Who pays for remote work expenses?

Marija Kojic

Last updated on: December 23, 2021

In this post, we’ll be talking about the expenses remote workers accumulate over a month to build a suitable working environment and cover the equipment that ensures they can do their jobs with the quality expected from them.

But, who covers the expenses associated with working from home?

  • Who pays for the Internet?
  • Who pays for the laptop/desktop computer?
  • Who equips the remote home office with furniture?
  • Who pays for a co-working space?
  • And, if some of the remote work expenses are covered, do the remote employees take a pay cut as a result?
Who pays for remote work expenses

These are all vital questions to ask and answer – after all, remote work is no longer viewed as a benefit or reward only a select few can enjoy.

Quite the contrary, according to a recent study, the number of fully virtual teams is on the rise. And, as much as 99% of traditional employees would love to work remotely in the future, to strike a better work-life balance.

What’s more, employers are more and more willing to introduce remote work as a fully-fledged work arrangement within their companies.

This is because they believe that a better work-life balance helps employees reduce workplace stress – a notion fully supported by several studies.

In turn, reduced stress and a better work-life balance make the employees more productive and efficient at their jobs.

So, the company benefits as well.

In line with the prospective rise of remote employment, as well as its prospective benefits, here are the answers to all your burning questions about full-time remote work and its expenses – including some basic definitions of what remote work really means:

What does remote work entail? 

Remote employees or telecommuters are people employed by a company who carry out the bulk of their workload while working outside of a traditional office.

Remote workers may choose to work from:

  • a home office
  • a coffee shop
  • a co-working space

Some remote employees may even choose to work while traveling to distant cities and locations – they’re usually referred to as digital nomads.

Remote workers may be expected to work at the same time as their office-based peers.

But, most of them enjoy flexible working hours – either because they live in a different time zone than the rest of their colleagues, or because flexible work time is prescribed by the remote work policy of their companies.

In such a case, they are expected to meet a certain norm (e.g. 8 hours per day) – they track their time on work tasks to:

  • document their start and end times for the day
  • show what projects and tasks they’ve been working on

People usually decide to pursue a remote work arrangement because of the perks – and here are only some of them:

What are the perks of remote work?

  • You’ll enjoy a better work-life balance – you’ll finish your work assignments AND spend more quality time with loved ones at home.
  • You’ll save the time you’d otherwise spend commuting – you’ll have more time to spend on your priority tasks
  • You’ll save money you’d otherwise spend commuting – you’ll save the money you spend on gas, maintenance, and public transportation.
  • You’ll be able to work from the comfort of your own home one Stanford study shows that people working from home are 13% more productive than their office-based peers.
  • You’ll be able to travel more – you’re already working remotely, so why not travel and work from there?

Once the perks have drawn you in, in order to work remotely properly, you’ll first need to equip your home properly. Here is the remote working equipment remote workers need in their remote workstations:

What do you need for a telecommuting office setup?

  • You’ll need proper furniture – no matter where you work from remotely, you’ll need a desk, chair, etc.
  • You’ll need hardware for working remotely – this includes a mobile phone, a laptop/desktop computer, a second monitor, printer, etc.
  • You’ll need software for working remotely – this includes tools you need to use to carry out your main line of work, as well as the tools you use to communicate and collaborate with your team, etc.

So far, remote work and freelance work largely overlap – so, what is the difference?

And, most importantly, how does this difference affect the question of remote work expenses?

What’s the difference between remote workers and freelancers?

Most freelancers are remote workers, but not all remote workers are freelancers.

The term “remote worker” is often tied to someone who’s employed in a company full-time.

The term “freelancer” is often tied to someone’s who’s hired to work on one (or more) short-term projects.

Moreover, freelancers cover their own remote work expenses (i.e. write them off as taxes).

On the other hand, the question of whether full-time remote workers or their employees cover the costs of the said remote work is a bit more difficult to answer.

Let’s start with the basics plaguing many who are considering a remote work arrangement.

Do remote workers get paid less?

Remote workers seem to enjoy a number of great perks. But, do the perks pay off, or do remote workers get paid less than their office-based counterparts?

The answer depends.

According to research made by Buffer, here’s how much money per year remote workers make:

how much money per year remote workers make

As evident, the highest number of remote employees (28%) gets paid less than $25K – with a total of 65% of remote workers who get paid less than $75K.

