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The tech giant is moving largely toward more remote and flexible work as a result of coronavirus-related office changes, Zuckerberg said in the video, adding that he expects about 50 percent of Facebook's workforce to become remote over the next 10 years.
"That means if you live in a location where the cost of living is dramatically lower, or the cost of labor is lower, then salaries do tend to be somewhat lower in those places," Zuckerberg said in a Thursday townhall video.
In a survey, 40 percent of Facebook employees said they were extremely, very or somewhat interested in full-time remote work, and 75 percent of those people would move to a different city if given the option. Moving outside of expensive areas like Silicon Valley, however, could result in a salary reduction.
The average price of a home in Silicon Valley is upward of $2 million, according to The Mercury News.
U.S. employees have until Jan. 1 to report their remote-work locations if they choose to work from home full time rather than commute to the office, Zuckerberg said.
"We’ll adjust salary to your location at that point," Zuckerberg said. "This is important for taxes and accounting. We're mostly going to rely on the honor code for this ... but we are going to put in place some basic precautions."
He added that there will be "severe ramifications for people who are not honest about this."
The Facebook founder said the company hasn't seen very significant cost savings as a result of more people working from home amid the pandemic. People need additional benefits to work from home such as technology for their home offices and travel stipends, which offsets savings that come from changes in real estate and food expenses by having fewer people working in offices.
Giving employees the option to work remotely full-time, however, will allow Facebook to "build a more diverse company." The company won't have to limit its hires to only people who live near Facebook's offices in big cities in California and New York.
While about 60 percent of Facebook employees said they wanted more work flexibility, Zuckerberg said creating a more flexible policy such as letting people work remote part-time and in the office part-time rather than just allowing more full-time remote work, would be more complicated and likely incur more costs because it would require giving employees a combination of home and office benefits.
"We're going to be the most forward-leaning company on remote work, especially at our scale, and we're going to do this with a thoughtful and responsible plan," Zuckerberg said.
The Facebook founder's announcement comes as tech and financial giants across the U.S. update their work-from-home policies as states ease lockdown restrictions, highlighting a significant change to post-pandemic U.S. work culture.
Twitter, for example, said on May 12 that it is going to allow its employees to work from home "forever" if they wish to do so. Shopify CEO Tobi Lutke announced in a Thursday tweet that the e-commerce company is making most of its jobs permanently digital, saying, "Office centricity is over."