Should You Provide a Work From Home Stipend? [Guide for Businesses in 2023]

Andrew Buck November 28, 2022
black and silver laptop on brown wooden rack

Do you provide a work from home stipend for your remote employees? If not, perhaps you should.

Between 2005 and 2018, the number of US employees working from home increased by 173%. And this was before a little thing called Covid forced everyone to set up a home office.

Those who continue to let employees work from home can seriously benefit from providing everything remote workers need to be comfortable, happy and productive. 

That’s what we’re going to discuss today. Keep reading to learn all you need to know.

What is a Work From Home Stipend?

A work from home stipend, or remote work stipend, is an allowance paid to employees to help with the cost of setting up a home office.

The most basic use for a work from home stipend is to cover the cost of remote working for the employee (which would otherwise be paid by the company when someone works out of the office). This includes things like equipment and technology that they need to do their job.

A work from home stipend may go further to include certain perks that are more readily available in the office.

Learn More: the most important Remote Work Tools to help you run a productive remote team.

Let’s look a little deeper now at what a remote work stipend can include.

What Should a WFH/Remote Work Allowance Cover?

There’s no universal list of things that a work from home stipend has to cover. It’s generally up to the business’ discretion.

At the minimum, it should cover what remote workers need in order to do their job. This might include:

Remote work allowances might also include things you’d usually get in the office, such as coffee and tea, lunch and snacks.

Remote work stipends could also cover the cost of a membership to a co-working space, in case the employee can’t (or doesn’t want to) set up a workspace at home.

How Does a Work From Home Stipend Work?

A work from home/remote work stipend might work as a cash payment, which the employee can use to cover their home office expenses.

Alternatively, the company could supply tools and equipment directly to the employee.

The second one is not technically a stipend or allowance, but it essentially works the same way. Many companies do it this way, providing a laptop and/or cellphone for example, which the employee can use for their work.

More often, though, it’s the latter. The company provides remote workers with a cash payment to cover costs of remote working, or they’ll reimburse the employee for the money paid.

Another option is to provide a flat payment to remote workers (either a one-time payment, monthly, or yearly), which they can spend as they wish.

Remote work stipends are generally pretty flexible. We’ll see a few examples of how real companies do it a little later on.

How Much is a Home Office Stipend?

The average home office stipend is somewhere in the range of $500-$1000. But it can vary from place to place.

Some companies can afford (and are willing to pay) more than others. It also depends on how much the company is covering. For example, just a laptop and a chair, or if it includes utilities, meals, etc.

But by looking at examples of companies with remote work stipends, we can comfortably put the average in the range above.

Some provide this in a one-time lump sum. Others in a monthly payment (on top of regular wages), some an allowance that renews every year.

To put this into perspective, take this study from Global Workplace Analytics, which discusses the savings companies can access by letting employees work from home.

The study suggests that employees working from home 2-3 days a week can save the company an average of $11,000 per year, in savings on office-related expenses, and additional benefits, such as higher productivity and lower absenteeism.

Do Businesses Need to Give Remote Employees a Work From Home Allowance?

In most cases, there’s no legal requirement to pay remote employees a work from home stipend, if working from home is optional.

If you make remote work mandatory, depending on your company’s location, you may be required to reimburse certain work expenses. There were several legal cases in California which highlight this.

Make sure you check with a legal professional for proper advice, tailored to your own situation.

Legality aside, there’s the question of whether you should offer a remote work stipend or not. 

According to Owl Labs’ 2020 State of Remote Work Report, only 20-25% of companies pay or share the cost of home office equipment and furniture.

Whether the number of companies that provide tech, such as computers and accessories, and utilities, is close to that is unclear. But it does appear that a large number of companies do not provide a full or partial remote work allowance.

Yet looking at the data we shared in the last section, a standard cost of $1,000 per year as a WFH stipend is far less than what it can save you as a company.

Furthermore, a large part of the $11,000 savings to the company comes from increased productivity:

Source

It’s difficult to expect employees to be productive if they don’t have a home office setup optimized to do so.

In addition, there are many other big benefits to being generous with remote work stipends. It really is an investment that pays off over time.

