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Long after the height of the pandemic, the news of the tight labor market has companies continuing to hire remote and hybrid positions. What is not so widely discussed is the status of many employees who were asked to work from home and still have not returned to the workplace. Many stay-at-home workers say they do not see a future back in the office.
According to a September Nasdaq article regarding workers who will and won’t return to the office, “The hesitation to return to work is not likely to dissipate, regardless of industry.” Many employees are leveraging staying at home as the only way they will remain in their positions with their current employer.
This remote and work-from-home movement has deep and complicated implications for employers, not the least of which is employee pay. It will be critical for employers to drive the dialogue and set the policies to ensure a strong workforce is retained while remaining legally compliant.
Here is a list of considerations to help companies navigate the creation of a policy that will balance compensation for remote, work-from-home, and onsite employees:
Determine employee roles.
Review your company’s roles and decide which jobs can be performed remotely. Does a job require face-to-face interactions with customers? Do you have roles, such as security officers, which require onsite monitoring of facilities and merchandise? Exempt or non-exempt are different since it is more difficult to track and manage non-exempt employee time from afar. Many employers are not allowing non-exempt employees to work remotely; this privilege is only granted to exempt employees in many cases.
Recognize location-based or value-based compensation mode, or a combination.
Salary ranges traditionally vary based on geographic location, but employers are beginning to change their compensation models due to the rise in remote work. When you develop a pay strategy, weigh the benefits of a location-based strategy (one where you tie compensation levels to the location of your workers) and a value-based strategy (where you pay employees purely based on the value they bring your organization).
Comply with pay equity standards.
Here are some important reasons you may want to pay onsite workers more for coming to the office:
- Cover commute-related expenses.
- Encourage in-person collaboration.
- Reduce challenges associated with managing and tracking remote work.
Consider the impact of the pay policy on employee morale.
Consider pitfalls like gender discrimination when paying remote workers less than those who come to the office. Women often have had more childcare responsibilities than men and may disproportionately need the flexibility of remote work to help balance professional and family needs. This could potentially create pay discrepancies between male and female workers if more female employees are remote.
Also, some employees enjoy onsite work. Others place a high value on working from home. While one employee may accept lower pay for remote work, another might not be willing to trade compensation for flexibility. Before finalizing any new policy, you should consider how these adjustments will affect your recruitment and retention efforts, as well as employee morale.
Understand the wage and hour rules.
Minimum wage and overtime rules for non-exempt employees – as well as salary thresholds and job duty tests for exempt employees – differ throughout the country. Some locations have requirements for paid leave, business expense reimbursement, meals, and rest breaks. Make sure your remote workers comply with the applicable federal and state wage and hour laws.
Know the impact of union employees’ rules.
Unionized employers have their own unique labor relations challenges when it comes to compensation. As your collective bargaining agreements are being negotiated, make sure you address flexible work arrangements and compensation for remote workers.
Comply with local tax and insurance requirements.
Some states have family leave and disability insurance programs that require employers to deduct from employee wages or contribute to a state-run fund. Make sure state unemployment insurance workers’ compensation insurance is compliant. You should also investigate whether a business registration is required when you have one or more remote employees working in a state. Work with your accountants to set up your taxes correctly.
Communicate company policies.
It is critical to create a written policy that can be communicated to all employees. Once this compensation policy is in place and known by employees, it will help an employer maintain consistent pay practices that employees view as fair and equitable.
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A New Path to HR Bliss – Trusted for more than 30 years, Employer Advantage frees you from the administrative and compliance burdens of having employees so you can focus on your business success. Versatile enough for companies of all sizes, our unique service combines comprehensive management of your employee administration and compliance with the latest software solutions, tailored to meet your individual needs and company culture. Our full-service management of Human Resources, payroll, health and benefits, workplace safety, and more enhances your profitability while reducing the costs and risks associated with employment law compliance. We provide your employees with top-notch assistance and benefits that help you increase productivity, save time and money, and attract and retain a talented workforce. And for small and mid-sized businesses, we bring you economy of scale with access to Fortune 500-level benefits, specialty assistance, and savings that would not be possible to attain on your own. Headquartered in the Midwest and serving more than 500 companies and 10,000 worksite employees throughout the country, Employer Advantage is an IRS-Certified Professional Employer Organization (PEO) (CPEO). Experienced, certified, and trusted. www.EmployerAdvantage.com
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