Payment reductions, taxes, child care: what will be another year of remote work

Among the questions that companies are trying to resolve: Who should bear 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 make the wrong decisions.

The relocation of employees to new cities, states and countries has companies and workers struggling with tax issues.

the Facebook Inc.

CEO Mark Zuckerberg told employees last year that starting in January, the company would use its virtual private network, or VPN, that employees use to access the company’s systems to determine where they are working for tax purposes.

The question is whether workers who told Facebook they left places like California and New York – and therefore should not be paying state and local income taxes – have really moved, according to a person familiar with the matter. In addition, if an employee has moved to another state or city where there is a local income tax, the company and the worker may be held responsible for not paying them.

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

Lyft ride-sharing service Inc.

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

Likewise, if Lyft workers plan to live outside the state in which they worked before the start of the Covid-19 pandemic for 60 days or more, they must submit a form before March 31 so that the company can tax them in this new state – but they can only send this request once, according to the email.

Companies like payments firm Stripe Inc. have offered employees leaving San Francisco, New York or Seattle the chance to move for a one-time bonus of $ 20,000 if they agree to a pay cut of up to 10%. Others, such as Microsoft Corp.

, indicated that benefits and compensation may change based on the company’s compensation scale by location.

Several Fortune 500 companies in all sectors are considering possible payment changes if an employee moves from a city like San Francisco to Texas, says Jimmy Etheredge, North America chief executive at consulting firm Accenture PLC.

“Almost all of them have a cost of living element in their pay,” he says. “While they are thinking about this future of work that may involve more remote work, that may involve talent in places that they did not necessarily have before, they will seek to make adjustments.”

Other technology companies continue to pay people the same, regardless of zip code. Spotify technology SA,

the Swedish-based audio broadcasting company recently told its employees, which it calls “band members”, that they could work from anywhere within the designated country and maintain the same salary.

“When you move, we won’t change that,” said Katarina Berg, HR director at Spotify. The company, with about 6,500 full-time employees, will adopt national salary ranges for each job based on the remuneration of competing companies and defined by the payment in force in high-cost cities, such as San Francisco or New York, where many of Spotify’s workers are headquartered.

The prolonged period of remote control is putting pressure on companies to help parents more care for their children – taking care not to irritate workers without dependents.

Some companies offer Covid-related stipends that workers can use for anything from childcare to gym equipment. Technology company Palo Alto Networks Inc.

now offers workers a $ 1,000 grant that can be applied to a menu of options. Parents can use the money to give private lessons to their children, while others can use it on a Peloton bike.

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

Others are launching special benefits for parents and guardians. Bank of America Corp.

it offered qualified employees, including those working in its branches, up to $ 100 a day for childcare expenses. The company has also increased the number of days employees can use day care or support day care to 50 a year, from 40 days.

For workers who were used to frequent business trips before the Covid-19 era, another question is emerging: will their customers want visitors when the pandemic is over?

Brad Preber, CEO of Grant Thornton LLP, one of the largest tax and accounting firms, says some clients are beginning to say that they prefer work to remain virtual. This is because remote work has worked well, he says, but also because personal visits by accountants and consultants can be disruptive, especially when many offices are reopening with less than 100% of their employees’ capacity.

For road warriors who have thrived on almost constant business travel, the move could be a disappointment, he says.

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

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