Higher Pay with No Benefits

Carl

We are considering creating higher paying positions with no benefits in addition to our benefit positions. Is there any awareness of any benefits that may be required by law in this circumstance, outside of FMLA? This would mean no paid time off, health or life, STD, LTD, etc.

Leslie

>We are considering creating higher paying positions with no benefits
>in addition to our benefit positions. Is there any awareness of any
>benefits that may be required by law in this circumstance, outside of
>FMLA? This would mean no paid time off, health or life, STD, LTD,
>etc.


You have to offer the same medical to all. How you accommodate their premiums is up to you - and an (bonus) incentive if they don't take it is allowable.

Life, STD, LTD I'm not sure, but I'm thinking it sounds like an insurance benefit to me that needs to be offered straight across the board.

However, paid leave can be different based on pretty much whatever you want to base it on - exempt v. non-exempt, salary level, etc. Just be consistent.

skyrocket

Actually there is no law that requires you to provide group health or medical (life/LTD/STD, etc). However, if you terminate these policies without replacement, you may be required to provide advance notice of same (California law requires 15 day notice). In addition, you should be careful that it does not appear that you do so inorder to deny someone a "vested benefit"... (ERISA).

You should give plenty of advance notice to allow employees/dependents to get on-going medical/dental care completed.

Leslie

I didn't mean that you had to provide the benefits - simply that if you did you had to offer them to all.

Crout

>I didn't mean that you had to provide the benefits - simply that if
>you did you had to offer them to all.


Leslie, where is that stipulated?

mwild31

I'm curious - why are you considering this type of situation? I offer part-time employees a slightly higher rate because they are not eligible for benefits (you can set the classifications for benefit levels), but why do it for full-time folks? x:-)

Carl

We have a significant number of employees that are covered by their spouses insurance. We thought this might be a retention incentive or an employment inducement for that category of employee. I understand that we would have to offer benefits to all but this would be a pay rate based on declining coverage.

sonny

I worked at a place where there was a one time a year "bonus" paid out to folks who were eligible for family benefits, but did not take them. Don't know if something like that might work in this case?

mwild31

Ah! Now I understand (or at least I think I do). I wouldn't do it for that reason - I would do a bonus amount instead. Once employees, make more, for any reason, they get used to their rate of pay, i.e. home loans, credit loans, car payments, etc. So, once their situation changes and they need coverage, you're in a sticky situation where you have to take money away from them (reduce them back to their normal pay). They will fight you on it and you could end up losing valuable employees.

Second, your compensation system for wage/salary rates should be based on market value/skill level/current economic conditions, etc. - not on whether or not they take advantage of the company paid health benefits. Bonuses, if your intent on doing this, are a better way to go.

Thirdly, if you do this, be prepared for the wrath of the rest of the employees. Most employees, especially, dare I say, younger employees who don't typically use the insurance benefit much and usually make less money, would rather skip the benefit themselves and just get more money. It sets an awful precedent that could have some unintended outcomes.

Finally, at least in my state and with the insurance companies that we work with, we get a 'break' on insurance rates when we cover 100% of the employees 100%. The good will you are trying to establish with the employees could make your CFO see red when it comes to renewal rates...

skyrocket

You need to be careful if you decide to pay employees who do not take the benefit plan. Unless you run this through a Section 125 plan, the IRS considered the payments to be "constructive receipt". This means that the value of the premiums paid on behalf of the employees would be considered taxable income to the employees who participate in the benefit plan. The theory is that since the "paid" employees have the use of the cash, the similar benefit becomes "usable cash" and thus taxable.

mwild31

Good point. Actually, I wouldn't do either, a bonus or a hike in wages. It's use it or lose it in my opinion. Wages/work environment/respect for employees are usually good retention programs on their own. x:-)

Sandy

We offer employees the option of declining medical and/or dental insurance. We stress the importance of having it however if they are already covered under another plan, there are not a whole lot of advantages of double coverage.

These are considered an insurance bonus and is paid out monthly on their paychecks. It's a win-win since the employee gets extra compensation and the employer saves on the premium. We have had no employees complain about it since the option is open to all.