Knowledge and Insights

Remote Working is Here to Stay – Things to Consider

The practice of “working from home” has been around for years. However, the pandemic forced more companies to adopt remote work on a scale never seen before, which turned out to be a hit with many employees. With the new remote-focused workforce here to stay, some of the risks companies are leaving themselves open to are: data theft, time theft, payroll fraud, and yes, even worker’s compensation fraud.

Employees are being inundated with new software and enhanced access to systems and files to keep them productive, but doing so leaves a business open to breaches of customer data and proprietary secrets and documents. The company loses the ability to control who has visual and physical access to an employee’s computer, be it in their home or from unsecured networks, such as a local coffee shop.

One of the benefits to remote work is flexibility. Do you need to run an errand, throw in a load of laundry, walk the dog? Great! But often times people underestimate how long a non-work task actually takes and either don’t make up enough time, or any at all. Being home allows for other distractions too, like increased cell phone and television use. Remote employees are on the honor system for meeting and accounting for their hours. While most employees are honest, some might simply log more hours than they spent working.

Payroll schemes such as ghost employees, timesheet fraud and advance fraud have been around a long time. In some companies, remote work makes monitoring payroll tasks more difficult. It’s harder to verify that paychecks were sent out on time, for the right amounts and to the right people. Separation of tasks such as writing and signing checks is also more difficult when employees work apart.

If you think worker’s compensation fraud can only happen at the office, think again. When an employee’s home is also their workplace, the lines can be blurred on what occurs “on the job”. At least two cases have been brought before the court where employees claimed to have tripped over their dogs with varying results (Sedgwick CMS v. Valcourt-Williams (Fla. App. 2019) and Sandberg v. JC Penney Co. (Or. Ct.2011)). The remote employee typically has the burden of proof in providing evidence that the injury is work related, meaning they have to show that they were acting in the interest of their employer at the time they were injured. Since remote work injuries are typically unwitnessed, the employee’s prior work history, integrity, and diligence in following company policies as well as the timeliness as to reporting any claims will be important.

Fraud costs your company money, time and impacts your reputation. So, what can be done to minimize fraud and its related risks? Create a remote work policy (requiring employee signature) that outlines expectations for remote work  including time management practices, time reporting policies, designated work areas, equipment used, and any other important details that will help remote workers understand what is expected of them during work hours. In part:

  • Require employees to work only on secure networks on company-issued computers. In other words, get that coffee to go and leave the ‘free Wi-Fi’ behind.
  • Provide annual security training to all employees. Make sure the training is relevant to the current atmosphere and interactive.
  • Specifically address time theft in your fraud policy, including a clear definition and consequences.
  • Ask managers to check in with employees throughout the day and/or offer flexible work hours so remote employees don’t feel the need to commit time theft if they have other commitments during a traditional workday.
  • Restrict access to payroll records, rotate financial tasks, reconcile balance sheets and payroll records more frequently, and require manager approval of all payroll records.
  • Check with your workers’ compensation and general liability brokers or carriers to ensure that all appropriate coverages apply to those employees who work from home.
  • Establish guidelines for a home office or remote workspace. Establishing guidelines for a home office, such as keeping a designated work area, and providing training on workstation setup and safety measures like ergonomics enables employers to help remote workers reduce chances of injury.
  • Obtain acknowledgments that each employee understands he or she must report work-related accidents immediately. The acknowledgment should provide consent to an investigation of the accident, including inspection of the premises on which the accident occurred.

If you suspect or become aware of potential employee fraud, consider speaking with a member of Mercadien’s Forensic and Litigation Support team. Our extensive experience working closely with counsel, analyzing data, and interviewing witnesses allows us to efficiently investigate and uncover critical facts and antidotal information that will help you understand the claims and coordinate next steps. For more information on the forensic and fraud investigation services we provide, please contact Frank Pina, CPA/CFF, CFE, CGMA, Managing Director at or 609-689-2319.

DISCLAIMER: This advisory resource is for general information purposes only. It does not constitute business or tax advice and may not be used and relied upon as a substitute for business or tax advice regarding a specific issue or problem. Advice should be obtained from a qualified accountant, tax practitioner or attorney licensed to practice in the jurisdiction where that advice is sought.