Whether your company likes it or not, it looks like remote work is going to stick around, at least for most of this year. There are many discussions going on right now centered around when (or even if) you'll return to your office. Many companies that had a lease expire since the pandemic hit haven't even begun to look for new space yet (and there's not a ton of motivation to add that major piece of overhead back into their budgets). As this current work-from-home environment continues, there are salary and tax issues that companies are now facing. (Disclaimer: I am not an accountant and do not provide accounting advice. If you don't have an accountant and would like a referral, I'm happy to give you some names...)
These discussions over the future are particularly important for companies whose workers have left high cost of living cities and who now must decide how to handle new salary and tax issues.
Remote Work and Salary
You can read plenty of news articles these days about how companies are handling pandemic salaries. For example,
- Facebook - some salaries may change if the employee moved to a location with a different cost of labor than their prior location.
- Stripe - employees leaving San Francisco, New York or Seattle can relocate and receive a one-time bonus of $20,000, but that also comes along with up to a 10% salary cut.
- Microsoft - may change benefits and pay based upon the company's compensation scale per location.
- Spotify - their "band members" can work from anywhere in their assigned country and maintain their same pay.
Whether you consciously think about it or not, most people's salary already has cost of living already factored in.
Along with the salary issue, another issue facing many companies is how to support the working parents who are working from home and attempting to balance life with their children. When schools first started closing down in the spring of 2020, no one anticipated that children would be engaged in remote learning for nearly a year. While companies need to help working parents where they can, they also can't discriminate against their workers who don't have children. It's a very careful balance that needs to be struck.
Remote Work and Taxes
One issue that companies need to consider is the local taxes in the localities where workers may be living. If your company is based in one state, but your employee has moved to a different state, talk to your accountant about what the taxes are in that locality. Both you and your employee could be held liable for the taxes for an employee living in another state.
Working with businesses, I try to stress the importance of having a strong TEAM (Trusted Experts, Authorities and Mentors) around to help them out. When it comes to sorting out these compensation and tax issues, those TEAM members are worth their weight in gold. Reach out to them. Learn from them. Find new ways to keep your employees happy and healthy as we continue to endure this pandemic.
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Next Steps
If your workers are still primarily remote and have relocated to different states, now's a good time to check in with your TEAM to be sure you've got the issues covered. Feel free to schedule a Legal Strategy Session with me and we can discuss how to help you emerge from this pandemic and grow your business.
