topic at the moment, and advances in technology mean that employers can track more aspects of employee behavior. Employers need to think carefully about which features they switch on, which data they keep, and what they use it for. There’s a risk of an employee claim or fine from a regulator if they cannot justify what they are doing.”

Stefan Martin | Partner, Hogan Lovells


The “bring your own device” threat

Many companies now ask employees to use their personal devices for work. “Bring your own device” (BYOD) saves costs, but it also raises important legal issues.

Even companies that do not encourage BYOD may find employees using non-work systems to communicate with each other and with customers. In some markets, employees communicate through apps such as WeChat and WhatsApp.

Help your employees understand how and when to use non-work systems. And if customers are driving it, provide clear guidance on how employees should respond.

“As a South Korean company that is extremely protective of our IP, we have to take extra precautions about the devices employees use and their connectivity. Employees simply cannot access work systems remotely without special authorization, and even within the office you cannot use the internet without special permission or download anything to a thumb drive, for example. Our focus on security adds an extra layer of complexity, but it is necessary.”

David Delman | Executive Vice President, Head of International Legal & Commercial Management, Samsung Engineering

Where local law permits it, privacy policies could allow personal devices used for work purposes to be monitored for activity that might indicate fraud and accessed in the event of an investigation. But in many jurisdictions it is not possible to require employees to hand over personal devices for investigations.

The risk here is clear, and more and more clients are coming to us for help with recovering work-related communications from personal devices. There is a balance to strike here between the risks and the benefits.


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