Work-from-home stipend gone wrong: Avoid these 5 pitfalls

The traditional 9-to-5 office job is slowly becoming a thing of the past. With advances in technology and a growing desire for work-life balance, more employees are seeking opportunities to work remotely. Companies that recognize this shift and offer remote work stipends can not only considerably lower their office space costs, but also set themselves apart as innovative and forward-thinking organizations.

However, simply offering a remote work stipend isn’t enough to reap the full benefits of remote or flexible work. Without carefully considering what the stipend is for, how much to offer, why you’re offering it, and what you expect the stipend to do for your employees and your business, you risk bleeding money that could be put to better use.

Let’s explore the role of the WFH stipend, why it’s essential, and common mistakes companies make when offering a remote work stipend and how to avoid them.

What Is a Work from Home Stipend?

A work-from-home stipend is a financial allowance provided by employers to cover the additional expenses employees incur when working remotely. This stipend helps mitigate the expenses of setting up a functional and comfortable home office, such as:

• Purchasing home office equipment, such as a desk and ergonomic chair
• Upgrading internet connections
• Using a VPN
• Investing in noise-canceling headphones

While some organizations may provide a monthly or one-time reimbursement for these expenditures, others opt for an ongoing monthly stipend that allows employees to cover their chosen essentials. Aside from furnishing an office, the stipend may also be used to cover things like coworking space rentals or flex meeting spaces for remote teams who want to collaborate in person outside of the office.

Why Companies Offer WFH Stipends

With the recent acceleration towards remote and hybrid work, many companies are recognizing the importance of supporting their employees wherever they choose to work. They understand their role in helping to maintain productivity and wellbeing in all manners of work, even outside of the traditional office. 

Those who work from home cover the costs of equipment, printing, internet, supplies, and a myriad of other little things they’re used to having at their fingertips in the traditional office. The company pays for these things anyway, and offering a stipend shifts the buying power from the company to the individual.

Beyond addressing immediate physical needs, a work-from-home stipend can also contribute to employee satisfaction and motivation. The stipend acknowledges the employees’ efforts in adapting to new working conditions, helping to foster a sense of belonging and loyalty among remote workers who might otherwise feel disconnected from company culture.

Overall, implementing a work-from-home stipend demonstrates an organization's commitment to creating an inclusive and supportive environment for its remote workforce. Recognizing that each remote worker’s situation is unique—whether they’re juggling family responsibilities or dealing with limited space at home—and making sure adequate resources are available helps workers stay productive and feel valued. 

As the lines between personal and professional spaces blur, offering financial support through a work-from-home stipend not only benefits employees but also serves as an investment in the organization as a whole. 

5 Common Mistakes When Offering Remote Work Stipends

Companies offer stipends for good reasons, but doing so can be a mistake without first considering the following pitfalls. Let’s explore five common mistakes related to WFH stipends.

1. Randomly Choosing a Stipend Amount

There’s no magic amount of money for offering stipends. That said, you also don’t want to pluck a dollar amount out of thin air. Stipends should be affordable to the organization but also provide sufficient financial help to the employees. 

The best approach is to talk with your remote workers to determine their needs and how much money would benefit them. For example:

• Do you have employees who need to create a home office setup from scratch?
• Will you encourage face-to-face collaboration a few times per month?
• Do you want to provide support beyond physical infrastructure, such as personal health and wellness?

For example, HubSpot gives their remote employees a flat $60 per month that they can use however they like. Gusto offers a one-time payment of $500 to cover home office equipment, then a $40 per month stipend for internet.

Webflow provides three separate stipends, one of which focuses on remote work: 

• $250/month for remote work expenses
• $200/month for health & wellness (all employees)
• $1,000/year for continuous learning (all employees)

There’s no right or wrong answer. Try to find a happy medium between your budget and your employees’ needs and wants.

2. Not Considering the Tax Implications of a WFH Stipend

Work-from-home stipends can be taxable benefits if they’re considered monetary compensation. However, if your employees are using their own funds to purchase home office equipment and supplies and receive reimbursement for those purchases, it may not be considered taxable income. Your employees should understand whether their stipend counts as income. 

This is important because, as with their salary, they’re not putting the full amount of the stipend in their pockets if it’s being taxed. This may impact what they’re able to do with their stipend, such as purchasing office equipment or renting a flex office space.

Before offering a stipend, your organization should communicate any tax implications so employees can budget accordingly. Also, if you have international employees, it’s important to understand local regulations for taxing stipends.

3. Not Offering the Stipend to All Remote Workers

Many companies overlook an important aspect when implementing a WFH stipend: including all remote employees. By excluding some remote workers from receiving these benefits, companies unintentionally create a two-tiered system that can lead to feelings of inequality and resentment among employees. It also undermines the principles of fairness and equity that should be at the core of any company's culture.

If remote work stipends are truly aimed at improving employee wellbeing and productivity, it is essential that they are provided to all remote workers across the board.

That said, you might consider offering different amounts to full-time vs. part-time remote employees. Your stipend might also increase alongside tenure in the company as a way to show your continued investment in your people (and their continued investment in your company).

4. Making the Stipend Too Difficult to Take Advantage Of

While it's understandable that some level of control and accountability is necessary when issuing stipends, overly complicated processes can deter employees from taking advantage of this perk. This creates additional work not only for the employee but also for your HR or accounting department.

If you have certain guidelines remote employees need to meet to be eligible for the stipend, try to keep them simple. Remember, the goal is to contribute to a positive work culture and support your remote teams’ productivity and well-being. Simplifying the process aligns with these goals, ensuring each employee gets the most benefit from the stipend.

5. Micromanaging What the Stipend Can Be Used For

Remote employees have varying needs. Not everyone will need to purchase a new desk, monitor stand, or mouse, for example. Some may want to upgrade their desk chair while others may prefer to save money for large expenses in the future.

Because each working environment and each employee is different, try to be flexible about what the work-from-home stipends include. Let each employee decide what they need to make themselves productive and able to contribute their best.

Adding Flexible Space to Your Remote Work Stipend

Work-from-home stipends don’t have to be limited to the home office. You can also add flexible office space to your stipend program, allowing employees to have more control over where and how they work. 

LiquidSpace makes it easy to find available workspaces according to your size and location requirements, as well as compare rates on demand. Give your teams instant access to face-to-face meetings and collaboration when needed while helping them make the best use of their WFH stipend. Learn more when you book a demo.