back to article VMware staff in Silicon Valley can leave a pandemic, wildfire-ridden zone – if they're willing to accept less pay

VMware, the cloud computing biz headquartered in Palo Alto, California, will reportedly cut salaries for employees opting to permanently work-from-home if they decide to move out of Silicon Valley. The coronavirus pandemic has forced tech companies to shutter their offices as the Bay Area counties enforce strict shelter-in- …

  1. quxinot Silver badge

    Cost of living adjustments by location are going to go both ways, of course.

    1. big_D Silver badge

      Yes, I used to get a London weighting, when I worked in the London catchment area. When I worked at a customer site outside that area, I lost the weighting.

      I think it depends though, are these people temporarily fleeing a situation (i.e. the fires) and living with parents/friends etc. whilst maintaining their flat in the Silicon Valley catchment area? Or have they quit their contract and moved to cheaper accommodation elsewhere? That is the big question. If the former, then it is wrong to cut the salary, if the latter I removing a weighting is fair enough.

    2. Mike the FlyingRat
      Boffin

      You're just a cog...

      Usually if you start in a high cost of living area and move... you keep it.

      The only time I have seen it drop is in IBM where if you were 'repatriated' back to your home country and worked locally, your salary was adjusted. Had a couple South African friends who were given the offer to go back to South Africa... they just laughed.

      What most companies do is keep your salary the same, however when it came time for bonus or promotion your new salary bump was weighted against you.

      Of course w IBM ... they tried to cull those who worked from home and outside of their 'office' as a way to cull older workers....

  2. whoseyourdaddy

    It's a renters market here in the SF area. Residential and commercial.

    But, It works both ways. I was constantly turning down recruiters asking me to work in Cupertino, Palo Alto, or wherever Google is.

    Add an hour-long commute to avoid what was last year's $1/500 increase in rent (Palo Alto)?

    *giggle* Nope.

    Find someone else to be struggling on $160K/yr.

    1. jelabarre59 Silver badge

      That's like recruiters trying to push jobs in NYC for me. 90+ minutes just to get top GCT (then travel to the job location), and the supposed pay increase is quickly gobbled up by NYC non-resident taxes, train passes, parking fees, etc. Factor in those (along with the time lost to the extra-long commute; you need to count those as "working hours" when looking at the value of a job), and the fact that the last few times I had gone into Manhattan gave me a migraine, they're a net loss of pay.

    2. Mike the FlyingRat

      @Who's Your Daddy..

      I'm getting hit w all of these body shops who want a W2 contract to work in California remotely and then when COVID is up... they want you on site. Besides the rate being too low... No talk about who covers T&L. They expect you to relocate.

      This industry is FUBAR'd

  3. HildyJ Silver badge
    Meh

    Bottom line

    From the point of view of the employers, this is all about the bottom line. And attracting talent to Palo Alto always costs more than attracting it to someplace where it's cheaper to live.

    However, it will be interesting to see if the talent they attracted stays with the company when switching to remote working at another company is as easy as changing a browser bookmark.

    1. chivo243 Silver badge

      Re: Bottom line

      While I feel getting your salary slashed due to an unprecedented situation is just bad business, I get it. What they are basically saying is, we are paying you X to do the job, and %Y is housing allowance adjusted on the housing cost in locale where you live. I still don't like it applied to a live situation. Maybe saying, new policy, any new hire is subjected to our new structure due to the current situation, but "grandfather" all those who were already in the game.

      1. John Brown (no body) Silver badge

        Re: Bottom line

        "grandfather" all those who were already in the game.

        Our company does that. The longer you've been there, the less, in real terms, you get. New hires get the market rate. They don't do pay rises. Yes, I am looking around, thanks :-)

        1. sev.monster

          Re: Bottom line

          Ah, yes, welcome to our Old Stogie Dinosaur office! It's where we keep the grandpas that still use C instead of Angular React on Node.js, don't spend 10% of their salary on mocchafrappuchinos, and don't wear skinny jeans that cut off circulation to the feet.

          1. sev.monster
            Joke

            Re: Bottom line

            Sorry, guess this was necessary. --->

  4. Anonymous Coward
    Anonymous Coward

    They may be in for a nasty surprise.

