Virtual Office Politics: Work and the Law in the Digital Age

Virtual Office Politics: Work and the Law in the Digital Age

Virtual Office Politics: Work and the Law in the Digital Age

1000 648 David Hoppe

The COVID-19 pandemic profoundly affected the way businesses operate and interact with their employees, remote and hybrid work models chief among them. The expansion of working from home has given rise to innovative solutions that help organizations maintain productivity and engagement. Among these, the use of virtual reality, augmented reality, and the metaverse have emerged as increasingly popular tools. Employers across various sectors, including video games and esports companies, are leveraging these technologies to create immersive, real-time work environments for their off-site or remote employees.

One platform lets employees control their digital avatars who work in virtual offices and attend meetings in real time. They can interact with each other as if they were physically present, engaging in water cooler chat and collaborating on projects just as they do in traditional office environments.

ERGO, a German insurance group, leverages virtual reality to train its agents and salespeople by creating individual client and prospect avatars that present their own distinct challenges and temperaments. Trainees experience various scenarios and environments to learn how to deal with people involved in car accidents, injuries, and malfunctioning household appliances.

The adoption of these advanced technologies, however, crosses into uncharted legal territory. In many cases, the law is ambiguous or fails to address the innovative use of extended reality in employee recruitment, hiring, onboarding, and training. Companies specializing in emerging technologies may be especially at risk when relying on XR and should take comprehensive measures to document their processes and mitigate their exposure to liability.

According to ARtillery Intelligence, the value of VR business applications will surge to $4.26 billion in 2023 – from $829 million in 2018, a five-fold increase from 2018. This growth is attributed to the increasing use of VR for worker training, meetings, and customer service during the pandemic. COVID accelerated remote work setups and normalized the use of VR and AR at home. A report by PwC predicts that nearly 23.5 million jobs worldwide will be utilizing AR and VR by 2030 for similar purposes.

While the adoption of VR, AR, and the metaverse has the potential to revolutionize the way workers in emerging technology sectors get the job done, it also could be the answer to legal questions across industries. As Fortune predicts, “as workspaces catapult into the future, the metaverse will help maintain the innately human sense of connection and community that so many of us crave, while enabling the kind of flexibility and balance that we’ve also come to know.

Legal & Regulatory HR Challenges in the AI Environment

1. Sexual Harassment – According to a 2021 Pew Research Center study, one-third of young women (and 11 percent of men) report being sexually harassed online. The unique nature of these digital environments, where employees are represented by avatars, often obscures their identities. This anonymity can facilitate incidents of verbal harassment and bullying, rendering traditional reporting mechanisms less effective. Such circumstances underscore the urgent need for companies, especially those dealing with emerging technologies, to reassess their current strategies and adopt robust measures to prevent sexual harassment in these virtual spaces. It is recommended that companies develop and implement comprehensive policies specifically addressing sexual harassment within virtual worlds. These policies should clearly define what constitutes harassment in these contexts, outline the consequences of policy violations, and provide a clear, secure procedure for reporting incidents. Again, technology could provide some solutions as well as contribute to the problem. AI applications can monitor and detect inappropriate online behaviors.

2. Occupational Safety – AR/VR platforms and the metaverse can provide more accessible work environments for employees with disabilities. These technologies can create inclusive spaces that cater to various physical needs, thereby promoting diversity and inclusion. Still, it is likely that these virtual environments also will create health and safety hazards that could result in criminal or civil litigation. Businesses should investigate whether it is advisable to restrict the time workers spend in the metaverse and on AR/VR platforms to reduce the risks associated with physical and mental fatigue and other health concerns. Consequently, the decision to allow employees to work remotely via virtual platforms or by using virtual reality technology should be assessed on a case-by-case basis. It is best if the specific scenarios in which employees could work remotely or offsite via virtual platforms are documented so that there is little room for ambiguity.

3. Privacy and Cybersecurity – Working in the metaverse can blur the boundaries between employers and employees, particularly when it comes to privacy. The Department of Justice (DOJ) has issued guidance on the preservation of corporate communications. The guidance states that companies should have policies and procedures in place to ensure that business-related electronic data and communications are preserved, regardless of the communication channel or platform used. This is especially important in the metaverse, where 20 minutes of activity can generate 2 million data points. Companies need to ensure that they have the ability to monitor and preserve employee communications in the metaverse in order to comply with legal requirements and conduct investigations. Moreover, current VR functionalities that track head and hand movements can identify an individual with up to 95% accuracy. Effectively, this tracking data serves as a digital fingerprint, making it challenging to maintain employee anonymity. Given these concerns, companies intending to use AR/VR platforms or the metaverse for remote work must develop robust employee privacy policies. These should clearly outline data collection practices, usage, and protection measures, and ensure compliance with relevant data protection laws.

4. Governing Law and Jurisdiction – Without specific legislation to regulate this virtual environment, the location of servers may not always be evident, leading to potential legal ambiguities. Experts suggest that in resolving disputes and determining policies, employers, including those involved in emerging technologies, enjoy some latitude to determine which employment laws and regulations will apply to their metaverse workplaces. They can decide the location of the platforms, whether local or international, and consider associated factors such as terms of use. However, the path to jurisdiction determination is not always straight. Employers must navigate a complex web of considerations, including applicable employment laws, immigration issues, tax implications, and other regulatory concerns. These factors can significantly influence which state, country, or region’s laws and regulations apply, impacting both companies and employees operating within the metaverse.

Legal Documents and Policies

Generally, employees performing their jobs in the metaverse will be represented by their avatars. Their body, clothing, identity, demeanor, and behavior will be depicted virtually, creating the need for a comprehensive set of legal documents, policies, and procedures to protect the employees in AR/VR platforms or on the metaverse. For instance, employment contracts serve as a critical tool in delineating the legal obligations and duties of employees working remotely via VR/AR platforms or within the metaverse. For companies operating in emerging technologies, these contracts are particularly valuable, providing a solid legal foundation that can mitigate potential liabilities. The contract could specify situations that might give rise to legal liability for the employer. This clarity safeguards the company and provides employees with clear guidelines on acceptable conduct within the virtual workspace. One such provision could entail a clause allowing the employer to terminate the contract if an employee engages in harassing behavior over VR/AR platforms or within the metaverse during official work hours. Other provisions may prescribe the handling of employee and customer data.

One of the pillars of the future of workplace 2023 is remote work and offsite deliverables. Since the COVID pandemic, emerging technology companies have increasingly resorted to remote work. As the laws and regulations pertaining to virtual platforms continue to evolve, so do the labor laws to consider remote work. It is best to speak to a qualified legal professional to understand and guard against the legal risks involved in resorting to virtual platforms (particularly AR / VR and metaverse) for implementing remote work arrangements. 

Gamma Law is a San Francisco-based Web3 firm supporting select clients in complex and cutting-edge business sectors. We provide our clients with the legal counsel and representation they need to succeed in dynamic business environments, push the boundaries of innovation, and achieve their business objectives, both in the U.S. and internationally. Contact us today to discuss your business needs.


David Hoppe

All stories by: David Hoppe

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