So, these numbers indicate that remote employees do get paid less than the more traditional workers. 

However, this largely depends on the company you’re working for (1) – some may expect you to take a pay cut for your remote role and some simply won’t.

Moreover, the question of whether remote employees get paid less is also tied to the industry of work (2).

For example, one study shows that developers who work remotely earn 40% more that developers who come into the office.

Another important factor is your location (3) – companies often define your yearly salaries based on the costs of living in your country or city.

So, someone living and working remotely from Kansas City will likely have a lower base salary than someone living and working from New York City. 

In any case, no matter what the remote work policy prescribes, one research states that as much as 40% of employees would take a pay cut to work from home.

In the end, let’s circle back to the previously mentioned statistics. If you’re part of the 65% of remote workers who get paid less than $75K, bear in mind that these figures show the yearly salary without the money you save in the long run while working remotely. 

How much can you save by working remotely?

According to research, Americans spend as much as $5,000 on commutes per year. They also spend extra money on professional wardrobe ($925), as well as restaurant lunches and branded coffee ($1,040).

That’s almost $7,000 you save by working remotely per year, right there. 

Now, If you’re part of the 35% of remote employees who get paid more than $75K that means you can quickly make enviable savings account out of your remote work arrangement.

And, if you’ve taken a pay cut in order to work remotely, remember that you may still make more than your office-based peers. For example, if you take a $4,000 pay cut, but save $7,000 on various expenses, you’ll still be earning $3,000 more.

Now, let’s move on to the matter of who pays for the remote work expenses.

In gist, who pays for what?

In gist – the answer depends once again.

Some companies offer more to their remote workers, some offer less.

Some require the workers to cover their own costs.

Others provide their remote employees with access to a company computer (one they’ll most likely have to return when they move to a new job, of course).

Some companies even provide a stipend to cover the costs of a remote office.

Here’s what may be included in your company’s remote work policy, based on some of the most common remote work reimbursement questions:

Who pays for the work equipment?

Work equipment includes all hardware and software you use to carry out your work – it includes your Internet connection, your laptop/desktop computer, cell phone, as well as the apps you use to facilitate work.

Who pays for the internet connection?

According to research that covered 1,900 remote workers from 90 countries, 78% of remote workers pay for their own internet connection.

In truth, there is no wide-reaching federal law that requires the employer to reimburse Internet expenses for their remote employers – only some states require employees to do so.

If your Internet connection is crucial for you to carry out your work, you can discuss this with your supervisor, and maybe even get part of your Internet fees covered by the company.

After all, the research sample shows there are 22% of remote workers who do have their Internet expenses covered – so, it’s not something unheard of.

Who pays for your laptop/desktop computer?

When it comes to the equipment your company will provide you with for your remote work, chances are it’s going to be a laptop (or maybe even a desktop computer).

This probably has a lot to do with the fact that it’s in the interest of your employers that you have a reliable, secure, and fast machine to carry out your work on.

However, bear in mind that you probably won’t be able to get a company laptop if you’re working in a small business – due to a budget that’s probably limited.

Who pays for the software you use?

You’ll likely need a number of business-specific and more general tools to help you carry out your work and collaborate with colleagues remotely.

  • If you’re a designer, you’ll likely need the Adobe Creative Cloud package, or a similar package – this includes Adobe Photoshop, Adobe Illustrator, and Adobe Animate, or their alternatives.
  • If you’re a programmer, you’ll likely need a great editor system and database tools, among other tools.
  • If you work in sales, you’ll likely need an efficient power dialer and marketing intelligence tool.
  • You’ll likely need a strong audio and video conferencing system, for daily meetings and other arrangements, considering that you can’t meet with your clients and colleagues face-to-face on a regular basis. Alternatively, you can use a chat or communication app for this purpose.
  • You’ll also need software that records the time you spend working, to make sure you document your work time correctly.
  • You’ll likely also need project management tools or some similar software that helps you track project progress and collaborate with your other remote colleagues.
    If your company is supplying you with a laptop, you’ll probably already have these tools installed. Some of them will even be free, to begin with.

If you’re working on your personal laptop or desktop computer, your employer will likely still pay for your work software. As for the collaboration and project management software, the company will probably pay for a team plan – and you’ll be included.

