VMware cuts pay for fleeing remote workers

VMware employees who take up the company’s offer to become permanent remote workers will get a pay cut if they move from Silicon Valley, one of the nation’s most costly areas to live, to a less-expensive city.

The software maker has joined technology companies such as Facebook and Twitter in letting some of its office staff choose to permanently work from home in the wake of the coronavirus pandemic. But employees who worked at VMware’s Palo Alto headquarters and go to Denver, for example, must accept an 18% salary reduction, people familiar with the matter said. Leaving Silicon Valley for Los Angeles or San Diego means relinquishing 8% of their annual pay, said the people, who asked not to be identified discussing internal policies.

Facebook and Twitter are among the other technology companies that have put in place or are considering similar pay policies. A Twitter spokesman said the company has a “competitive” approach to localizing compensation while Facebook

has publicly said it may cut employees’ salaries depending on where they choose to move.

VMware’s senior vice president of human resources, Rich Lang, said the company adjusts salary based on the “cost of labor” in different regional zones and benchmarks salary variations among firms competing for its workers. While some employees will see pay cuts, Lang said others could get a raise if they chose to move to a larger or more expensive city.

The coronavirus pandemic has shuffled U.S. life, forcing millions of people to work from home. Some Americans have moved closer to their families and loved ones or to more affordable areas than the expensive metropolitan hubs along the coasts. In the midst of a recession with high unemployment, many technology workers have greater flexibility than ever before in deciding where and how they want to work post-pandemic. But some companies’ efforts to claw back some compensation when workers depart Silicon Valley, one of America’s most expensive places to live, shows that leaving may have its costs.

Cloud-software maker ServiceNow is considering changing the pay of Bay Area workers who move away, starting in 2021, according to Chief Executive Officer Bill McDermott.

“I don’t believe we should have an environment where management is not involved with those determinations, because what you could get into here is a situation where employees then become the decision-maker in working literally from anywhere, and you would have a hard time organizing and holding together a culture if that was the case,” McDermott said Friday in an interview.