Employee Benefits – Right Or Privilege

Over the years, one of the most important factors candidates cited in searching for employment was benefits. Surprisingly this was second to salary. Considering the high cost of healthcare and prescriptions, benefits have played a vital role in the way people look for jobs. Unfortunately, in recent years, we have seen a decline in the benefits being offered. Companies are finding it difficult to keep pace with the rising costs of insurance and other employee benefits, forcing them to either reduce or eliminate their offering. Many believe that employees are entitled to benefits, feeling it is the company’s responsibility to offer some level of support. Others believe that employee benefits are a privilege not a right. For this group, they believe that any offering is better than nothing at all. Adding further fuel to this hotbed issue – the number one reason that people file for bankruptcy is medical bills. So, what is the truth about employee benefits – is it a right or a privilege?

Let’s begin by addressing the many inaccuracies and misconceptions relating to employee benefits. Myth: For Only large companies are required by law to provide benefits. Truth: The truth is that while some benefits are mandated, the majority are not. Standard benefits such as healthcare, holiday pay, and vacation are routinely offered by companies of all sizes as part of a benefits package. While most companies do offer some or many of these benefits, from a legal standpoint, these “benefits” are not actually governed by the law.

In a competitive marketplace, employee benefits can be the deciding factor for many candidates. Organizations offer these benefits in order to attract and retain high quality employees. Business owners know that providing perks to employees is a worthwhile investment to attract a higher caliber of employee. Therefore, while the company has to spend significant money to provide this type of coverage, they do so as an investment to growing business, and attracting and retaining a talented workforce not because they are required to do so. Today’s world is highly competitive. Individuals who have graduated with a BA or even MBA usually only work for top companies. This means that for small to medium size organizations to compete they have to find creative ways to make the opportunities more appealing.

Another misconception is that people are entitled to time off for vacation. Again, this is something offered, not mandated by law, as most people believe. Now, when it comes to receiving vacation time, if it is provided by the employer, it must be treated in the same way as wages, being earned daily, which is law. The other factors protecting the employee from accrued vacation is that once it is earned, the company cannot renege by taking it back and if the employee leaves the company, regardless of termination or voluntary leave, he or she must be paid earned income.

The examples listed below will provide you with an idea of what is the employee’s right versus privilege:

• Any company with a minimum of one employee is required to provide unemployment insurance, which is covered 100%, meaning the employee pays nothing.

• Workmen’s Compensation – This too must be provided for any company with one employee to include disability income, medical benefits, and time off, paid for by the company at 100%.

• Pregnancy Disability Leave – For companies with a minimum of five employees, reasonable accommodation must be provided, typically between four and eight weeks.

• Vacation – This benefit is not required under current law although any vacation must be accrued and paid out to the employee upon separation from the company.

• Sick Pay – Again, by law, this is not required. However, under the Federal Medical Leave Act (FMLA), employees under certain circumstances would be provided time off (up to 12 work weeks within a 12 month period) without pay while the current job is protected. FMLA would cover issues pertaining to death in the family, medical leave, adoption and serious health issues of immediate family members.

• Holiday Pay – This too is at the discretion of the company and not mandated.

• Pension and Retirement – While this would not be mandatory, any coverage provided would need to follow strict ERISA regulations and tax laws.

• Healthcare Insurance – Finally, health insurance is not required by law. However, when coverage is offered, it would fall under the direction of COBRA, Cal-COBRA, and HIPPA regulations.

As you can see, most employee benefits are in fact a privilege and not a right. While job seekers and employees might deem it unfair or even immoral, it is what the law currently states. Having an understanding of the law, enables you to tailor and market your employee benefits package appropriately highlighting the perks that your company can offer.

Richard A. Hall is founder and President/CEO of LexTech, Inc., a legal information consulting company. Mr. Hall has a unique breadth of experience which has enabled him to meld technology and sophisticated statistical analysis to produce a technology driven analytical model of the practice of law. As a busy civil trial attorney, he was responsible for the design and implementation of a LAN based litigation database and fully automated document production system for a mid-sized civil defense firm. He developed a task based billing model built on extensive statistical analysis of hundreds of litigated civil matters. In 1994, Mr. Hall invented linguistic modeling software which automatically reads, applies budget codes, budget codes and analyzes legal bill content. He also served as California Director and lecturer for a nationwide bar review. Mr. Hall continues to practice law and perform pro bono services for several Northern California judicial districts.

LexTech provides corporate and public sector legal managers a cohesive suite of tools, professional services, and educational offerings to manage the Business of Law.

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