Companies that adapt to the needs of their most important asset - the people! - are coming out on top in a tight labor market.
The ideal method for supporting your remote employees, which is also the most flexible and scalable option for HR, is a remote perk stipend - also known as a remote work allowance or remote employee reimbursement.
With stipends, an employer can offer more perks with less money, and ensure availability to everyone regardless of where they work. Who wouldn't want that? Remote workers will likely be a part of every organization's future. That's why we developed this guide to everything you need to know about remote work stipends.
Here's what is covered in this guide:
First, a definition:
A remote work stipend, or remote work allowance, is a sum of money given to employees for them to use to access perks while working remotely.
A remote work stipend can be used in one or both ways:
Further details on what they are:
As mentioned above, when setting up a remote work stipend, there are two approaches:
Below are three examples highlighting the unique approaches regardless of remote work policy:
They provide one stipend for their remote people:
They provide three stipends for their team:
Learn more about how Compt helped Webflow make perk allowances possible at their company.
They offer the following perk allowances for their team members:
To learn more about these in-depth and the thinking behind them, check out their post on employee benefits at Basecamp.
To learn more about these perks and their budget vs spent in 2019, check out this in-depth post about Buffer's perk stipend audit.
To learn more about Gusto—and the remote work benefits they offer employees—check out their profile on Levels.fyi.
For more information on Gimkit's work from home stipend, check out their write-up on WeWorkRemotely.
For more about Plaid and their remote work benefits, check out their profile on Levels.fyi.
For more on Zillow's remote work stipend, check out their profile on Levels.fyi.
For more on Almanac's remote work perks, check out the company's benefits page.
There are many more examples of companies doing this successfully. If you want to hear what our customers are doing, click here to talk with a Compt lifestyle benefits specialist.
Input some basic data into our Perks Vendor Cost Calculator to identify how much you're spending on all of your vendors for any remote work stipends you offer, and how much you can save by consolidating with Compt. Your CFO will thank you.
Not only does the perk stipend model offer a significant upside to how your company manages perks and benefits from the day-to-day management and tax perspective, but it also helps promote other strategic areas of the business such as your culture and values, attracting and retaining talent, inclusivity, and employee engagement.
Perk stipends also represent the most desirable new lifestyle benefit for HR and finance professionals alike.
One of the most impactful and relevant benefits of offering a remote stipend as a perk especially today is that it's adaptable for ANY working environment - whether that's back to the office, 100% remote, or something in between in your own version of a hybrid work model.
Here are even more specific benefits of a remote stipend or reimbursement program:
Strategic benefits for employers:
If you're still wondering why your remote team should have perks, here's a piece detailing why your remote employees need support like your on-site team members.
Download the free eBook to find out why lifestyle stipends are delighting employees, HR professionals, and finance teams alike!
Here at Compt, most of our customers who set up remote work stipends select one or more items from the following broad-based categories in which their employees can spend:
The broad-based categories are a deliberate approach to remote perks. With this approach, you're able to avoid building out a long list of vendors and initiatives you'll cover. If you do want to pick specific vendors, then you may want to go with a vendor-based approach.
Some examples include offering $100/month, $500/quarterly, or $2,000 annually.
If you are interested in getting insight into what the most successful companies do, we can share some insider information. You can also decide whether you want to offer a stipend only to remote team members or one to them in addition to what you offer all employees.
In the examples above, you'll notice that they most often surround a category of spending like health and wellness, continuous learning, family, or travel.
Doing it this way allows you to create a custom program for your team and then allows 100% personalization for them.
If you're looking for ideas for spending categories beyond a remote stipend, consider tying them to your company's culture, goals, or important cultural initiatives.
Managing the perk allowance manually
If you choose this option, be prepared to set up a process to track purchases, receipts, balances, approval, and paid perks, as well as rejections or ones which need further review. Consider using Google forms to track submissions, excel, or Google sheets to track progress, and be sure to create a process to track the nontaxable vs. taxable (for IRS compliance).
Choose software to help you manage this
Options like Compt can help communicate your programs to your team members, track balances and spending, scale the process for you, eliminate a large portion of work, and provide valuable metrics. Plus, Compt is 100% IRS compliant, making you and your finance team's job much easier.
Generally, work-from-home stipends are considered taxable income
Work-from-home stipends are not considered part of an employee's wages or salary—so the employer will not withhold taxes from that income, including Medicare or Social Security.
But work-from-home stipends are considered income. That means that they'll increase your taxable income for the year—so in the end, you'll end up paying taxes on your stipend income.
Because companies approach work-from-home stipends so differently, there's no single average for work-from-home stipends. For example, some companies give employees a one-time stipend to help them set up their home office (like Google, which gives remote employees a $1000 stipend to get their home offices up and running.) Others opt to give employees a monthly stipend (for example, $75 per month) to cover WFH-related costs, like internet, phone, and electricity. And others opt to do both.
Not only are the payment structures different, but the amount of the stipends can vary based on a variety of factors—for example, the cost of living in the area where the employee works from home or whether an employee is fully remote or spends some time in the office.
As mentioned, while stipends are not considered wages, they are considered additional income—and, as such, are also considered taxable.
However, how a company pays for your internet can determine if it's taxable. Stipends are generally taxable—while reimbursements are not. So, if a company gives an employee a stipend, it's considered taxable. But if they reimburse the employee for out-of-pocket expenses—and include internet costs in those expenses? The reimbursement would not be subject to taxes.
There's no way to know exactly how many companies offer remote work stipends. For example, buildremote assembled a list of 101 companies that offer WFH stipends. But that list is by no means exhaustive and doesn't include small companies—many of which offer a variety of perks to their employees, including remote work stipends.
While there's no way to pin down exactly how many companies are offering WFH stipends, it is fair to say that the number of companies offering remote work stipends increased in the wake of COVID-19, when a huge percentage of companies shifted to full or partial remote operations.
We're here to talk through your company's current goals and challenges with supporting remote team members. Let's connect to show you how employee stipends can help you reach your people any time, anywhere.