Paying Remote Workers Less May Heighten Legal Risks

Quick Hits

• The demand for hybrid and remote work arrangements remains strong among employees.
• Paying remote workers less than in-person workers for performing the same work could increase the risk of discrimination claims.
• Reducing pay for exempt employees who work remotely could jeopardize their exempt status in certain situations.

Five years after the COVID-19 pandemic catalyzed a wave of telework, this type of arrangement remains very popular among many workers. Some job seekers are even willing to accept a lower salary for a fully remote or hybrid job, as it can save them time and money on commuting expenses (such as gas, parking, and vehicle maintenance). According to research from Robert Half in 2025, about half of job seekers indicate that their top preference is hybrid work, while a quarter favor fully remote positions, and 19 percent prefer in-office jobs. These preferences may vary depending on factors like location, job type, and industry. 

The same research from Robert Half reveals that at least 88 percent of employers offer hybrid work to some employees, while 25 percent provide hybrid options to all employees. Furthermore, the study found that 24 percent of new job postings in the third quarter of 2025 were hybrid, and 12 percent were fully remote.

Legal Considerations

Telework policies that tie lower pay to remote work may disproportionately affect women, caregivers, and employees with disabilities, potentially raising the risk of equal pay and disparate impact lawsuits. Title VII of the Civil Rights Act of 1964 prohibits pay discrimination based on gender, race, and other protected characteristics. The federal Equal Pay Act requires employers to pay men and women equal wages for jobs that are substantially equal in skill, effort, responsibility, and working conditions. The Lily Ledbetter Fair Pay Act of 2009 established that the 180-day time limit for filing a charge of pay discrimination starts from the last paycheck affected by the discrimination, not the first.

At the same time, employers must comply with state laws on equal pay. Remote work expands the jurisdictional footprint, thereby implicating divergent state thresholds, expense reimbursement rules, and pay transparency requirements.

Courts and regulators increasingly expect individualized assessments of job functions, consistent application of policies, and rigorous documentation of legitimate business reasons for paying certain workers less than others in similar jobs. Without data-driven and legally sound analysis, employers could unintentionally adopt telework policies that are difficult to defend in court.

Meanwhile, under the Fair Labor Standards Act, most exempt employees must be paid a set salary and are not eligible for overtime pay or minimum wage protections. Reducing pay for exempt employees who work remotely could undermine federal or state salary thresholds or alter their job duties enough to jeopardize their exempt status if not carefully reviewed.

Next Steps

Employers may want to analyze how their current telework policies are impacting labor costs, recruiting, retention, and overhead expenses, such as office space rental.

In addition, an attorney-client privileged analysis of telework practices can help a company:

• Monitor legal risks associated with disparities in telework-related pay practices and identify legitimate factors contributing to pay differences, such as geography, seniority, and performance.
• Validate that geographic differentials and performance metrics are consistently applied and job-related.
• Confirm that job descriptions and essential job functions accurately reflect the need for in-person attendance or the feasibility of remote work.
• Assess multistate exposure to wage and hour rules based on where remote employees perform work.
• Evaluate how remote and hybrid arrangements affect supervisory headcount, budget authority, independent discretion, and professional responsibilities.

Employers should consider regularly evaluating their pay practices to ensure compliance with state and federal laws requiring equal pay for substantially similar work.

Ogletree Deakins will continue to monitor developments in this area and provide updates on the Pay Equity, Return to Work,  Wage and Hour, and Workforce Analytics and Compliance blogs as new information becomes available.

T. Scott Kelly is a shareholder in Ogletree Deakins’ Birmingham office.

Charles E. McDonald, III, is a shareholder in Ogletree Deakins’ Greenville office.

This article was co-authored by Leah J. Shepherd, who is a writer in Ogletree Deakins’ Washington, D.C., office.

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