As employees at a number of Silicon Valley companies have worked remotely during the pandemic, some of these companies are making permanent changes to their remote-work policies. They are giving employees the freedom to flee the exorbitant rents of the Bay Area and other expensive cities. But for many employees, that flexibility can come at a price.
Tech companies including Facebook, Twitter, Microsoft, and VMWare are requiring workers to take pay cuts if they choose to go remote permanently and move to cheaper locations. Stripe, meanwhile, offered employees who were relocating out of San Francisco, New York, or Seattle a one-time moving allowance of $20,000—but with a pay cut of up to 10%.
These policies might not seem so outlandish; after all, location is a factor that most companies take into account when determining the wages they pay employees. But there are a number of reasons why companies that dock remote workers’ pay might come to regret it.