    California law lets an employee that has taken a pay cut file for what's called "under employment" payments. It's like unemployment, but the worker still has a job just is no longer making what they were hired at. If you take a pay cut & are still working, filing for under employment may get you a federal cheque each month to make up the difference. And your current employer, the one that just cut your pay, will be on the hook to pay the government for your under employment benefits.

    Then there's that whole cluster fuck of the wild fires getting folks mandatory evac notices as the flames start torching civic borders. Town about to be consumed in an inferno the fire department can't contain? Grab your stuff & GTFO. Employer then punishes you for no longer living where you claimed? Oh yeah, THAT won't involve any social backlash. That's the stench of a class action lawsuit wafting through the smoke.

    I realize the employers want to save money, but if you hired someone at $X & suddenly start paying them less, you might want to do a quick Google on the Streisend Effect & what it tends to do to your bottom line.

    1. jelabarre59 Silver badge

      Re: They may be in for a nasty surprise.

      Town about to be consumed in an inferno the fire department can't contain? Grab your stuff & GTFO. Employer then punishes you for no longer living where you claimed?

      Especially considering the place you were living may not exist anymore.

    2. Jellied Eel Silver badge

      Re: They may be in for a nasty surprise.

      California law lets an employee that has taken a pay cut file for what's called "under employment" payments. It's like unemployment, but the worker still has a job just is no longer making what they were hired at.

      I think that could get messy. So if a person is employed and contracted to be in the office for Xhrs, and they've moved to Colorado, then they may be in breach of contract unless the employer approved that move, or a shift to being a permanent home worker. I saw that happen when I was an FTE. An engineer had a Spanish partner, and then married, and then moved to Madrid and worked out of the office there. I discovered this in a 'Where's Bob?' kinda way, and the answer was at a desk on the end of a phone or video call, and working just fine.

      HR however was not amused because they hadn't been consulted. 'Bob's manager however had, because 'Bob' was a very good engineer and they wanted to keep him. So HR caved (eventually) and drew up a Spanish contract, and all was well. I suspect a less respected employee would just have been fired. Which was all a bit ironic given the employer was a large telco that sold remote working solutions, often redeployed staff internationally, but had a lot of senior managers who disliked home working.. To the extent that when a new manager appeared for my team, they insisted we were in the office every day, even if we were due to go visit clients. Most of my team & I soon left because the manager was an utter asshat.

      But such is politics. Current events have given a massive boost to homeworking, and general improvements to employee's quality of life. Which for a sensible employer, should be great. Work's getting done, staff are happy, performance is good if not better. And the employer can save money in not providing X m^2 space per employee in some very expensive real-estate. But then that may also upset some employers, especially if they've spent a shedload of cash building 'flagship HQ's that aren't really needed in the 21st Century.

      Disasters are a bit different, ie if someone's lost their home through no fault of their own, then a good employer should assist their employee. And if they can't work due to mandatory evacuation, then given the employer has a duty of care, they can't insist an employee stays put to finish that Powerpoint.

    3. big_D Silver badge

      Re: They may be in for a nasty surprise.

      It depends on how they have moved...

      If they have kept their flat in SV/SF and are currently living with relatives away from danger, then it would be wrong to reduce the salary. If they have given up their flat and moved permanently to somewhere cheaper, it is another matter.

      If VMware can clearly show that it is just a cost-of-living reduction, I don't see the problem. BUT the question remains, can they retro-actively state that part of the salary is a cost-of-living benefit to SV? If that is already in the contract, again, it seems fair, if it isn't, I guess a court will have to decide whether they can claim it is CoL or not.

      If not, there are other ways, like the salary remaining stable, until the CoL has been taken into account by inflation. Obviously an immediate CoL reduction is cheaper for the company, if they can get away with it.

      I've certainly had it applied to me (and removed) in the past, in the UK. I had a London weighting at one point, then I was moved to another office outside the catchment area and lost the London weighting. But that was communicated in advance and written into my contract.

      1. hoola Bronze badge

        Re: They may be in for a nasty surprise.

