For those of you actually doing this, what are the challenges associated with paying people with bitcoins?
P2P Foundation offers to its employees the ability to have a portion of (or all of) their salaries payable in bitcoins.
Bitcoin Foundation pays salaries in bitcoins. The compensation rate in BTCs is computed periodically (e.g., quarterly) and then the same amount of bitcoins as compensation is paid out each payday. I don't know if the value for W2 is computed based on the exchange rate on payday or if it uses the rate at the beginning of the quarter.