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Reduction of Benefits

Hunter1Hunter1 808 Posts
in Benefits & Leave Vote Up0Vote Down
Here's the situation: My son works for a small employer. For the last four weeks, there has been a notice in his weekly newsletter telling him of the latest reduction in benefits to the point that now, the only benefits left are vacation and employer health insurance contribution. Last week they told him that they are no longer going to pay the administrative charges associated with his 401k plan (they did away with the employer match a couple of weeks ago), and this week they said, oh, by the way, we're not paying the admin charges for last quarter of last year, either (wouldn't you think they would have been paid by now?). Two questions: I'm not familiar with 401k plans. Can an employer determine retroactively that they're not paying the admin charges? Second, oh wise HR and Benefits Forumites, what would you guess this employer is up to? They claim to have more business lined up this year than last. (Bankruptcy? Positioning for sale? Any other guesses?)
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Comments

  • 4 Comments sorted by Votes Date Added
  • SystemSystem 5,885 Posts
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    I smell a rat, and it's deserting a sinking ship. Tell your son to head for the lifeboats before he gets sucked under.

    James Sokolowski
    HRhero.com
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  • AnneLaAnneLa 328 Posts
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    Time to polish up the old resume and hit the pavement.............
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  • SystemSystem 5,885 Posts
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    It has always been my understanding that a company cannot just arbitrarily change benefits without having first notified the ee in advance. As to 401(k), any time the plan is changed, a plan summary has to be developed with those changes and a copy given to the ee with sufficient notification of any changes, nor can that back up administrative costs and assess them to the ee. I agree, tell you son to start looking. This company really smells.
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  • MS HRMS HR 186 Posts
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    I disagree with the above posts as regards to the company's long term goals. They just might be in a mode to get very conservative on benefits yet be a thriving enterprise. I do not think bailing out is the only way to go, just an option.
    Stick around and see if the storm passes. I do agree that they can't make the changes retroactive, but I'm not an attorney and will it cost you more financially to legally challenge it?
    I would ask the CEO to address the issue to employees to allay their fears, concerns, etc.
    Wouldn't hurt if management were more communicative.
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