        A slightly reversal of this is happening in the UK where some people at the higher end of the payscale who work in large cities and presumably have expensive properties within reasonable commuting distance have decided that as home working is almost 100% they can move to some very nice place in country that is remote and cheap (for them). This is resulting in a boom in very specific house prices in an already, totally broken system.

        It does not appear to occur to these people that their current salaries may not be maintained. It is easy enough for a company to restructure and have everyone reapply for their jobs or sign new contracts. It can take a while to go through the hoops but if enough do it you can see market rates dropping. The other thing that I stumbled upon whilst queuing was a chap ranting to his mate that his company car had been withdrawn. Apparently this was a mixture of cost savings and his need to have the car mostly disappeared due to home working and video conferencing.

        Things are changing and the assumption that one gets an increased salary to reflect the area in which the company is based are, I suspect, numbered if you don't actually have to live near that base.

      2. Jellied Eel Silver badge

        Re: They may be in for a nasty surprise.

        I've certainly had it applied to me (and removed) in the past, in the UK. I had a London weighting at one point, then I was moved to another office outside the catchment area and lost the London weighting.

        Yup, I've seen that happen as well. Like you say, London weighting was included specifically in contracts, so easier to change. In the case I saw, it was tapered down over 3 yrs. Created some interesting arguments from London staff who wanted to keep the weighting to cover the costs of commuting..

        But from my experience, US employment practices tend to favor the employer, as well as the need to comply with relevant Federal and State employment laws. Something various states have been using to tempt taxpayers away from California. From chatting with friends in SF and LA, rents are nuts, ie $3-5K+ and many looking to relocate to places like Idaho where they could rent a McMansion for that money. Or just save to buy a nice house for a fraction of what they'd have to pay in California. But that seems to be affecting both rents in Cali and starting to drive up property prices in the migration states. That also happens in the UK where former London staff relocate as well.

        So we live in interesting times, where places like SF, NY, Chicago etc are already seeing outward migration, with obvious impacts to their tax base, as well as real-estate and services that have fewer customers. So combined with the effects of Covid, hammering food & retail, and retail of course having been under pressure from the likes of Amazon.

    4. Robert Grant Silver badge

      Re: They may be in for a nasty surprise.

      Employer then punishes you for no longer living where you claimed?

      Employer's not a parent; it's odd to characterise in such terms. If you don't know why the salary was so high for that location (hint: it wasn't your parent rewarding you) then maybe check that out before responding on here.

    5. Mike the FlyingRat

      @AC Re: They may be in for a nasty surprise.

      Close but not quite.

      The issue is that the employee is relocating to another state, so they don't get that option. The company has to reset their employment data and pay taxes to that state. It gets complicated.

      Bottom line... if your company does what Dell's VMWare is doing... leave.

  5. Matthew "The Worst Writer on the Internet" Saroff

    Take on a Roommate or 15

    I expect people to start having 15 or so roommates in studio apartments at VMWare.

    Mostly, they will just be there when they need meetings, and spend most of their time in "vacation homes."

    Problem solved.

    1. Psmo Silver badge

      Re: Take on a Roommate or 15

      That will work until you find the host has underprevisioned.

      I wouldn't want to see that toilet peak load.

      1. Matthew "The Worst Writer on the Internet" Saroff

        Re: Take on a Roommate or 15

        The idea as that all the people "live" there, but only use the apartment if they are called into the office.

        1. big_D Silver badge

          Re: Take on a Roommate or 15

          I think Psmo was referring to something like a corporate get-together, where they are all suddenly in town and all trying to stake their claim on the apartment.

          1. Matthew "The Worst Writer on the Internet" Saroff

            Re: Take on a Roommate or 15

            There is a movie about this starring Jack Lemon, The Apartment.

  6. chivo243 Silver badge
    Coat

    Simples

    rent a closet with a mailing address, kit it out with relays and proxy servers, and work from anywhere?

    1. Anonymous Coward
      Anonymous Coward

      Re: Simples

      rent a closet with a mailing address, kit it out with relays and proxy servers, and work from anywhere?

      I suspect that's what a large number of these job scammers do in the US. I can't imagine THAT many of these "recruiters" with unpronounceable Indian and Pakistani names are living in New Jersey.

      1. whoseyourdaddy

        Re: Simples

        Worse. They use a speakerphone on a NJ number when talking to you and there's a half-second time delay.

