We are in agreement then. Your earlier statement suggested you did not want employees to be able to make changes at all.
Huh? I really haven’t understood what you’ve been referring to since you’ve been posting.
Each year company sponsored insurance plans have something called “open enrollment”. At that time people can add themselves, family members, dental, vision, cancel dental vision, etc. Each year the folks that don’t want the insurance for whatever reason have to sign the form that they waived whichever coverage they waived. Some do not have health but pay for vision, etc.
Every full time employee gets this form no matter what their status last year. Which is how this came up. Open enrollment is an insurance policy term, not a company policy term.
When you called them “free benefits,” my first thought was that that meant they didn’t cost the employees anything, which meant the employees wouldn’t have to give up anything to get them.
But then it sounds like they do have to give up something to get those benefits: they give up the extra salary that gets added to their pay if they waive the benefits. So it’s misleading to call them “free.”
If I understand correctly, you’re giving them the choice between (for the sake of example) $50,000 + benefits or $60,000 + no benefits. Is there a difference between telling them “You get a salary $50,000, with a bonus of $10,000 if you elect to waive the benefits” vs. “You get a salary of $60,000, and you can pay $10,000 for benefits”?
I think you are in the right and in fairness to your other employees to reduce her base pay for the cost of the insurance benefits that were previously added to her base pay when she waived it.
There is no free lunch.
That’s kind of a crummy way to deal with the situation. You need to straighten her out, not punish everyone because of one flake.
Your company policy sounds quite similar to the one we have at my company. If you have insurance from another source (like a spouse), then you can choose to waive the insurance and you do receive a ‘rebate’; however, this is not counted as part of your ‘base pay’. It shows up as a separate line-item on the employee’s paycheck.
It still is counted as ‘income’ for W-2 purposes, but there’s a clear distinction between the ‘base pay’ and the ‘insurance waiver reimbursement’. Such a distinction makes a situation like you describe trivially easy to deal with, I think.
I’m very aware of how benefits works and what the term open enrollment refers to. I was responding to your statement, quoted here again:
[QUOTE=Foxy40]
I think I am just going to ditch this entire thing allowing people to waive it and join any time during open enrollment in the future.
[/QUOTE]
That statement of yours made it sound like you wanted to eliminate the option of letting employee’s who had waived when they were hired from participating in open enrollment at all.
I’ve worked in places where they would give you (taxable) cash if you select a cheaper-than-average option (as a separate item on your pay stub) and I’ve worked in places that would put the excess into an untaxed “health spending account” that can only be used on health care costs.
When I opted out of my employer’s health coverage (because my husband’s was soooo much cheaper) they “reimbursed” me by putting a similar amount to what they’d been paying into an HSA. So if things change–for instance my husband loses his job–I could go back on the insurance, but I’d be choosing insurance instead of their contribution to the HSA. (I would still be free to make my own contribution to the HSA.)
This seems like a fair way to do it, but I don’t know how the OP could get there from where she is now.
Your system sucks, and I have trouble believing any organization with a lawyer or an HR professional would let it work like that.
Salary is salary, and benefits are benefits. If you want to offer a “rebate” or something along those lines for people who do not partake in the benefits, that is very generous of you. But that is not, not, not, not a part of the base salary. That’s what “base salary” means. It’s the salary before benefits. Any compensation for un-needed benefits needs to be managed separately, as it’s own category in the overall compensation package. If you are including all kinds of random other stuff in the base salary, it does open up a lot of room for things to get unfair when it comes to raises, comparing employees, etc. And even if you are scrupulously fair, it still opens up room for misunderstanding and resentment between employees, which is ultimately bad for you.
To be honest this is your company’s screw up. The honest and fair thing would be to fix the system for any new hires. I’m not sure what to do with the people you hired under the old system. It seems unfair to grandfather them, allowing them to have both the increased pay and benefits, but if you offer health insurance, you have to offer it to everyone and it’s not going to be cool to dramatically cut someone’s base pay.
If you hate managing employees so much, why are you a manager?
Ask HR/payroll if there are two line items on her paycheck.
Salary: $X
Benefits: $Y
Or it it just
Salary $X.
If it is the latter, you are really hosed. (Because you are changing her TOTAL COMPENSATION)
If it is the former, there is no problem–other than she wants a raise, out of cycle–which you are not obligated to provide.
Did she ever formally agree that if she chose to change her health insurance plan, she would take a pay cut?
