25 Mar Should You Offer Home Office Stipends?
Your employees want to make their workspaces at home efficient and comfortable. Remote work stipends can cover that. You determine what’s eligible. A stipend can cover a laptop, bookcases, lighting, coffee, electric and utility bills, toilet paper, coworking space fees, learning and development perks, and even music and podcast subscriptions.
A work-from-home stipend is in addition to an employee’s base salary and helps them purchase items and cover expenses incurred while working remotely. Stipends vary and are flexible, from creating or updating a home office to covering the cost of working at a coworking space.
Your budget will help you decide which expenses to include. 8th Light, headquartered in Chicago, offers a $200 monthly stipend for home office furniture, notebooks, monitors and accessories through a partnership with FirstBase. San Francisco-based Alt offers $100 monthly to be used at employees’ discretion — for lunches and/or their home office. In general, companies offer between $50 and $250 per month or $1,000 per year.
Home-office stipends can be offered:
- As lump sums to newly hired employees to set up a home office. Is there any downside? You may pay more than the employee ends up using.
- Up front on a monthly, quarterly, semiannual or annual basis. Employees need to stretch the funds until the next scheduled payment.
- As reimbursements when they are incurred as eligible business expenses to ensure you pay exact costs instead of estimated operational costs.
What are the rules?
Stipends are taxable income for employees because they’re extra money provided in addition to their wages. In some cases, employee reimbursements for remote expenses are tax-free for employees so long as the expense is eligible, business-related and properly documented. The perk stipend model can include simplified tax handling via software packages that automatically deal with such systems. But know that the IRS considers reimbursement an accountable plan — the business portion is the only reimbursable part. If the benefit is recurring, employees pay taxes. It’s important to check with the IRS and your state and local laws to ensure you’re complying with all regulations.
Your company stipend policy can outline eligible work-related expenses, allowance amount and frequency and whether employees must return purchases if or when they leave the organization.
Would a work-at-home stipend work for you? Advantages of a stipend policy include the following:
- It can be flexible and customizable. Employees can use the stipend to create an environment to produce their best work, no matter where they’re located or what their work schedules are.
- It can boost productivity. Remote employees need the same tools and experience as in-office workers. Ensure everyone has the equipment and environment they need to succeed in their roles. Noise-canceling headphones or a white noise machine will help workers focus and be more productive.
- It can increase recruitment and retention. You’ll have more remote talent to choose from and maintain a competitive edge in your industry. Helping employees feel as supported and valued as their in-office counterparts leads to lower turnover.
The program can help everyone
As a personalized benefit, a remote stipend says that you trust your employees to use the benefit in the way that’s most useful, optimizing your resource allocation and minimizing wasted finance and time expenditures. Employee surveys and check-ins can help ensure stipends give remote workers what they need to be productive.
A “State of Remote Work” report noted that only 37% of remote workers have dedicated office space, with 21% using a bedroom, 20% working in their living room and 14% roaming from room to room. Your work stipend can enable employees to set up functional and productive workspaces.
Original content by © IndustryNewsletters. All Rights Reserved. This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.