        I. Can't. Think. Or. Talk. To. You.

        *click*

        Whenever my credit card is stolen, it always gets used in NJ first. As a California resident...

      2. Ralph Online

        Re: Simples

        Just recruiters..? Meet "Bob" a star programmer who outsourced his own job to China:

        https://www.theguardian.com/commentisfree/2013/jan/17/sacked-model-modern-employee-outsourcing

        1. Anonymous Coward
          Anonymous Coward

          Re: Simples

          Yep. Happened to me twice.

          The last time, I refused to train my 'indentured' replacements from Chennai. I just worked my notice by sitting at my desk every day. There was nothing about training my replacements in my contract.

          The quality of the people I was supposed to be training was absymal. It took two of them to do half my job. None of them had any previous experince in the tooling we used despite the boasting of their people when they made the play to taky my job.

          The level of service delivered from India was abysmal. Cheap but crap.

          1. cbars Silver badge
            Thumb Up

            Re: Simples

            Cheap you say? I'll stop you there, I've heard enough!

        2. Anonymous Coward
          Anonymous Coward

          Re: Simples

          Didn't Wally from Dilbert do that first? (IIRC, Delbert was concerned people would catch on, but Wally paid the contractor extra to screw up from time to time).

  7. Chris G Silver badge

    What this is really about

    Is that a beancounter has seen another item for profit maximisation. Companies almost without exception pay what they must based on the supply and demand of relevantly qualified individuals who can do the job rather than pay what an employee is worth in terms of their contribution to the function of the business.

    Any opportunity to reduce the payment to those who actually enable the business will be snatched at.

    1. Steve Davies 3 Silver badge

      Re: What this is really about

      Indeed and the cost of fighting the inevitable class action suit comes from a different bottomless pot of money so the beancounters are in a win-win, where's my stock options? situation.

  8. Ashto5

    No to pay cuts no to pay rise

    Working from home saves a fortune in time and costs

    I spent £7k on fuel last year this year I expect it to be around £2k that is a pay rise in itself factor in the saving of the 2 -3hr commute and I am on easy street

    Think with IT people is you can always move job if your not valued correctly

    1. John Brown (no body) Silver badge

      Re: No to pay cuts no to pay rise

      It's not a pay rise. It's a reduction in your costs. Nothing to do with your employer, other than the work from home that could have been part of your job years ago. Depending on where you work and where you live, you might have been able to save that by moving house. Likewise, saving the 2-3 hour per day commute isn't you working fewer hours. Your employer is still getting the contracted hours from you. You just don't have to travel as far any more or at least as often. Again, something you always controlled by choosing where you live and where you work.

      It's win-win for you and your employer because you have more money in your pocket and far better work life balance and happy employers are usually more productive employees, but it's not a pay rise nor a benefit to be grateful to your employer for. If anything, your employer should pay you more for working from home as you are now subsidising their heating and power costs while, in the longer term, reducing their office space costs.

    2. Falmari

      Re: No to pay cuts no to pay rise

      What about people that live near to the office. Where I work a large percentage of people live within 5 miles of the office a couple within walking distance. For them it is costing more due to computers being on all working day and any other cost from being at home for the working day.

  9. Erik4872

    I'd do it if I were working there

    I know Northern California has permanently nice weather, but $4500 a month renting in SF or millions to buy a house anywhere close to work in Silicon Valley is insane. This is coming from a New Yorker also, for reference. :-) California is on a whole other level compared to our already super-high cost of living.

    I think this is just the beginning of tech companies figuring out they don't actually need to be in Silicon Valley, Seattle or NYC to find people. For decades there's been this mystique that all you need is the top 10% of the Stanford/MIT/UIUC computer science class, a pool of poachable experienced employees, exploitable offshore and work visa labor, and a preschool office space to ensure success. That preschool office space is less appealing now, since companies have figured out that most jobs can be done with only minimal in-person (or no) interaction. So, the cheap perks like 3 meals a day and a college campus workplace do less to hold employees at work for 80 hour weeks than they used to. At that point, why spend the money on the expensive office space when you can send them to some other part of the country and pay them less?

