> Do you hire and pay the 60th percentile at approx. local market rates? Do you hire the best remote people at SFBay market rates?

The business owner in me says start low and raise your rates until you get the talent you're happy with. I would offer uniform base pay as typically lower costs of living come with other tradeoffs. If someone wants to make that work let them (but make it clear that it's their responsibility to make sure the electricity and internet are flowing when it's time to get to work)

> How is payroll and benefits handled?

I would suggest doing it like the oil companies, you setup a company and banking in the caribbean somewhere, and then pay folks salary into bank accounts there for them as well. Make it their problem to move/repatriate money. Don't withhold any taxes and factor in a fixed rate for any bennies you want to offer (unless legally prohibited in specific jurisdictions of course, IANAL). Let them optimize the money. I know this is how big oil companies pay most of their workers who are on rigs in various locales in the world (and not just offshore!).

Great question. I've been meaning to update the book to include a chapter on this.

The short version is it's mostly fixed to Chicago rates. We do have a fixed bump for folks in SF/NYC. It's an imperfect but simple way to handle this.

Payroll and benefits are solved using a service like TriNet.

I think this system breaks down more than the imperfect implies, but still works alright. Let's say I live somewhere that cost of living is more than Chicago, but less than SF/NYC, such as DC. You are now asking people to take pay cuts, which reduces the potential employee pool, certainly one of the perks of being a remote company. Of course, the reverse also occurs where people living somewhere with a lower cost of living would probably really want to work for you guys thanks to a much larger salary, so I suppose it ultimately balances itself out.

Yeah. This stuff is hard when you're a startup and can't pay Google rates. But as we've grown we've generally been able to grow salaries so folks are above market in the market they are in. Sometimes we lose out on folks in really high cost of living areas. But it's happening less often.

Thanks, knowing this I would avoid working for Zapier and would tell others not to, as you don't pay based on merit, but based on "what you need" based on cost of living. If a person is not limited to employment within a commuter distance then they have no reason to limit their salary based on the salarys within a commuter's distance.

A remote worker's "market" is the world, so you are competing with other remote companies, not other local-to-me companies.

We absolutely hire based on merit. People are living in rural areas making a great salary because we pay mostly fixed to Chicago market.

We don't downsize your salary. But sometimes we can't upsize it. There's a few companies we can't compete with on salary like Google. Most of those employers seem to be in the bay area. Sometimes we lose out. A lot of times we don't. The world isn't quite so black and white here.

Yes, you do downsize salaries. Paying Jill less than Bob where Jill is a better worker because she lives in Little Rock Arkansas and Bob lives in NYC is downsizing Jill's salary.

Jill can do better. Hopefully other remote companies seek out the Jills and pay them what they are worth.

I suppose that is true in the narrow case of SF/NYC. We're working to grow profits to make it so that isn't the case in the couple places that have the highest cost of living in the world.

I read the rest of the comment chain - just responding here.

My 2c: You don't have to accept the job offer if you don't like the salary. Hiring is a 2-way street, if the employee and employer aren't both happy with the salary package - then bail. Plain and simple.

Do you propose to ignore/lowball compelling candidates who've put down roots in high cost of living areas and intend to stay in them?

Or pay rural/developing world employees more than they demand?

IMO, both are at least a little bit irresponsible.

I don't think most employers are struggling for a lack of employment pool. The economy and unemployment is pretty shit world-wide right now. The only people making out like bandits are the high specialized folks that can demand it.

A follow up to this, how do benefits work for team members who are not in the USA? I imagine things like health insurance would be different, for example

I'm not the author but our company is remote and our comp is handled employee by employee. There isn't a "we offer 60% of market" it's a negotiation between me and the person I'm recruiting. So for example a Computer Vision engineer living in SF and one living in Edmonton with the same skills and background would get the same pay.

Note that the OP is referring to a "60th percentile" rule, not "60%" rule. Results in a much different number within a given market. I was confused initially, as "60% of market rate" salary would be very much on the exploitive side of things :)

Do you share your range before asking about requirements? If not, would you say people in lower cost of living areas ask for less on average? Do you feel you as an employer have an obligation to provide information on market rates given that you hire remotely?