Audit urges Palo Alto City Hall to tighten up policies for its remote workers

When Palo Alto adopted policies three years ago to allow city employees to work from home, its primary goal was public-health safety rather than convenience.

Like other cities and private companies, the city switched to remote working for much of the pandemic before ultimately transitioning to the current “hybrid” model that requires those participating to work on-site twice a week. Today, however, the policy is viewed less as a health measure and more as a perk — a way to make working for the city more attractive to current and would-be employees.

But a recent review by the city’s auditing firm, Baker Tilly, suggests that the remote-work policy could use some tightening up. The audit, which the City Council’s Policy and Services Committee discussed and approved on Wednesday night, April 26, recommends that Palo Alto establish clearer policies and guidelines for what it expects of remote workers. This includes a three-month trial period for employees switching to remote work with regular check-ins; a formal agreement with workers that specifies, among other items, that they are responsible for child care; and creating formal criteria to determine whether positions are eligible for remote work.

The proposals have received some pushback from the city’s Human Resources Department. In its response, city management stated that it only “partially agreed” with Baker Tilly’s proposals. It objected to the three-month period, which it characterized as “probation,” and noted that hybrid work is an option that “may offer flexibility candidates are seeking.”

“One of the goals is recruitment and attracting talent,” Human Resources Director Sandra Blanch told the committee Wednesday. “So we didn’t want to exclude probationary employees or new employees from the ability to work a hybrid schedule. That’s why we were excluding that section of that recommendation.”

Despite the growing popularity of remote work in the private sector, most Palo Alto government employees still show up to work in person on most days. Blanch said that on any given weekday, between 80% and 90% of employees are working on-site. And while the city hasn’t conducted a full-scale analysis comparing employee performance from before the COVID-19 pandemic to performance today, Blanch said the city did see an increase in performance expectations as employees switched to remote work.

Palo Alto’s current policy leaves it up to department directors to consider employees’ requests for a hybrid work schedule. While this discretionary approach allows for flexibility within each department, Baker Tilly concluded that the current policy “leaves the City susceptible to holding employees accountable for attendance and performance issues, City property inventory discrepancies, and dependent care responsibilities.”

Similarly, Baker Tilly concluded that the form that employees are currently required to sign when they enter a remote-work agreement leaves the city susceptible to “unclear accountability standards with regard to City property and policy, and an inability to modify the remote work agreement as needed.”

The auditor proposed adding language in the form specifying that telework “is not a substitute for dependent care” and requiring an employee to “report to the employer’s work location as necessary upon directive from his or her supervisor and notify the supervisor in advance of work location modifications.”

Among the most contentious clauses that the auditor recommended is one that requires an employee to allow the employer to “have access to the telework location for purposes of assessing safety and security, upon reasonable notice by the City.”

City management took issue with some of the proposed form revisions, arguing in its response that any changes that “infer disciplinary results or actions would detract from the City’s established performance management processes and cause meet-and-discuss obligations with the City’s different impacted labor groups.”

“Authority of managers and supervisors is clearly articulated in the City’s merit rules to document expectations of an employee to perform their assigned tasks,” the city’s response states. “An employee performing their assigned tasks remotely does not impact the supervisor’s responsibility to complete the performance management process.”

The three members of the Policy and Services Committee mostly supported the audit’s recommendations, though they also suggested that some of the proposed policies may be unnecessary. This includes a suggestion from Baker Tilly that telecommuters sign an inventory of all property that they had received and “agree to take appropriate action to protect the items from damage or theft.” City officials felt this was unnecessary because its Information Technology Department already has policies for tracking equipment, according to staff. Adding another process to track equipment as part of the hybrid work policy would be “duplicative and could lead to confusing and contradictory practices,” the city’s response stated. The committee agreed.

In discussing the audit, Committee Chair Greg Tanaka wrestled with a broader question: Has the performance of city workers improved since the switch to hybrid? While that question was well outside the scope of the Baker Tilly report, he and his two committee colleagues — council members Ed Lauing and Vicki Veenker — directed City Manager Ed Shikada to analyze the difference in how employees performed before the pandemic, when they all worked on-site, and under the current practice.

“I think there are a lot of benefits that you get from remote work,” Tanaka said. “I’m just trying to understand what the impact has been for the city, in terms of performance.”

One issue that the committee struggled with is the possibility of a situation in which an employee working at home suffers an injury and files a worker’s compensation claim with the city. Allison LeMay, the consultant with Baker Tilly who worked on the audit, cited one case in which an employee at another agency suffered an injury while walking to his garage to get something and then filed a claim.

Committee members on Wednesday requested a legal analysis from the Office of the City Attorney on the best way to mitigate this risk. Veenker, who is an attorney, suggested that the city include in its criteria of eligibility for remote work a requirement that the employee have a “safe home” and that they allow the city to inspect it at the beginning of the work arrangement.

“I don’t love that idea because it feels a little invasive, but I suggest that we consider that as a component of this, where the liability goes,” Veenker said. “Because why would we let someone work in an unsafe environment if we are assuming a risk of their home and we can’t control it like we can here?”

The Baker Tilly audit noted the surge of remote work nationwide in the three years since the pandemic began. The audit cited a survey by the International Public Management Association for Human Resources (IPMA-HR), which found that 70% of public sector organizations did not have any established remote work programs in early 2020.

Those that did have policies in place saw a greater share of workers switch to remote work in the early days of the pandemic. The 30% of the agencies that had policies in place saw their percentage of remote workers increase to 63% after the closures began. Among organizations that did not have established programs, the share of remote workers grew to 41% by April 2020, representing an increase by 4,000% and indicating “industry-wide adoption of remote work flexibility,” according to Baker Tilly.

Baker Tilly also noted in its audit that Palo Alto is in the top five cities in California when it comes to remote work, with 9.4% of the city’s total working population remote. According to job site Flexjobs, only Berkeley, Santa Monica and Pleasanton have higher rates of remote-work populations in California.

The audit also noted that the public sector is still experiencing huge hiring challenges in the aftermath of the pandemic. While about 90% of the jobs lost in the private sector returned as of April 2022, only 53% of the jobs in the public sector have done so.

“Remote work is likely preceding a future of public service performed by a network of workers across integrated geographies, making ‘remoteability’ a key metric for a public sector organization’s success,” the Baker Tilly audit states. “Addressing motivation and the intrinsic value of public sector work is one strategy to retain devoted public servants. Increasing resources through benefits and salary to match the increased demands placed on large City and County employees will further encourage public sector participation.”