Business

Google employees who opt to work from home may earn less than they did before

Google employees based in the same office before the pandemic could see their pay change if they work from home in another city and choose to not come back to the office, according to a company pay calculator seen by Reuters.

Company is among others that pay different salaries based on location of remote workers

Interviews with Google employees indicate pay cuts as high as 25% for remote work if they left San Francisco to work from home while living in other parts of the state of California. ( David Paul Morris/Bloomberg)

Google employees based in the same office before the pandemic could see changes in pay if they switch to working from home permanently, according to a company pay calculator seen by Reuters.

Adjusting salaries based on cost-of-living where remote workers — rather than their offices — are located is an experiment taking place across Silicon Valley, which often sets trends for large employers.

Facebook and Twitter also pay less to remote employees who move to less expensive areas. However, smaller companies including Reddit and Zillow have shifted to location-agnostic pay models, citing advantages when it comes to hiring, retention and diversity.

Alphabet Inc's Google stands out in offering employees a calculator that allows them to see the effects of a move.

Working from home could affect pay for some 

But in practice, some remote employees, especially those who commute from long distances, could experience pay cuts without changing their addresses.

"Our compensation packages have always been determined by location, and we always pay at the top of the local market based on where an employee works from," a Google spokesperson said, adding that pay will differ from city to city and state to state.

One Google employee, who asked not to be identified for fear of retaliation, typically commutes to the Seattle office from a nearby county and said they would likely see their pay cut by about 10 per cent by working from home full-time, according to estimates by the company's Work Location Tool, launched in June.

The employee was considering remote work but decided to keep going to the office — despite the two-hour commute — saying the pay cut would've been an amount similar to their last promotion.

"I didn't do all that hard work to get promoted to then take a pay cut," they said.

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Policy in place for Canada, too

The compensation policy is in place for the company's Canadian work force, too, Google confirmed in a statement to CBC News.

"Whether you come into an office or work remotely, we pay at the top of the local market — which differs from city to city," the company said.

"If an employee decides to change where they work from, they have always seen an adjustment — up or down — depending on where they go," Google told CBC News.

Jake Rosenfeld, a sociology professor at Washington University in St. Louis who researches pay determination, said Google's pay structure raises questions about who will feel the impacts most acutely, including families.

"What's clear is that Google doesn't have to do this," Rosenfeld said.

"Google has paid these workers at 100 per cent of their prior wage, by definition. So it's not like they can't afford to pay their workers who choose to work remotely the same that they are used to receiving."

Calculator shows extent of pay cuts 

Screenshots of Google's internal salary calculator seen by Reuters show that an employee living in Stamford, Conn. — an hour from New York City by train — would be paid 15 per cent less if she worked from home, while a colleague from the same office living in New York City would see no cut if they worked from home.

Screenshots showed five and 10 per cent differences in the Seattle, Boston and San Francisco areas.

Interviews with Google employees indicate pay cuts as high as 25 per cent for remote work if they left San Francisco for an almost-as-expensive area of the state such as Lake Tahoe.

In its statement to CBC News, Google said it received 10,000 requests from employees to either transfer to a new office or work remotely, and 85 per cent of those requests were granted in the first round of such requests.

"We have always provided top-of-market compensation to our workforce, across salary, equity, leave, and a suite of benefits — this isn't changing as we shift to a hybrid model."

With files from CBC News

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