The cost of remote work: Who's paying?

The pandemic has changed the traditional work environment to one where adapting to remote work is the core priority. A report from SHRM found that 68% of organizations will adopt a more flexible work from home policy for all workers. With more offices transitioning to a hybrid work model, should your company cover the expenses incurred when employees set up a home office? 

Is a stipend legally required?

In some cases, employers are legally required to reimburse employees for home office expenses. 

At the federal level, for example, the government requires reimbursement when expenses bring an employee’s salary below minimum wage. States like California, Illinois, Iowa, Massachusetts, Montana, and New York, plus the District of Columbia require employers to reimburse employees for necessary business-related expenses which include what employees would need for a home office. 

However, many companies across the country voluntarily offer their employees a work-from-home allowance. Some opt for an up-front monthly stipend while others reimburse recurring expenses.

Increase in costs of working from home

Thousands of workers observed a 25 percent increase in their utility bills after offices switched to work-from-home when the pandemic began. Employees not only need to pay to keep their computers and office equipment running, but they also need to pay for the overhead that companies typically incur, like air conditioning and heating costs. And while some recurring expenses come at a moderate cost like printer ink and toner or pens and paper, other one-time expenses can rack up quite the bill. Many employees need to buy a chair and desk for their new home office. 

Is there a solution? Consider a work-from-home stipend

Employers can help lighten this new financial load for employees through a fixed or flexible monthly stipend to cover costs like furniture, electricity bills, internet, and office supplies. There are multiple benefits in doing so:

• It shows appreciation to employees who have made working from home a success despite the challenges. 
• Wherever applicable, a remote work stipend could assist companies in following obligations imposed by their state government.
• By providing a fixed or flexible stipend, employees will feel the support they need from their employers to stay motivated — something that pays dividends in employee satisfaction and engagement. In a Staples Workplace Survey, 90% of employees said that flexibility in their work arrangements contributes to their morale.

Tactical benefits of remote work stipends

The upside to remote work benefits lies in promoting strategic areas of the business such as culture and values, attracting and retaining talent, inclusivity, and employee engagement. Gallup research shows that 54% of employees said they would leave their jobs for one that offers more flexibility. Specific benefits include but are not limited to the following items:

• Companies recognize the importance of having employee compensation-related programs following IRS compliance. Customizable benefits software automatically takes care of that to ensure tax compliance.
• Instead of limiting options for all employees, providing a broader benefits offering based on individual employees’ interests would positively impact company culture.
• Remote work stipends would avoid wasting time on vendor management and decrease the burden on HR. 

Examples of a home office stipend

A work-from-home stipend for your remote employees does not have to be complicated or expensive. With so many companies already doing it, it is easy to find an example to model. 

Google and Shopify are two companies that offer a one-time $1,000 work-from-home stipend to their employees to purchase home office supplies. Tech companies Facebook and Twitter have made similar efforts to help employees afford work-from-home expenses. Education technology company Chegg offers $500 to remote workers to furnish their home offices and pays their monthly internet bills. Exercise equipment and media company Peloton reimburses its remote employees home office expenses up to $500. Depending on your company’s budget, you could offer $100/month, $500/quarterly, or $1,000/annually. 

Introducing a stipend program to your company

Companies looking to establish a stipend for their remote employees first need to determine which expenses qualify and the limits of reimbursement. Realistically, a company cannot cover every single expense each employee incurs; that is a surefire way to rack up a bill that tanks the program. Find the sweet spot – offer perks that the company can afford while satisfying employee needs.

The next step is to establish parameters and a process to request reimbursement. Consider how employees will account for the items they wish to expense. Are they expected to submit receipts for each office supply item they purchase and is there an easy way for them to do so? Do they submit reimbursement requests to HR through payroll software or do they submit written requests to their department head? These are just a few of the considerations to be made to keep your stipend program organized. 

Finally, employers must decide how employees receive their work-from-home stipend. Some companies have opted to pay employees a stipend manually; they deposit a predetermined amount to their paycheck bi-weekly. The more efficient option would be to use a stipend software, which helps employers manage the full cycle of the stipend process for all employees, including receipt submission and approval, payroll, tax compliance, and employee communications.

Companies want to make employees feel valued and important. Offering remote workers perks helps the transition from traditional office life to a more modern, flexible work environment. Plus, it reminds employees that just because they are not in a centralized corporate office, it does not mean they are any less relevant or important. 

Amy Spurling is the CEO and Founder of Compt, HR software that enables companies to offer truly personalized employee perks that adapt to remote and hybrid employee needs, while being fully tax compliant and inclusive for global teams. Named Boston’s “CFO of the Year” in 2016 by Boston Business Journal, Amy is no stranger to helping organizations of all sizes identify how to best support their employees’ diverse needs in a way that’s flexible, manageable and fun. Connect with Amy on LinkedIn. Learn more about Compt at our website or follow us on LinkedIn and Twitter.