Payment reductions, taxes, childcare: what another year of remote work will look like

Among the questions companies are trying to solve: Who should bear the 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 are many games, from employee happiness and productivity to the consequences of regulation, if they make these wrong decisions.

Employee relocations to new cities, states and countries have companies and workers facing tax problems.

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

The issue is whether workers who told Facebook that they left locations like California and New York – and therefore shouldn’t pay local and state income tax – have indeed moved, according to someone familiar with the matter. thing. Also, if an employee has moved to another state or city where there are local income taxes, both the company and the employee could be held liable for non-payment.

Facebook has finally decided not to track the locations of its employees based on the use of VPNs. The company now says that when its workers apply for – and are approved for – long-term long-term work, they must confirm their new location with the company because it could affect their taxes. Facebook also said that the salaries of remote employees could be changed if they live in a location with a different labor cost than their previous location.

Lyft Travel Sharing Service Inc.

recently told its US employees that employees must work in one of Lyft’s 36 registered states for tax purposes depending on where Lyft’s corporate entity is registered. If an employee lives outside of the states where Lyft is registered as a corporate entity, such as in Maine or Wyoming, they have until March 31 to return to one, according to an internal email reviewed by The Wall Street Journal.

Also, if Lyft workers plan to live outside the state they worked in before the Covid-19 pandemic began for 60 days or more, they must submit a form by March 31 so the company can tax them in new state – but I can send this request only once, according to the e-mail.

Companies like the payment company Stripe Inc. 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., have indicated that benefits and pay may change depending on the company’s compensation scale depending on location.

A number of Fortune 500 companies in the industry are considering potential pay changes if an employee moves from a city like San Francisco to Texas, says Jimmy Etheredge, North America’s chief executive officer at consulting firm Accenture PLC.

“Almost everyone has an element of the cost of living in their compensation,” he says. “As they think about this future of work that may involve more distant work, which may involve talent in places they haven’t necessarily had before, they will look to make adjustments.”

Other technology companies continue to pay people the same, regardless of the zip code. Spotify Technology SA, the Swedish-based audiostreaming company, recently told its employees, whom it calls “band members”, that they could work from anywhere in their assigned country and maintain the same pay.

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

Long-distance witchcraft puts pressure on companies to give parents more help in caring for their children – while taking care not to confuse workers without addicts.

Some companies have offered Covid-related scholarships that workers can use for everything from childcare to training equipment. Technology company Palo Alto Networks Inc. now offers workers a $ 1,000 allowance, which can be applied to an options menu. Parents can use the money for assistance to guide their children, while others can apply it on a Peloton bicycle.

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

Others offer special benefits to parents and caregivers. Bank of America Corp. offered eligible employees, including those working in its branches, up to $ 100 per day for child care expenses. The company has also increased the number of days employees can use backup facilities to care for children or adults to 50 per year from 40.

For workers accustomed to traveling frequently on business before the Covid-19 era, another question arises: will customers want visitors when the pandemic ends?

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

For road warriors who have thrived on near-constant business travel, the change could be a disappointment, he says.

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

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