We’ll look at that next.

Related: check out some of the biggest Benefits of Remote Work.

Benefits of Providing a Work From Home Stipend

So what are the biggest benefits of providing a remote work allowance or stipend?

This cost – a proportionately small investment, really – can help you get more out of your employees, boost employee engagement, run a more close-knit team, and attract better new talent in the hiring market.

Let’s break it down a little closer.

Increased Productivity

The most obvious benefit is increased productivity.

You can’t expect the best results out of employees if they’re stuffed into poor working conditions. 

Imagine, in one case, an employee crammed onto the sofa, with a slow internet connection and a slow, old laptop.

Compare that to another, in a dedicated office space, with a fast computer, multiple monitors, a high-speed internet connection and an ergonomic chair.

Who do you think is going to be more productive? The second person is, most likely, going to provide more than enough added productivity to justify the cost of a yearly remote working stipend.

Positive Company Culture

There are huge long-term benefits when companies show that they care about their employees, and that they’re willing to invest in them.

This makes employees happier. They’re more excited to go to work each day (even if this is just a short trip down the hallway to their home office).

This happiness radiates and infects every area of the business, from the way people interact internally, to the vibe that comes out of the company.

Employee Retention

With a positive company culture and more enticing benefits, it’s easier to hold on to your employees and stop them from jumping ship for new opportunities.

This is another big cost saving. Losing an employee is estimated to cost approximately 1.5-2 times their salary. It’s hard to stay profitable when you’re always replacing people and training new staff.

Higher retention rates also means more stability at the workplace, which makes it easier to build a high-performing and cohesive team with a shared vision.

Learn More: how to effectively boost Employee Satisfaction and Retention in your startup.

Hiring Power

Benefits like home office stipends also offer a powerful carrot to attract new, talented hires.

As more companies adopt a modern, forward-thinking approach, you’re going to find most of the companies you compete with will offer benefits like this.

It’s going to be hard to compete without offering a similar benefits package of your own. 

Examples of Real Companies with Remote Work Stipends

To get the best idea of how work from home stipends can work, see these real examples from notable companies who have remote work allowances/work from home stipends.

Google

When the coronavirus shutdown happened, Google extended an offer to reimburse up to $1,000 to pay for equipment needed to work from home.

HubSpot

As part of their benefits package that had HubSpot voted as one of the best places to work (per Glassdoor), HubSpot also provided their employees with a $1,000 stipend to cover remote work costs in 2020.

Shopify

Shopify offered the same during their office shutdown in 2020, with a $1,000 stipend too.

Basecamp

Jason Fried, Founder & CEO at Basecamp, wrote a detailed post making public their company’s benefits package.

Their employees are allowed to work wherever they want in the world. In addition to that, their benefits include the following:

Buffer

Buffer is another company who is extremely transparent about the inner workings of their business.
Their work-related employee benefits include:

Gusto

HR tool Gusto offers:

Reddit

Reddit’s benefits package includes:

They also provide Unlimited PTO, along with a number of other wellness benefits.

Uber

When Uber announced that employees can work from home, it came with a $500 allowance to set up a home office.

Flamingo

At Flamingo, we’re a fully remote company, and we have been since inception (the start of the company – not the movie).

We offer a yearly “tech spend” stipend, (refreshing every year), which team members can use to purchase anything they need to do their job, from home office supplies, technology, software, furniture, or just about anything.

Final Takeaways

More and more companies today are giving their employees the opportunity to work from home.

But with that, comes the need to help employees be comfortable and productive in their home office.

Employees shouldn’t have to foot the bill for work from home expenses. If you want someone to do their best work for you, you need to be willing to spend money to help them do it.

That means offering a reasonable remote work stipend, so your team members don’t feel like they’re out of pocket by trying to find a good place to work, and for buying new office equipment such as a desk, chair, and tech.

Even the most generous work from home stipend comes in well under the savings you’re likely to see by allowing employees to work remotely.

This is an investment that’s well worth it, especially when you consider the positive impact for you on job satisfaction, retention and hiring power.

Take a look at some of the examples above and think about how you can give a similar stipend to your remote team members.

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