While the cat’s away, the mice get paid: Navigating compensation packages as remote work becomes the new normal
While the cat’s away, the mice get paid: Navigating compensation packages as remote work becomes the new normal
January 08, 2021

In the wake of COVID-19, many businesses have switched to partial or full remote work. Some larger corporations, like Novartis International AG, are leading the way and making remote work an option going forward to certain departments. A good employee, whether they are in-office or remote, is worth their weight in gold, but what does that really mean when it comes to negotiating a compensation package? Stay tuned as we discuss some of the ways remote work will impact your compensation strategy and some liability red flags that can impact the bottom line.

Cost-of-living adjustments versus cost-of-labor

 

If you are like most companies, your compensation strategy is based upon the going rate for an employee with similar experience in your geographical area. With remote work, suddenly, location may be up to the employee’s discretion and you have a decision to make. Will you continue to pay market-rate for your locale, or will you adjust based on where your employee lives?

Job Postings

It can be tricky to post a salary range for geographical location if your prospective employee’s location is essentially unknown. Going with a cost-of-labor strategy can help solve this problem but be mindful of the compensation packages of current employees. Drama can ensue if the compensation strategy changes… well, dramatically.

In-state vs Out-of-state

You can limit the geographic region within which the prospective employee can live and narrow your cost-of-living adjustment to that region. This can be particularly important if your company does not have, and does not desire to obtain, the specific state licenses that might be required if your employee is out-of-state. Also, be mindful of differences in state laws regarding equity compensation and how those laws may impact your total compensation package, if your employee lives out-of-state.

No corner office, but no commute

 

Office furnishing and safety compliance stipend

Consider allocating a furnishings and safety compliance stipend for your remote employees. You will want to make sure they are working in a safe environment with ergonomic tools to help protect your company from workman’s comp claims, and these changes can be costly to implement. You will have happier and more compliant workers if they don’t have to dip into savings to fund desk chairs, keyboards, office supplies, cybersecurity measures, etc.

Creating a corporate culture

Particularly if there is a mix of in-office and remote employees, try to identify perks that would apply to both groups.

Do you provide lunch for the in-office employees on Fridays? A gift card or approved weekly lunch expense would help remote employees feel more included.

Does the office have an on-location gym or child-care facility? Consider fitness and care-provider stipends for remote employees.

Make an effort to identify the right technology for your team; if your tech is glitchy, your employees are not going to want to use it, and poor communication and socialization will result.

Will semi-regular in-office gatherings of all employees be desired? The costs of such gatherings should be considered when budgeting employee costs.

Benefit Plans

You will want to pick a benefit plan that includes your employees’ locations; you will have a hard time employing and retaining workers if your health plan coverage is focused on Florida-based providers but your employees span both coasts.

Compliance

Work visas

If your employee is on a work visa and wants to move outside of the location designated in the visa application, that application will need to be updated. This cost should be considered before approving a change in location or compensation package.

Pay Equity

The state laws regarding pay equity are both numerous and diverse; allowing your employees or future employees to work remotely will invariably increase the number of states in which your company has a presence, and you will need to be compliant with those states’ equal pay laws when it comes to making salary determinations.

Summary

Whether your company is planning to make remote work a long-term option, or just trying to adjust to the short-term realities of COVID-19, how you compensate your employees now will drive the success or failure of your business for years to come.  We encourage you to seek experienced advice from attorneys, HR consultants, or industry consultants to help smooth the bumps in the road as you turn today’s “make it work” ideas into tomorrow’s best practices.

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This blog was written by Hunter Business Law Attorney Haley Lemon.

DISCLAIMER: This blog is for educational purposes only and does not offer nor substitute legal advice. Additionally, this blog does not establish an attorney-client relationship and is not for advertising or solicitation purposes. Any of the content contained herein shall not be used to make any decision without first consulting an attorney. The hiring of an attorney is an important decision not to be based on advertisements or blogs. Hunter Business Law expressly disclaims any and all liability in regard to any actions, or lack thereof, based on any contents of this blog.

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Thank you for taking the time to consider Hunter Business Law to assist you with your legal needs. We appreciate you reaching out to our firm. However, due to our commitment to current client matters and to ensure we are meeting the needs of our existing client base, we are unable to onboard any new clients at this time. Again, we appreciate you reaching out, and we wish you the best of luck with your venture!