Reductions in pay, taxes, child care: what will be another year of remote work

Among the questions companies are trying to resolve: who should bear the tax costs as employees move to new locations while working remotely? And what is the most effective way to support working parents?

Companies say there is a lot at stake, from employee happiness and productivity to regulatory consequences, if they are wrong in these decisions.

Relocations of employees to new cities, states and countries have companies and workers facing tax problems.

Facebook Inc. CEO Mark Zuckerberg told employees last year that as of January, the company would use its virtual private network, or VPN, which employees use to access the company’s systems for determine where they worked for tax purposes.

The question is whether workers who said on Facebook that they had left locations like California and New York and therefore should not pay local or state income taxes had actually moved, according to someone familiar with the matter. . In addition, if an employee has moved to another state or city where there are local income taxes, both the company and the worker could be held liable for not paying them.

Finally, Facebook decided not to track the locations of its employees based on their VPN usage. The company now says that when its workers apply for – and are approved to – a long-term remote job, they must confirm their new location in the company, as it could affect their taxes. Facebook also said that the salaries of some remote employees could change if they live in a location with a different labor cost than their previous location.

Lyft Travel Sharing Service Inc.

recently told its U.S.-based employees that employees must work in one of Lyft’s 36 registered states for tax purposes based on where Lyft’s corporate entity is registered. If an employee lives outside of the states where Lyft is registered as a corporate entity, such as in Maine or Wyoming, they have until March 31 to return to one, according to an internal email reviewed by The Wall Street Journal.

In addition, if Lyft employees plan to live outside the state in which they worked before the Covid-19 pandemic began for 60 days or more, they must submit a form by March 31 so the company can impose them. in this new state, but they can only send this request once, depending on the email.

Companies like the payment firm Stripe Inc. have offered employees leaving San Francisco, New York or Seattle the chance to move to a one-time bonus of $ 20,000 if they accept a pay cut of up to 10%. Others, such as Microsoft Corp., have indicated that profits and payment may change depending on the company’s compensation scale by location.

A number of Fortune 500 companies from all industries are considering possible pay changes if an employee moves from a city like San Francisco to Texas, says Jimmy Etheredge, North American executive director of consulting firm Accenture PLC.

“Almost everyone has an element of the cost of living in their compensation,” he says. “As long as they’re thinking about this future job that may involve more remote work, that may involve talent in positions they didn’t necessarily have before, they’ll try to make adjustments.”

Other tech companies continue to pay the same to people regardless of zip code. Spotify Technology SA, the Swedish-based audio streaming company, recently told its employees, which it calls “band members,” that they could work from anywhere in their assigned country and maintain the same salary.

“When it moves, we won’t change that,” said Katarina Berg, Spotify’s human resources director. The company, with approximately 6,500 full-time employees, will adopt national salary ranges for each job based on compensation in competing companies and established by the predominant salary in high-cost cities such as San Francisco or New York, where there are many Spotify employees. based.

The prolonged remote spell is pressuring companies to give parents more help in caring for their children, while being careful not to upset workers without dependents.

Some companies have offered Covid-related stipends that workers can use for anything from child care to training equipment. Technology company Palo Alto Networks Inc. now offers workers a $ 1,000 bonus that can be applied to an options menu. Parents can use the money in tutoring aid for their children, while others can apply it to a Peloton bike.

“No two employees are alike in the support they need,” Nikesh Arora, CEO of Palo Alto Network, said in a blog post announcing the benefit.

Others offer special benefits to parents and caregivers. Bank of America Corp. has offered eligible employees, including those working in its offices, up to $ 100 a day for daycare expenses. The company also increased the number of days employees can use secondary child or adult care facilities to 50 a year, from 40.

For workers who were accustomed to frequent business trips before the Covid-19 era, another question arises: Will their customers want visitors when the pandemic ends?

Brad Preber, CEO of Grant Thornton LLP, one of the largest tax and accounting firms, says some clients are starting to say they prefer the job to be virtual. This is because remote work has worked well, he says, but also because face-to-face visits by accountants and consultants could be detrimental, especially when many offices reopen with less than 100% of their employees ’capacity.

For road warriors who thrived on near-constant business travel, the change could be a disappointment, he says.

“I also miss human contact,” Preber says, “but the rules of the game have changed.”

Write to Chip Cutter at [email protected] and Emily Glazer at [email protected]