💡 Clockify pro tip
Many tools your team will use for remote work come with a hefty price – but you don’t have to spend a fortune on tracking the time you spend working. Try Clockify, our straightforward and efficient time tracker for teams that allows you to add an unlimited number of teammates and track time on an unlimited number of projects and tasks, for free.

Who pays for the additional equipment?

Additional work equipment you may need may include printers, scanners, cell phones, and multiple monitors – the exact equipment you may need will depend on your industry and the job position you hold.

And the chances you’ll have expenses covered for them depends on how crucial this equipment is for your work.

When it comes to a cell phone, chances are you’ll be given one to carry out your work if you work in sales or any other position that requires you to make frequent phone calls.

Unless printers and scanners are absolutely crucial for your work, you’re not very likely to get them.

When it comes to multiple monitors, some types of professionals are more likely to get them than others.

For example, if you’re a designer or programmer, your second monitor will be just as important for your work as the first one – accordingly, your chances that you’ll get one will significantly increase.

What is the California telecommuting law?

We’ve already mentioned that there is no wide-reaching federal law that requires employers to reimburse the equipment expenses of their remote employers – however, some states do have their remote work policies regarding work equipment clear.

For example, the matter of who pays for work equipment is legislated in California – through the California Occupational Safety and Health Act. 

According to it, employers are required to make sure their employees are working in safe and healthy surroundings –  no matter whether they’re remote or office-based. It also requires employers to reimburse their remote employees for all their work-related expenses.

This includes the remote workstations they create in their homes, as well as the Internet fees, and tax deductions.

Moreover, according to the labor code 2802 cell phone law, remote workers who use their cell phones for work are entitled to be reimbursed for this time by their employers.

Who pays for your remote office?

When working remotely, you’ll likely work from home – in that case, it’s best that you have a home office equipped for that purpose.

However, you may also choose to work from a co-working place.

In any case, this may mean more expenses.

Some companies don’t cover these expenses, come cover these expenses to an extent – with a predefined home office stipend.

Let’s see how it all works in practice.

Does the employer pay for the remote home office?

According to research, as much as 84% of remote workers prefer to work from home – despite the popular image of remote workers who often travel and work from coffee shops.

This may have something to do with the fact that you can have some of your home office expenses covered – much easier than if you were to make other remote work arrangements..

Your employee may not be required by law to equip your home office, but he or she may need to make sure your office is “comfortable enough for your health”.

According to the Occupational Safety and Health Act (OSHA), employers are not mandated to provide ergonomic chairs and workstations, but one General Duty Clause mandates the employers to keep the said workstations void of all hazards – and this includes “ergonomic hazards”.

In line with that, your company may provide you with an ergonomic chair, monitor stand, and similar tools to help keep your office ergonomics. An increasing number of companies will even cover the costs of a stand-up desk or similar equipment meant to increase your productivity if you ask for it.

However, some companies may also implement an ergonomic program to make sure you’re aware of proper conduct in terms of ergonomics – and you’ll be the one to cover the expenses.

Again, it all depends on your company’s remote work policy.

💡 Clockify pro tip
Our blog post about being productive working from home has a section dedicated to home offices – check it out for the best tips on how to furnish and arrange the perfect home office.

What is a home office stipend?

A home office stipend is an amount a company pays you to reimburse for the expenses of a remote home office. Interestingly, a home office stipend may cover more than just furniture – it will likely include your hardware and software if it’s not otherwise provided.

You may be in a position to arrange a home office stipend that covers the costs of:

✅ your work equipment

✅ your employee insurance

✅ renting your home office (if applicable)

✅ your internet

✅ cell or home phone

But, coming down with the exact figure for your stipend may be difficult – the price for quality ergonomic chairs begins at $200, and an average work desk is also priced at $200. The costs of software and hardware you’ll need depends on your job position and industry.

Depending on the company, you may be allowed to keep the said equipment after you leave your position at the said company – however, most companies will require you to return the stipend if you quit after a short time, say, several months.

If you get a home office stipend, you’ll always need to document your bills – however, if your arrangement says you’ll get reimbursed for business calls, you may not be reimbursed for electricity bills.

According to the Bring Your Own Device policy (BYOD), you may receive a mobile stipend that covers work-related calls you make from your home – this mobile stipend usually falls somewhere between $30 and $50 per month or $430 per year.

