Location Pay Gaps...A New Pay Equity Dilemma?

As remote work faces increasing scrutiny from major corporations, significant shifts are being proposed, most notably by Amazon CEO Andy Jassy, who declared that employees must return to the office five days a week starting next year. A recent survey from Robert Half, titled "2025 Salary Guide," uncovered some striking statistics:

- 66% of managers would offer higher pay for new hires working in-office for positions that can be done remotely.

- 59% would increase salaries by up to 20% for employees who work on-site four to five days per week.

- 53% would provide up to a 10% salary increase for those working in the office one to three days a week.

While this approach may seem like an efficient way to encourage in-office attendance, it raises concerns about pay equity and the essential principle of equal pay for equal work.

Pay equity guarantees that employees receive fair compensation based on their role, experience, and contributions, irrespective of their work location. By rewarding in-office work with higher pay, companies risk penalizing those who choose or need to work remotely—often caregivers, individuals with disabilities, and people without reliable transportation—thus perpetuating existing inequities.

One cornerstone of fair compensation is the principle of equal pay for equal work, meaning that individuals performing the same role with similar productivity and quality should receive the same compensation. However, introducing in-office pay premiums could result in two people in identical positions earning different salaries based solely on their work location rather than the value they contribute to the company. This undermines the principle of equal pay for equal work and could lead to legal challenges, damaging the organization's reputation.

Moreover, the willingness of 66% of surveyed managers to pay higher salaries for in-office employees could lead to pay compression, where new hires or returning employees earn salaries similar to, or greater than, those of longer-tenured remote workers. Pay compression can also affect bonuses and promotions by narrowing the wage gap between junior and senior roles. If returning to the office associates with higher pay, companies may need to adjust salary bands and promotional criteria to ensure fair compensation at all levels.

Disparities in pay between remote and in-office employees can lead to division, resentment, and a lack of cohesion within teams. Employees who feel disadvantaged for opting to work remotely may experience decreased job satisfaction and engagement, resulting in diminished productivity and increased turnover. Similarly, these disparities can breed perceived favoritism and distrust in leadership, negatively impacting company culture.

If companies see the necessity of incentivizing office attendance for their success, alternative strategies should be considered to mitigate pay disparities. These could include offering commuter benefits or stipends, improving on-site amenities, and highlighting the value of in-person collaboration. Such strategies promote an environment where employees feel genuinely motivated to work in the office rather than obligated.

Ultimately, as companies consider the risks associated with return-to-office mandates, it raises the question: Are they genuinely seeing benefits from these initiatives, or are they merely hoping that voluntary turnover will assist in their return-to-work push, thereby preventing layoffs?

I think it’s a question worth asking.