Should Employers Pay for Work From Home Costs? And If So, What's Required?

by Linda Le Phan April 1st, 2021

Who's responsible for the cost of internet for remote employees? Should your company cover expenses your employees incur when setting up a home office, and if so, how much of it? When those working expenses add up, what ongoing support should be available for remote employees?

These are just a few of the many questions employers face in a business environment forever changed by the pandemic - one where adapting to remote work is a core priority.

Whether your company has an obligation to provide something like an internet stipend or to reimburse other home office and equipment expenses depends your state laws. In this article, we'll cover your legal obligations for supporting remote employee expenses, as well as offer additional helpful information like:

  • the answer to "does it cost more to work from home?"
  • the average home office stipend amount
  • example companies offering work from home stipends

At the federal level, the government only requires employers to reimburse employees for home office costs when their expenditures would bring their salary below minimum wage. On the state level, however, several including California, the District of Columbia, Illinois, Iowa, Massachusetts, Montana, and New York, do require employers to reimburse employees for necessary business-related expenses which include what you would need for a home office.

Even if they're not legally required, many companies are voluntarily offering their employees a work from home allowance in recognition of the many expenses they've had to take on to establish a home office.

Some do this by providing a fixed stipend for monthly home office expenses that's paid upfront, while others are offering a recurring stipend or reimbursement for employees so that they have support for their long-term remote work setup.

Does It Cost More to Work from Home?

Working from home does increase some expenses while also adding new ones.

For example, thousands of office workers who switched to working at home once the pandemic arrived reported a noticeable spike in their utility bills. Although the average reported increase was 15 percent a month, remote workers reporting a utility bill increase of 25 percent was also common.

The increased cost of electricity is understandable when you consider that employees did not use any electricity in their homes when they were at work at least 40 hours a week. Costs can skyrocket now that they both work and live out of the same home. Not only do remote workers need to pay to keep their computers and other office equipment running, but they are also on the hook for air conditioning and heating costs during working hours.

An August 2020 report by Refinery29 provides additional insights into employee expenses when they work from home. In a survey of 850 people required to work from after the pandemic, 56 percent reported that their employer would not allow them to take any supplies home from the office. The average spend for office supplies was $194 per employee. However, many incurred expenses approaching $1,000 if they had to buy a desk and chair for their new home office. Employers should certainly take these expenses into consideration.


Work-from-Home Stipend as a Solution

One compromise that employers and employees can make is for the employer to offer a fixed or flexible monthly stipend to cover such things as Internet, increased electricity, and the purchase of office supplies and furniture. This solution has multiple benefits:

  • It recognizes the sacrifices employees have made to make working from home, well, work.
  • Offering a remote work stipend also allows employers to meet obligations imposed by state governments, where applicable.
  • And last but not least, covering your employees' work-from-home costs with a flexible stipend gives them the flexibility they need to feel supported by their employer, something that pays huge dividends in employee satisfaction and engagement.

A work-from-home stipend is just one of many categories of employee perks that Compt can help you manage.


Average Home Office Stipend Amount, with Examples

Google and Shopify are two examples of well-known businesses that currently offer at work-from-home stipend to their employees. Both companies provide employees with a $1,000 stipend to help them purchase the supplies they need to set up a home office.

Other companies, including tech giants Facebook and Twitter, have also stepped up to help employees working from home offset some of their expenses. Many business analysts consider the stipends offered by Google and Shopify, however, to be the most generous ones available.

Businesses looking to establish a stipend to help with the cost of home office expenses first need to determine which expenses qualify and the limits of reimbursement. For example, does the expense need to meet the definition of useful, necessary, or ordinary to qualify for a stipend? After establishing those parameters, the next step is to create a process to request reimbursement. Here are some common considerations:

  • When are employees required to submit documentation?
  • What type of documentation is needed for the expense to be accepted?
  • How and where do employees submit their documentation?
  • Do employees need to get official approval before buying the supplies?

The last decision to make is how employees receive their work-from-home stipend. Many companies have opted to do this manually, even though it's a significant burden on their finance teams to do so. A better option is to use a stipend software like Compt, which helps you manage the full-cycle of the stipend process for all of your employees - including receipt submission and approval, payroll, tax compliance and employee communications.


Compt is the #1 employee stipends platform that gives your people the freedom to choose the lifestyle perks that are best for them and their always evolving needs, even when remote. Interested in learning how Compt might benefit your company? Consult with our team or request a demo.

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