According to an Oxford Economics survey, 89% of companies provide at least a partial mobile stipend to cover phone expenses for their BYOD employees. What’s more, 58% cover at least connectivity stipend – this also includes device purchases.

If you have a great case about why working from home would benefit the business, you’ll be more likely to make arrangements for a home office stipend.

What is a home office tax deduction? And is working from home tax deductible?

Before 2018, if you used your home office strictly for business, you were in a position to deduct at least a portion of your home expenses for taxes.

For example, if the size of your home office is 300 square feet (roughly 28m2), the IRS would provide you with a $5 deduction for each square foot – which may build up to as much as $1,500 you’d be able to deduct for taxes on your home office space.

However, as of 2018, the home office tax deduction law is no longer applicable for people working remotely for companies – only for people who are self-employed, i.e. freelancers.

So, you can no longer deduct home office expenses for taxes.

Does the employer pay for co-working space? 

According to research, only 8% of remote workers work from a coworking space.

Probably because the average cost of a coworking space in the US ranges from $195 to $387 per month, depending on the type of desk you want.

And, probably because 76% of remote workers have to cover the costs of a coworking space from own pocket.

However, if you want to make a case for your co-working space in front of your employer, bear in mind that there are elements that may tip the scale in your favor.

For example, if you work from a remote part of the globe (instead of the nearby city where you can easily drive to your company’s offices if you want to enjoy a “more traditional working environment”), your employer may be more willing to cover the costs of a suitable co-working space.

If you want to make the case for your company covering your co-working expenses, explain that a co-working space would help you:

✅ avoid the distractions of working from your home or a coffee shop

✅ always have a reliable internet connection

✅ be more productive overall

✅ install a dedicated business address for your company in the said co-working space

✅ have a professional place to attend video conferences and video calls with clients

Alternatively, you may need a co-working space to test out a new market in a new state or city – if your company sent you to a new city to test out the waters for your business without opening full-fledged offices, you’ll more than likely to have all co-working expenses covered.

Who covers the other expenses?

Despite being a remote worker, i.e. free of a daily commute to work, you’ll likely still need to travel at least a little for your business.

You’ll also need to consider whether you’ll get the same benefits as your office-based colleagues.

Does the company cover travel expenses for remote workers?

Yes, even remote workers have to travel to work from time to time – if they’re required to visit the company’s headquarters for whatever reason.

This will depend on your company’s policy, your industry or even the culture in the country where your company is based.

You may be required to come to the office once a month or a couple of times over the year.

Your company will likely cover your flight (if you have to fly in), hotel expenses, meals, and other types of transportation you need.

However, there are restrictions on the amount you can spend on each item – for example, you may be restricted to only spending $20 on each meal to qualify for full reimbursement of your meals.

Will you still have work benefits if you work away from the office?

Most remote workers get paid time off and sick leave just like their office-based counterparts – however, they may take less sick days – after all, commuting for 1 hour while sick is much less convenient than working from home while sick. It’s a matter of choice more than need.

When it comes to the paid time off, some remote employees get unlimited paid time off – which entails a flexible amount of days per year you can use for your vacations.

Some companies even offer a travel stipend that lets you travel more – after all, you can work remotely, so they’re OK with you working remotely from various parts of the globe.

In conclusion… What should you ask from your employer? And how?

As evident, the question of who covers the expenses of remote work – the employer or the employee – may depend on a lot of factors:

✅ It may depend on the industry you’re working in.

✅ It may depend on the job position you hold.

✅ It may depend on the work equipment you need.

✅ It may depend on the situation in your company.

✅ It may depend on the official remote work policy of your company.

✅ It may depend on the country or state where your company is located.

In any case, if you have any questions about your company’s remote work reimbursement policy or you want to present your arguments for a stipend to cover the costs of an important piece of equipment, you can discuss it with your operations manager or employer.

Author: MarijaKojic

Marija Kojic is a productivity writer who's always researching about various productivity techniques and time management tips in order to find the best ones to write about. She can often be found testing and writing about apps meant to enhance the workflow of freelancers, remote workers, and regular employees. Appeared in G2 Crowd Learning Hub, The Good Men Project, and Pick the Brain, among other places.

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