COVID-19 has forced employers and businesses to be creative and adapt to new and ever-changing guidance, restrictions, employee concerns, and much more. Fortunately, for some businesses, employees have been able to continue working remotely. For the most part, employers have learned that employees can be trusted to work from home and some employees have learned how much they enjoy remote work. After this forced adaptation, some employers plan on incorporating remote work as a way of the future, not only to provide flexibility to employees but also to save money on overhead and expenses. However, if remote work is truly the wave of the future, employers need to stay focused on how existing laws and protections for employees will be applied.

Some companies are considering remote compensation structures based, in part, on where employees are located. Employers need to be thoughtful on how these location lines are drawn. In particular, employers need to remember that an employee’s compensation may not be based on a protected characteristic like race, color, national origin, religion, gender, disability, age, or citizenship status. Meaning, an employer’s policies may not purposefully or effectively discriminate against any of the protected classes. For example, basing a compensation policy on whether an individual lives in the suburbs versus the city may not purposefully discriminate, but it may have the effect of discriminating against certain classes. Therefore, policies for compensation based on location should be tailored more to “Detroit versus New York City,” rather than “city versus suburb.”

Compensation based on location may sound nerve-wracking for many employees, but companies might not be implementing such strategies as a disguise for cutting wages. Instead, companies should be trying to remain competitive and plan for the future since remote work is likely here to stay. In some markets, allowing remote work may give employers the opportunity to cast a much larger net and allow greater access to the necessary talent pool. For example, technology start-ups might not be effectively limited to the West Coast anymore because a Michigan based company could hire workers that are spread out all over the country. 

On the other hand, some companies will see this as an opportunity for domestic outsourcing. Companies based in places with higher costs of living such as San Francisco or New York may see this as a chance to pay for the same quality work at a lower rate. As with anything new, the implementation of such a system could vary widely from employer to employer, especially at the beginning.

Working remotely was trending before COVID-19, but has now solidified its foothold in the way companies conduct business. Companies that plan on remote work being part of its long-term strategy need to consider all of the same employment law principles as before. In terms of compensation structure, employers need to make sure its policies do not purposefully or effectively discriminate against any protected classes.

More from the Hilger Hammond Blog: