Location-Based Pay at Google

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Author: Karen Robson

Pub. Date: 2021
Product: Sage Business Cases
DOI: https://doi.org/10.4135/9781529795806
Sage Sage Business Cases
© Karen Robson 2021

Keywords: Google, pay, salaries, human resource management

Disciplines: Business & Management, Human Resource Management, Organization Studies, Compensation
Management, Organization Studies (general), General Business & Management, Management (general)
Access Date: March 26, 2024
Publishing Company: SAGE Publications: SAGE Business Cases Originals
City: London
Online ISBN: 9781529795806

© 2021 SAGE Publications: SAGE Business Cases Originals All Rights Reserved.

Location-Based Pay at Google

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Sage Sage Business Cases
© Karen Robson 2021

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Abstract

In August 2021 Google revealed that the company was considering applying a location-based pay
scheme which could lead to employees who opt to work from home permanently experiencing a pay
cut of up to 25%. The policy would apply to remote workers who lived in low-cost living areas. This
case covers the proposed compensation policy and asks students to evaluate the pros and cons of
the policy in order to understand whether this is a desirable policy for Google to implement.

Case

Learning Outcomes

Students should apply their learning of human resource management to assess the benefits or drawbacks of
Google’s proposed remote work policy for employees living in low-cost-of-living cities.

Location-Based Pay at Google

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Sage Sage Business Cases
© Karen Robson 2021

Source: Photo by Eduardo MunozAlvarez/VIEWpress

The Issue

In August 2021, Google proposed a policy in which workers who choose to work permanently from home
could face a salary reduction, based on whether they live in an area associated with high cost of living or not.
For example, an employee working remotely in Stamford, Connecticut who had previously worked in the com-
pany New York office would face a 15% salary cut; the same employee would see no change to their salary
if they lived in New York City and worked remotely or chose to commute into their workplace. Google’s pro-
posed salary calculator suggested employees could face as much as a 25% decrease in their salary. Google
revealed that under this scheme, compensation packages would vary between both cities and states, de-
pending on the cost of living.

Location-Based Pay at Google

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Sage Sage Business Cases
© Karen Robson 2021

Why Is It News?

Like many organizations, Google is in the midst of the transition from COVID-19 work-from-home measures
to post-pandemic work plans, grappling with issues like how to ensure employee safety at workplaces as well
as employee preferences for flexible work arrangements. Reports indicate that many employees prefer work-
ing from home and expect that working from home will become standard in many industries, even after the
COVID-19 pandemic has ended.

Google faced some backlash for their proposed policy, with some arguing Google was being “greedy” and
treating employees “unequally.” Google responded by saying that

our compensation packages have always been determined by location, and we always pay at the
top of the local market based on where an employee works from. Our new Work Location Tool was
developed to help employees make informed decisions about which city or state they work from and
any impact on compensation if they choose to relocate or work remotely.

Other tech firms, such as Facebook, Microsoft, and Twitter, have suggested that their employees could face
similar compensation cuts if they decide to work remotely from low-cost cities. Facebook CEO Mark Zucker-
berg, for example, said that his company may adjust salaries for employees who move to low-cost cities:
“We’ll adjust salary to your location at that point. There’ll be severe ramifications for people who are not hon-
est about this.”

Discussion Questions

1. Explain the Google policy, including how it impacts remote workers.

2. What potential benefits could Google experience after implementing the policy?
3. What potential downsides are there to implementing the policy?
4. Should Google enact this policy?

https://doi.org/10.4135/9781529795806

Location-Based Pay at Google

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