Reducing Pay For Remote Workers?

Written by: Vicki Shepard

October 23, 2022

3 min read

Compensation for remote workers have created discussions, webinars, and forums with varying opinions. In most cases, the decision to adjust base pay for remote workers relies on the company’s overall compensation philosophy. Below are a few hot topics on compensation considerations for remote and hybrid work for employers.

Reducing pay for remote workers

If the remote employee is performing the same work as would be conducted in the office, is a pay adjustment warranted? When contemplating a pay adjustment for remote workers it is important to consider a few things before making this decision.

Internal Equity

First, consider the internal equity of your employees when making these decisions. The current tight labor market creates a competitive landscape that has workers interested in changing jobs to work remotely. Reducing pay for remote workers will not only produce a morale decrease for your employees, but it may also result in unexpected turnover.

Training and Hiring Costs

Second, consider the cost of training and hiring for a new employee. This is one of the highest costs that organizations face because they lose not only the previous employee, but also the knowledge base and networking that the employee had.

Remote Workers Have Their Own Costs Too

Thirdly, consider the employee costs that remote work can have. For example, the employee will save money with low-to-no transportation and start time flexibility. Remote work may also require that the employee create a designated office space as well as purchasing their own office supplies and equipment in order to perform well. Where not every employee will have this available space in their house or the money for a working office chair.

Although organizations will save money by reducing pay for remote workers, there are some considerations needed before a decision like this is made.

Allowing employees to relocate

If retaining employees also means allowing employees to relocate while continuing to work for your organization, it may be important to review some critical information regarding state laws and local jurisdictions.

Consdider Your State Labor Laws

Many human resource and labor laws will differ between states which can make it difficult for HR administrators to be able to navigate the challenges with relocating employees. State minimum wage laws can also be a fluid and complex navigation challenge for HR administrators. Conversely, employees may be attracted to employers that hire in several states in case they were potentially interested in moving without looking for another job.