Google employees who opt to work remotely could have pay cut by up to 25% if they live in less expensive areas

Google employees who live in less expensive areas could have their paychecks cut by up to 25 percent if they opt to work from home permanently. 

The company has provided workers with a calculator that determines their change in pay, and those who opt to work remotely and had longer commutes pre-pandemic will be hit the hardest.  

Google has defended the move, saying compensation packages have 'always been determined by location'. 

'We always pay at the top of the local market based on where an employee works from,' a Google spokesperson told Reuters, adding that pay will differ from city to city and state to state. 

Google employees make a median compensation of $134,386. 

Google employees who live in less expensive areas could have their paychecks cut by up to 25 percent if they opt to work from home permanently. Google has defended the move, saying compensation packages have 'always been determined by location'

Cutting paychecks for employees who opt to work from home is an experiment that's been taking place across Silicon Valley, which often sets trends for other large employers. 

Facebook, Twitter and Microsoft also cut pay for remote employees who move to less expensive areas. 

The fifth member of the big 5 tech companies - Apple - hasn't announced a final decision about its work-from-home policy. 

Some employees wrote a letter advocating for location-based pay - citing savings such as travel costs - which has sparked an internal debate, imore.com reported at the end of July. 

Facebook CEO Mark Zuckerberg announced the new work-from-home policy in a May 2020 livestream.

'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 in those places,' Zuckerberg said. 

'We’ll adjust salary to your location at that point. There’ll be severe ramifications for people who are not honest about this,' he added.

Alphabet Inc's Google stands out in offering employees a calculator, seen by Reuters, that allows them to see the effects of a move. 

The calculator is based on the US Census Bureau metropolitan statistical areas, or CBSAs. Stamford, Connecticut, for example, is not in New York City’s CBSA, even though many people who live there work in New York. 

Screenshot of what Google's Work from Home tool looks like

The tool will show the difference in pay for someone who moves and works remote

But smaller tech companies - like Reddit and Zillow - have shifted away from the location-based pay model, citing advantages when it comes to hiring, retention and diversity. 

In an October 2020 blog post, Reddit said it will eliminate the geography component of its pay scale in the US. 

That allows employees to work wherever they choose in the country while getting paid in the same pay ranges of high-cost cities like San Francisco and New York. 

One Google employee, who asked not to be identified for fear of retaliation, typically commutes to the Seattle office from a nearby county and would likely see their pay cut by about 10 percent by working from home full-time, according to estimates by the company's Work Location Tool launched in June. 

The employee was considering remote work but decided to keep going to the office - despite the two-hour commute.

'It's as high of a pay cut as I got for my most recent promotion. I didn't do all that hard work to get promoted to then take a pay cut,' the employee said.

A cyclist rides past Google Inc. offices inside the Googleplex headquarters in Mountain View, California

Screenshots of Google's internal salary calculator seen by Reuters show that an employee living in Stamford, Connecticut - an hour from New York City by train - would be paid 15 percent less if she worked from home. 

Meanwhile, a colleague from the same office living in New York City would see no cut from working from home. Screenshots showed 5 percent and 10 percent differences in the Seattle, Boston and San Francisco areas.

Interviews with Google employees indicate pay cuts as high as 25 percent for remote work if they left San Francisco for an almost as expensive area of the state such as Lake Tahoe.

Jake Rosenfeld, a sociology professor at Washington University in St. Louis who researches pay determination, said Google's pay structure raises alarms about who will feel the impacts most acutely, including families.

'What's clear is that Google doesn't have to do this,' Rosenfeld said. 'Google has paid these workers at 100% of their prior wage, by definition. So it's not like they can't afford to pay their workers who choose to work remotely the same that they are used to receiving.'

A Google spokesperson said the company will not change an employee's salary based on them going from office work to being fully remote in the city where the office is located. Employees working in the New York City office will be paid the same as those working remotely from another New York City location, for example, according to the spokesperson

Google didn't respond to DailyMail.com's calls and email for comment, but a spokesperson told Reuters that the company will not change an employee's salary based on them going from office work to being fully remote in the city where the office is located.

Employees working in the New York City office will be paid the same as those working remotely from another New York City location, for example, according to the spokesperson.

Google did not specifically address the issue for commuters from areas such as Stamford, Connecticut.