As employees continue working remotely and employers consider hybrid work models post-pandemic, the question often comes up, should we pay for an employee’s home internet? Or ergonomic chair? Or phone? Or computer?
Let’s first take a look at what is legally required. There is no federal requirement to provide reimbursement for remote workers’ expenses except where those expenses would lower an employee’s pay to below minimum wage. A growing number of states and municipalities require employers to reimburse employees for business-related necessary expenditures. This includes California, Illinois, Iowa, Montana, Seattle, and the District of Columbia.
Apart from the legal question, why would an employer want to provide a work from home allowance or reimburse the employee for certain expenses? There are many reasons, including that the employer may be saving money by having their employees telecommute. Studies compiled by Global Workplace Analytics estimate a typical employer can save an average of $11,000 per half-time telecommuter per year. The savings are primarily the result of increased productivity, lower real estate costs, reduced turnover and absenteeism, and better emergency preparedness.
Some employers recognize that employees often incur additional expenses while working from home. This includes upgrades to internet service to improve connectivity, replacement of the dining room chair with one that won’t hurt their back, purchasing a locking cabinet to keep organizational information secure, or the need for a headset to keep the noise of roommates from interfering with their work.
From Willis Tower Watson’s July 2020 COVID-19 Actions to Restore Stability Survey, 1 in 10 employers have taken action to offer employee subsidies to assist with the costs of working from home. Here is a sample of what some companies are providing: HubSpot provides a $60 per month remote work stipend; Indeed offers to reimburse their employees up to $500 for equipment, including desks, chairs, and lighting; Google provides an allowance of $1000 to expense necessary equipment and office equipment.
From Employer Council’s February 2021 Coronavirus Survey, only 3% of the responding 485 employers have offered their employees a lump sum allowance or reimbursement on equipment to help employees outfit their home workspaces. Lump-sum allowances average $358, while reimbursements average $275. Eight percent of the responding employers provide a monthly home stipend, with the average being $66 per month.
There are pros and cons for offering stipends versus expense reimbursement, including whether the money is taxable for the employee or ease of administration. Please check with your tax advisor on whether work from stipends, allowances, or reimbursements are taxable or non-taxable for the employee.
Contact Employers Council if you need assistance in developing your remote work policies.