Honestly, this sounds like your mistake and you may be the one with a moral obligation to suck it up. You essentially made an informal arrangement with the employee regarding benefits and base salary, and informal agreements are basically worthless. You made a mistake by lumping the insurance rebate in with the base pay, which is a strange thing to do, and now you’ve put her in the position of taking a huge pay cut or giving up the option to change her health insurance- a trade-off that I bet she never agreed to.
Think about it this way- if she genuinely thought she had the option to change her insurance situation, that flexibility was a part of her compensation package.
I would discontinue the policy for a year, and reinstate as a “health insurance rebate.” I’d grandfather in the people with inflated salaries from the previous arrangements. It’s unpleasant, but that’s what happens when you don’t get your agreements on paper and don’t go through what any lawyer or HR professional would advise.
It has been discontinued today according to a phone conference between myself, our attorney and the CEO. There is no legal obligation on our part to keep her current salary and it will be lowered. It was presented as a gift after the salary was agreed upon. “Since you’re saving us a bit of money, we’ll pay you a few bucks extra, a win win.” Now she’ll go back to her original contracted salary and so will everyone else that was given a few extra bucks.
It really is a pity but as the lawyer said to the CEO"This is business, being nice can and will bite you in the ass". He also said that it is very rare that any small company pays one hundred present of health insurance and he advised that we stop doing that in this economy. That little piece of advice makes me want to slap this pain in the butt silly. This was her trying to work the system to get the raise she wants and it backfired for everyone.
I sincerely appreciate the opinions from everyone here. They always give me things to think about that hadn’t yet occurred to me.
Minus annual COLA? Or are you going to retroactively crunch the numbers for what her salary ‘should’ have been each and every year and re-figure appropriately? Are you going to go back and file amended tax statements that differentiate between her ‘salary’ and a taxable benefit? Cuz it seems to me that she has years of records on file with the IRS where your company has avowed under pain of perjury that her ‘wages, salary, and tips’ were X when you now want to claim Y.
You know, maybe she is trying to game the system. Or maybe she honestly mis -remembered -interpreted the deal. I don’t care. This is your fuck up, not hers. You screwed the pooch, and your attempt to deflect blame to her is disgusting. IANAL, and I don’t know the merits of her case. But I hope she has one. And when you pull this bullshit to CYA, I hope she sues the fuck out of your company and prevails.
Honestly, I haven’t read a thread started by you wherein you don’t come off as a reprehensible person.
ETA: Congratulations on your incompetence hitting all of your employees in the wallet. A lot of people are going to suffer because you couldn’t be arsed to do this right the first time.
According to the original thread, wasn’t it a woman whose husband had died who wanted to use her bereavement days to spend time with her daughters several weeks after his funeral? And a guy who wanted to wear his own non-sanctioned shoes?
No, she was trying to avoid taking a 12% cut in pay–not quite the same thing.
She’s not taking a pay cut though, she’s just having her compensation reallocated into health benefits instead of straight dollars. This really isn’t as hard as many people are trying to make it seem, and it’s pretty reasonable. You get paid X. Your health insurance costs Y. You can choose between receiving a salary of X+Y or X+health benefits. She’s been receiving X + Y. Now she will be receiving X + health benefits. What she’s trying to do is receive X + Y + health benefits. That’s gaming the system.
Jesus, what the hell is your problem?
Agreed with even sven. If this woman’s salary includes the benefit and its not listed separately in any way, taking it away from her is unfair. You made this mess, so punishing your employee is not right, in my opinion.
I forgot about that one! Yeah, that was a pretty disgusting display, so I guess I shouldn’t be surprised that the same person is trying to screw somebody else out of something they deserve because of a legal technicality.
It’s not unfair if she was given the higher salary because she waived the benefits. Yes, the employee may think it’s unfair, and yes, it may cause problems and it *may * even be (although there’s no guarantee) that the feeling of unfairness and problems could have been avoided by listing the additional payment separately. But the fairness doesn’t change because her paycheck lists salary ( X+ Y ) instead of salary X + premium adjustment Y. It’s not exactly fair to the other employees who took the insurance and therefore had a lower salary for this person to get the higher salary and the insurance , is it ?
The way it works at my job is: the cost of health benefits is figured out at a per-pay period rate. That rate is added to everyone’s paycheck as a separate, taxable line item. Employees who choose to can then “buy” their benefits. Employees who don’t can keep their higher income.
I think the part about raises is bullshit, though. A person should get a raise because she earned it, not because her expenses are X or Y.