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How to Set Salaries for Remote Workers

Tope Longe
gig economy

A well-informed hiring manager is undoubtedly aware of the many changes that have taken place in recent years when it comes to hiring employees. As a consequence of these changes, traditional work patterns are being replaced by remote jobs that require a different metric when it comes to setting salaries. Contributor Tope Longe, Content Marketing Specialist – Time Doctor.  

The shift to remote workers in the job market is partly due to the sudden realization that working from home is no longer viewed as an oddity, but as a legitimate means of employment. A remote worker can fulfill any position from anywhere in the world that doesn’t demand an in-office presence. In addition, employees are requesting flexibility and companies save money while also benefiting from the availability of a larger workforce. It seems like a win-win situation. Yet, one of the most ambiguous issues employers have to deal with is remote workers’ salaries.   

According to certain analysts, the standard yearly earnings for the majority of remote workers averages about $19.00 per hour globally regardless of the industry. Other researchers beg to differ. For example, the site Flexjobs.com sets the median rate for a java developer at $40.32 per hour. Even Forbes has jumped into the work at home spiel. On the basis of their research, a Senior Systems Engineer can make anywhere from $130,000 to $160,000 per year while a Registered Nurse performing home health assessments can earn at least $60,000 annually. On average, regardless of the job, a telecommuter will make $4,000 more than their in-office counterparts.  

Undoubtedly, there are a multitude of components that determine the salary companies are willing to pay remote workers. Line of work, experience, skills, and more are taken into account. What’s more, rates can differ considerably when hiring full-time and part-time telecommuters. In some instances, the hourly rate for a part-time remote worker is higher than full-time in-house employees!

Besides income, companies should assess additional costs for equipment. Will a remote employee require a specialized computer with enhanced security features and extended warranty options? What about desks, chairs, and printers? Are OSHA guidelines applicable? Clear cut home office equipment guidelines and policies for remote employees to follow should be put forward or discussed beforehand. 

Companies are also advised to provide remote workers with the materials needed to fulfill their job responsibilities efficiently. Sometimes, companies will simply offer a stipend for additional supplies pertaining to the job. Afterwards, whether to offer additional provisions can be addressed.  

Just Works.com states “Your remote worker will be considered an employee in his or her state of residence, not the state where the company is based.”

What about telecommuters working for a company in the same country but a different city? For example, a company hiring an IT Specialist in New York City will probably pay a higher salary than for an employee in Dayton, Ohio, even though both are performing the same job responsibilities. This consensus may go against the grain of conventional salary analysis; nevertheless, it comes down to economics and practicality. The cost of living can differ greatly between cities and countries.   

When it comes to world-wide locations, telecommuters working for the same company in different countries will automatically see a difference in salary – to a large extent – due to currency variables. A remote worker in Slovenia for example, will not receive the same salary as a remote worker in a non-EU country like Switzerland. 

Huge global corporations like American Express fully grasp the particulars of international payrolls confirming that: “Payroll expenses are a crucial part of every business, and foreign exchange rate fluctuations can result in unanticipated increases in payroll expenditures. A business’s yearly profits can vanish if exchange rate risks are not correctly forecast and properly managed.” 

“An employee must still be paid, whether the foreign exchange rate means that the salary paid is much higher in a company’s home currency.” 

Additionally, sites like Payscale.com provides up-to-date salary solutions offering businesses the opportunity to track and analyze their compensation strategy in order to specify how to conceptualize and manage employees pay and benefits. As an employer, it is essential to make sure that remote workers are compensated fairly without spending more than necessary.  

HOW TO DETERMINE WHAT TO PAY REMOTE WORKERS

Salaries for conventional positions that require a physical presence in an office, are usually decided after a company studies a stockpile of data. One of the most important factors being analyzed is    how much other workers – in the same field – are being paid in the company’s immediate region. 

Based on data provided by Flexjobs.com these are the three “key” factors for setting remote salaries: 

1. Company Location and Salaries
Salaries are measured solely by the responsibilities of the job at a specific level by calculating, using an average, of roughly 70 percent of the market. If a telecommuter is in an expensive city, some flexibility is permitted. Overall, salaries are set regardless of the remote worker’s location. Usually the barometer is fixed between a relatively expensive location and a cheaper one. 

Then again, a telecommuter living in an expensive district may receive earnings based solely on where the company’s main office is located. If it’s in a less expensive area, that may mean less pay. Other corporations may decide depending on the national average. Some business owners hiring remote workers simply want the same salary outcome regardless of where a stay-at-home employee is located.

2. Remote Worker Location and Salaries
Having employees in a high-cost metro area while having others in differing regions is quite advantageous – if a company knows how to properly compute salaries based on the remote worker’s location.

When salaries are based on a remote worker’s location, a person working from home in San Francisco will require a different salary than someone working in Kansas City, Missouri. Hence the need for flexibility when considering salaries based on a worker’s location and not the company’s location.  

Employers of work-at-home employees should regularly make themselves accustomed to the city, state, or country laws of their employees location in order to determine which employment rules and regulations apply.  

3. Salaries Influenced by Market Trends Irrespective of Location
Companies based in a mid-sized city, may come to the conclusion that “comparing what they offer in terms of the salary plus benefits and bonuses of an in-office employee in the same market,” is the ideal medium for determining a remote employee’s salary.”

With this approach, companies pay stay-at-home workers for the job they are doing. The rate is somewhat fixed and not particularly dependent upon a worker’s location. Salary data is decided upon on a number of factors pertaining to the job at hand. That said, these telecommuters tend to be on the peripheral of key cities, regardless of how much the company pays or where their city is located on a global scale. In most instances, companies will offer extras like bonuses that can considerably elevate a person’s earnings. All the same, each job has a specific pay range.   

Data for work statistics based on remote salaries is still fairly new; however, sites like SALARYEXPERT and Salary.com are very informative. 

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