›

Deferring Compensation

KenBKenB 28 Posts
in Compensation Vote Up0Vote Down
Hi

We have an employee who is leaving to go back to school in the fall. She is asking us to defer her last 3 months of salary until January 1st of next year and paying her then instead of paying her over the next 3 months.

I believe she would like to do this because it would help her qualify for grant money.

Does anyone see any issues with this or suggest anything we should do to protect ourselves if we accommodate her request?

Thanks

KenB
Share on Facebook Share on Twitter

Comments

  • 3 Comments sorted by Votes Date Added
  • HatchetmanHatchetman 877 Posts
    PMVote Up0Vote Down
    Check with your legal counsel before doing anything.

    First, does NY state employment law allow the emplyer to defer wages even with the employee's written authorization?

    Second, by deferring wages, if that is legally permissible, and apparently knowing why the employee wants the company to do that, would the company be in some form of "fraud" conspiracy against the grantor of the funds she is seeking?
    Share on Facebook Share on Twitter
  • marcmarc 3,126 Posts
    PMVote Up0Vote Down
    It sounds like she is engaging the company in an attempt to defraud a formidable adversary - the IRS.

    It might be legal, but delaying the payment of wages earned by a fiscal year might raise the IRS eyebrows for one. Also, engaging in some attempt to manipulate earnings for scholarship, grants or student loans may also constitute fraud.

    Ask any Enron accountant or auditor what the consequences are for engineering transaction. The penalties can be quite severe.
    Share on Facebook Share on Twitter
  • PricehcsPricehcs 128 Posts
    PMVote Up0Vote Down
    "It might be legal, but delaying the payment of wages earned by a fiscal year might raise the IRS eyebrows for one." This one is legal and could be done for just cause. Over the past few years, many companies engaged in salary deferrals. Some were paid back with interest, some were simply paid back partially or fully, and others never were returned...

    "Also, engaging in some attempt to manipulate earnings for scholarship, grants or student loans may also constitute fraud." This is a bit more dicey and certainly crosses the ethical boundaries. Even if you could get away with it, why would you want to? Not an ethical precedent you want to set.


    #1 thing a consultant shouldn't say: "I could tell you the answer right now, but we're committed to a three month project..." #-o
    Share on Facebook Share on Twitter
Sign In or Register to comment.