Do You Have a Pay Strategy for Your Remote Workforce?

A 2021 survey by the consulting agency beqom found that 80% of U.S. workers expect their employers to let them work remotely multiple days per week. Most respondents, 65%, also said they would accept a pay cut to work remotely.

Additionally, a 2021 survey by PayScale revealed that 65% of employers are permitting employees to work from home as needed. However, 81% of employers do not have a pay strategy for remote workers.

According to PayScale, most employers “consider work done from home to be as valuable as work performed in an office, and 69% say they will not be lowering pay for remote workers.” Most of the remainder are still making up their minds about whether to create a separate pay scale for work-from-homers.

Nonetheless, industry experts say that employers should adopt a pay strategy for their remote workers, especially since location-based compensation strategies are growing in popularity. The key is to ensure that the remote-work pay strategy is fair, consistent and competitive.

Traditionally, employers take the following into consideration when setting salaries:

• Skills.
• Experience.
• Education.
• Industry demand.
• Market rate.
• Location.

While all these factors are still relevant today, location is under increased scrutiny because remote employees often don’t live in the same areas.

Newport Retirement Services, an advisory firm, offers three approaches to setting pay for remote employees in different locations:

1. Set pay rates based on the location of your main office or regional offices. You can also assign pay ranges according to the office that’s closest to your remote employees’ locations.
2. Set pay rates based on the employee’s remote-work or residential location. For example, if an employee lives in a labor market with above-average salaries, you may need to adjust their salary accordingly in order to keep them from being tempted away.
3. Set pay rates based on the U.S. national level, and raise them as needed. This option may be appropriate for employers in locations with moderate labor costs. But if you relocate an employee to an area with a much higher cost of living, then you can adjust the employee’s pay upward to account for their higher cost of living. On the other hand, if you relocate an employee to an area with a much lower cost of living and their job description has not changed, then no location pay adjustment is needed.

When building a pay strategy for remote employees, it’s important to:

• Follow applicable federal, state and local equal pay laws.
• Avoid discriminatory pay practices.
• Confer with legal counsel to ensure the strategy is clear and legally sound.
• Incorporate the remote-work pay policies into your employee handbook.
• Communicate the policies to your hiring managers and remote employees.

Finally, be sure to enforce your remote-work pay strategy in a consistent and equitable manner.

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