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Why many Facebook work-from-home employees will earn less

May 21, 2020, 8:04 PM UTC

Many employees who take Facebook up on its new offer on Thursday to work permanently from home will end up earning less.

The salary reductions, which are based on the cost of living where the employees live, is a consequence of a huge shift by Facebook in letting some of its 48,000 workers do their jobs from home—permanently. The company made the move after having most of its employees work from home since March because of the coronavirus pandemic.

In a live-streamed town hall meeting during which he announced the initiative, CEO Mark Zuckerberg predicted that about half the company’s staff would work remotely within the next 10 years. “We’re going to be the most forward-leaning company on remote work at our scale,” he told employees.

On Jan. 1, Facebook will ask employees to tell them where they are working from and then begin adjusting their salaries accordingly, Zuckerberg said. The company plans to pay new hires salaries based on the market rates for their specific cities. 

“That means if you live in a location where the cost of living is dramatically lower or the cost of labor is lower, then salaries do tend to be somewhat lower,” Zuckerberg said. “With a somewhat lower salary, you can often still have a better quality of life than you can have in some of the big cities.”

Facebook is anticipating that many employees will move to or be hired in cities where the cost of living is much lower than near San Francisco, where its headquarters are located, and in New York, where the company has a major hub. Both cities have sky-high real estate prices and rents, forcing Facebook and other tech companies to offer huge salaries.

In going big on work at home, Facebook joins several other companies that have recently given employees the option to work from home permanently. Those businesses include Twitter, Square, and Nationwide Insurance.

Facebook said it would enforce the new work-at-home policy mostly by the honor code, but that it plans random checks of employee VPN addresses—the tool used to securely access the company’s network remotely—to confirm their locations. Any employee that is caught lying will face “severe ramifications” as it could affect some of the company’s tax filings, Zuckerberg said, adding, “You may be breaking the law.”

In the coming weeks, Facebook said it plans to internally release a list of the functions that are eligible for permanent at-home work. But generally, the option will be available to employees who are experienced, have high marks in their performance evaluations, are part of a team that isn’t needed in the office, and who have their supervisors’ approval.

Employees who work on hardware development, some human resources functions, or sales partnerships, or who are content reviewers or data technicians, will be ineligible because their jobs depend on being physically present with others in an office. Lower-level employees will also have to work from the office as will new hires during their training period.

Zuckerberg also said the company plans to extend its recruiting efforts under this new remote-working plan. That includes opening new engineering hubs in Dallas, Atlanta, and Denver, where there will be “some kind of physical” meeting space for engineers, but not necessarily full offices, Zuckerberg said. 

Facebook’s remote work plans will likely evolve over time as the company determines what works and doesn’t work. And while Zuckerberg said he hopes the option will help add flexibility for employees and lead to products that are better designed for at-home workers, he doesn’t want to spend a lot of extra money in the process. That means that the company will likely try to reduce what it spends on offices so that it has more money free to support employees who work from home.

“The reality is … I don’t think we’re going to wake up on Jan. 1, and no one has any more concerns about this,” Zuckerberg said. “We’re going to keep moving forward and learning and improving on this.”