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Is your employer paying remote and hybrid workers differently?

September 15, 2022, 10:48 AM UTC
Female professional having online meeting with team seen on big television screen. Businesswoman in hybrid office space having web conference with coworkers.
57% of employers are continuing a geographic pay policy to determine the pay rates, WTW finds.
Luis Alvarez—Getty Images

Good morning,

More companies are moving towards disclosing pay rates. At the same time, employers are determining if there should be a distinction between the pay of a remote and hybrid worker.

Advisory firm Willis Towers Watson’s (WTW) 2022 Pay Clarity Survey found that 17% of companies surveyed already reveal pay range information in U.S. locations where state or local laws do not require it. The survey of 388 employers also found that 62% of companies are planning or considering disclosing pay rate information in the future.

“Those employers that currently disclose pay range information but aren’t required to will often do so based on a couple of different factors,” Mariann Madden, North America Fair Pay co-lead at WTW, told me. “Company culture and willingness to provide visibility and clarity into pay structures, programs, and policies [are all factors]. However, these companies often have the foundational job and pay structures already in place, which aids in communicating pay ranges to the workforce.”

The survey also found that more than half of employers (57%) are applying a geographic pay policy, determining pay rates or ranges based on where the employee will work. Now, the idea of paying employees based on the region where they live isn’t new. But the pandemic has been a catalyst for remote work. Many employees moved from big cities like San Francisco or New York to smaller, less expensive cities like Boise. Are employers considering making the pay rate of a remote employee different from a hybrid employee?

“Yes, we would expect that companies will continue to set different pay rates or ranges for their different workforce segments such as remote, hybrid, or on-site workers,” Madden says. “What this may look like in practice depends on the company’s geographic pay policy, which will define each type of workforce segment as well as identify how each segment’s pay will link to a national or geographic pay structure.”

Google is an employer where this struggle is currently playing out. The tech giant has always paid differently based on location, but different pay rates have taken on “heightened meaning as some 17,000 Googlers have either relocated during the pandemic or gone fully remote,” Fortune’s Beth Kowitt wrote in a recent article. “The premise of having your salary adjusted for doing the same exact thing, just in a different zip code, has become perhaps the biggest sticking point for employees—even those who are grateful for the option,” Kowitt wrote.

Google will also have to effectively navigate heightened pay transparency if California Governor Gavin Newsom approves a recently passed bill that mandates employers with 15 or more workers to add payscale to job postings. Newsom has until the end of the month to sign the bill into law. California may join New York City, Colorado, and Washington, which are all areas that will require employers to include pay scale in job listings. WTW expects the recent wave of pay transparency legislation to continue, Madden says.

Research points to annual pay raise budgets in the U.S. getting a bump in 2023 from the longtime 3% raise to 4% or more next year. I asked Madden if some companies have expressed concern that disclosing pay rates would result in questioning and having to increase the salaries of existing employees even more. 

“Some organizations fear that this will be a result,” she says. “But they should be also concerned with the pay gaps that the current talent market is causing. Companies should conduct a pay equity analysis to understand if their past practices as well as any potential changes to their pay structures and pay ranges are not causing unintended pay gaps.”


See you tomorrow.

Sheryl Estrada
sheryl.estrada@fortune.com

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