Home Office Stipends: With Remote Work Trending Up, Will They Become More Common?

In 2023, 12.7% of employees worked from home full time.¹ That number is expected to rise to 22% by 2025.² It might be an exaggeration to say that the office as we knew it is no more, but in some sectors and for certain types of jobs, permanent remote work will become commonplace, if not the norm.

This shift happened so quickly and unexpectedly that, in many cases, benefit programs are still trying to catch up. A home office stipend is one example of a benefit that could prove essential to the success of long-term remote work. But as of 2021, only 20-25% of companies offered it.³

Some states including California, Iowa, Illinois and Montana have instituted policies that require reimbursement of employees for essential business expenses. At this time, there is no federal requirement for reimbursements or stipends for remote workers, providing that job-related employee-funded expenses do not effectively lower the employee’s compensation below the minimum wage. This raises the question of whether companies should take the initiative to offer a home office stipend or reimbursement.

The Argument for a Home Office Benefit

Because so many employees have an appetite for remote working arrangements, some companies see permitting employees to work remotely as a benefit in itself, especially as it often comes with savings for the employee in commuting costs, workweek meals, etc. By that logic, it’s reasonable and fair to expect employees to invest in the set-up and maintenance of a functional remote office.

But there’s a flip side to that argument. Companies also benefit financially by moving employees to remote status. It has been estimated that during the pandemic, employers saved over $30 billion every day by having employees work from home.⁴ According to one estimate, an employer can save, on average, $11,000 per employee per year just by letting them work remotely half of the time.⁵

With both employer and employee benefiting financially from a remote work arrangement, the question becomes whether there is equity in the quality of the work experience of onsite and remote employees. At the office, you provide employees with a desk and chair, computer, monitor, office supplies, access to printers and scanners, and file cabinets. You pay to light, heat, cool, and clean their work environment, and for phone and internet service. Perhaps you also bring in the occasional lunch, dinner or snack to reward employees for working overtime or to celebrate a success. If you consider all those things important to the health, productivity and job satisfaction of onsite employees, the same ought to hold true for remote workers.

One survey found that three quarters of remote workers have to pay for their own Internet connection.⁶ In cold climates, they might have to keep the heat turned up all day, instead of turning it down when they leave for the office. The costs can add up quickly, and can cut into compensation significantly. Employees who can’t foot the bill for those expenses and for dedicated office furniture and equipment, have to “make do” with the dining room table and chair, slow or unreliable internet, bad lighting, and one less monitor than they really need—an arrangement that worked in a pinch, but isn’t sustainable long term.

What Expenses Should Be Covered?

The goal should be a work environment that meets or approximates the quality of the environment employers provide for employees on-site. That might mean a dedicated right-sized work desk, an ergonomically sound chair, a faster or more dependable internet connection, a second monitor, good lighting, and locking storage to keep business documents secure. In addition, successful remote working might require a better-quality microphone or headset for meetings, standing desks (since so much more of the day is spent in one spot, versus walking to meetings), a preferred mouse or keyboard. Other possible areas for assistance are heating and cooling costs, mobile phone service, and even an allowance for periodic lunches, snacks, and trips to the coffee shop “on the company.” (The social media company, Buffer, provided $200 a month for food or drinks purchased in coffee shops, which some employees use as coworking spaces.⁷)

How Much Should I Offer?

There’s no single formula for helping with the home office expenses of your employees. Tech leaders, Twitter, Facebook and Google, provide a flat $1000 for remote work expenses.⁸ Basecamp offers a stipend of $100 a month to put towards the rental of coworking space—an alternative to the home office that’s likely to gain in popularity post-pandemic.⁹ Some companies go even further, providing interior design services to help remote workers adapt a room or part of a room as a home office. Other companies’ offerings are more modest: For example. $500 to set up a home office, plus an additional $200 each year for office related needs or reimbursement for coworking space or internet service. One company provides up to $250 a month to remote (home-based) employees, and between $100 and $200 a month to workers whose work is done in coworking spaces.

You can exercise as much or as little control as you want over what expenses are covered, the amount of financial support you offer, and how you offer it. Decide if it’s monthly, quarterly, yearly or a one-time set-up allowance. You can, if you wish, specify where equipment and furniture should be purchased. However, giving employees some leeway in the deciding how to spend the stipend builds a greater sense of connection with the company. You’re telling them you trust them to know what they need to do their jobs well.

Get a Jump On the Future

It’s not hard to imagine that, in the months and years to come, employers will face increasing pressure to help with the home office expenses of the growing number of permanent remote workers. By acting now, your company can position itself as a benefits leader and gain an advantage in the hiring and retention of remote workers. BASIC can help you set up a home office benefit account that works for your employees and you.

BASIC offers a Home Office Reimbursement Account and separately, an Office Supplies Expense Reimbursement Account from more than 30 in-demand benefit offerings that can be used to create custom plans that meet your staff’s unique needs. Plus, it can be configured as a non-taxable benefit for employees and tax-deductible for employers.