    I even see this within markets. I'm about 60 miles from NYC, so train-commutable if I'm willing to throw away 3 hours a day. Employers are well aware of this. I work locally, but could easily be making 30-40% more if I were willing to do the commute pre-COVID. What remains to be seen is whether employers will demand physical presence in our new COVID world. People are already predicting grim horrible futures for NYC real estate (but the market is insane here already.) I understand liking the area you live in (I wouldn't be here otherwise...) but there has to be a point where even money-printing employers are less willing to pay whatever it takes to hire people.

  10. Julz Silver badge

    Is

    This actually legal? Is it in the contract of employment that your employer can on their own decide to cut your salary? Is there a section dealing with where you live? And if so, is that ok? I'm thinking that this would be illegal here in Blighty but perhaps not in the Land Of The Free.

    1. A.P. Veening Silver badge

      Re: Is

      It might even be illegal in the Land Of The Free, but it is certainly legal in The Land Of The Fee (And Home Of The Slave).

    2. martinusher Silver badge

      Re: Is

      The Land of the Free has most states implementing "Right to Work" legislation. This allows both employee and employer to work 'at will' -- neither party needs to give any notice that they're terminating someone's employment.

      What this means in practice is that employers hold all the cards. They usually sugar the pill a bit to avoid frightening off the bits of the workforce they want to retain but basically if they want you gone, you're gone. So if the chocie is a reduction of salary or termination -- well, you choose.

      I think that because the UK has been a member of the EU it has all these legacy employment practices that involve treating employees half-decently. However, now you're independent you're free to adopt US working methods, including the right to work.

      1. big_D Silver badge

        Re: Is

        Works both ways... A friend was in a hostile environment, found a better job on more money and still had to wait out the 6 months of his notice period.

        1. Anonymous Coward
          Anonymous Coward

          Re: works both ways

          6 months seems a long time.

          I’m in Belgium, and with over 20 years with the same employer they need to give me close to 2 year’s notice. If I were to resign it’s about 5 months I think.

        2. Anonymous Coward
          Anonymous Coward

          Re: No he didn't

          I've been in a similar position after a change in organisational culture I was no longer a good fit. I found a contract role but before accepting it I had to clarify the legal position over not working my 3 month notice period. It turns out the the employer has very little redress if you just walk away. I was able to secure a much reduced notice period to allow me to start 2 weeks after accepting the role but would have walked if they had not been so reasonable.

      2. Anonymous Coward
        Anonymous Coward

        Re: Is

        There's a slight difference between "at will employment" and "right to work". You described at will employment (no contract, either party can quit the arrangement at any time). Right to Work is a set of provisions that seem to be designed to cripple unions (probably oversimplified, but non-union members get the same wages and benefits as union members, thereby discouraging paying union dues).

        IANAL (or a union member for that matter) so I I may be incorrect on lots of details.

    3. big_D Silver badge

      Re: Is

      That is the question, whether it is in the contract.

      I've had it in the UK, London weighting. All the time I was working in the London catchment area, I got the London weighting, when I transferred to an office outside, the London weighting was removed from my salary.

      So, yes, you can have this legally in Blighty, but it has to be in the contract - in fact, I believe many unions have forced employers to use it over the years and tried to get it extended to other major cities.

      1. Steve K Silver badge

        Re: Is

        I believe many unions have forced employers to use it over the years and tried to get it extended to other major cities.

        From what I have read, UK unions are fairly hostile to regional salary scales (may depend on the industry).

        In this "one size fits all" case you will either have people in London/Edinburgh/etc. eking out a living on a salary suitable for somewhere cheaper, or someone working somewhere cheaper raking it in on a London/Edinburgh etc.-weighted salary.

    4. Anonymous Coward
      Anonymous Coward

      Re: Is

      It will likely vary a lot depending on local laws. In the UK is legal for an employer to reduce your salary (as in actually reduce the number) in the same way that they can increase it. It is a change to your contract and requires notice, and you can reject the change and instead resign and work out your notice period on your current contract if you don't like it. I have had it happen to me twice during my career (different employers), both during times of very significant economic instability where my employer had to reduce the payroll costs and it was preferable that everyone on the team accepts a slight reduction over one team member being let go and us all having to pick up the extra work.

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