Pay savings, taxes, childcare: what another year of teleworking will look like

Among the questions businesses try to solve: Who should incur tax costs if employees move to new places while working remotely? And what is the most effective way to support working parents?

Companies say that there is a lot at stake, from the happiness and productivity of employees to the consequences of the regulations, if they make wrong decisions.

Relocations of employees to new cities, states and countries have companies and workers struggling with tax problems.

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

According to the person familiar with the matter, the question is whether workers who told Facebook that they left places like California and New York and therefore do not have to pay state and local income taxes have really moved. If an employee has also moved to another state or city where there is local income tax, the company and the worker can be held liable because they did not pay it.

Facebook has finally decided to track down employees’ locations based on their VPN usage. The company now says that when its workers request and approve long-term long-term work remotely, they must confirm their new location with the company, as this could affect their taxes. Facebook also said that some employees’ salaries may change if they live in a place with a different labor cost than their previous office.

Ride sharing service Lift Inc.

recently told his U.S. employees that staff members must work for tax purposes from one of Lyft’s 36 registered states, based on where Lyft’s corporate entity is registered. If an employee lives outside of states where Lyft is registered as a corporate entity, such as in Maine or Wyoming, they have until March 31 to retire to one, according to an internal email reviewed by The Wall Street Journal .

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

Companies such as the payment firm Stripe Inc., offered employees to leave San Francisco, New York or Seattle the chance to move for a one-time bonus of $ 20,000 if they agree to a salary reduction of up to 10%. Others, such as Microsoft Corp., have indicated that benefits and payment may change based on the company’s compensation scale according to location.

A number of Fortune 500 companies in various industries are considering potential wage changes if an employee moves from a city like San Francisco to Texas, says Jimmy Etheredge, CEO of North America at the consulting firm Accenture PLC.

“Almost everyone has a cost of living in their compensation,” he says. “While contemplating this future of work that may work more remotely, that may involve talent in places they did not necessarily have before, they will try to make adjustments.”

Other technology companies still pay people the same regardless of the zip code. Spotify Technology SA, the audio streaming company in Sweden, recently told its employees, who they call ‘band members’, that they can work from anywhere in their allotted country and maintain their wages.

“If you move, we will not change that,” said Katarina Berg, chief HR officer of Spotify. The company, with approximately 6,500 full-time employees, will adopt national salary ranges for each job based on remuneration at competing companies and determined by the prevailing salary in high-cost cities such as San Francisco or New York, where many of Spotify’s employees are. based.

The prolonged spell puts pressure on companies to give parents more help with childcare, while being careful not to arrange workers without dependents.

Some companies have offered Covid grants that workers can use for anything from child care to exercise equipment. The technology company Palo Alto Networks Inc. now offers workers a $ 1,000 allowance that can be applied to a menu. Parents can use the money for help with their children, while others can use it on a Peloton bike.

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

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

For workers who were regularly accustomed to business travel before the Covid-19 era, another question arises: will their 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 stay virtual. This is because teleworking has worked well, he says, but also because personal visits from accountants and consultants can be disruptive, especially when many offices reopen at less than 100% of their employees.

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

“I also miss contact with people,” he said. Preber, “but the rules of the game have changed.”

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