Compensation and Benefits

Compensation and benefits topics – whether it’s minimum wage, workers’ compensation laws, or employee pay – if properly handled, can help you retain workers and recruit new ones.

Use our advice to craft independent contractor agreements that keep independent contractors – and your bosses – happy.

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The IRS has clarified that em­­ployers can take a current-year tax deduc­­tion for a fixed amount of bonuses that will be paid to employees during the following year, even though the amount that each employee will re­­ceive, and even the identity of employees, aren’t known until after the tax year ends.
Q. An employee’s spouse has become disabled. Even though this employee is younger than 59½, he’d like to take a distribution out of his 401(k) account. Can we accommodate him?
Q. We reimburse employees for the business use of their personal cellphones. To cut down on paperwork, management has suggested that instead of having employees submit their cellphone bills, we give them a flat allowance. This sounds like we’re giving them extra pay. Would those allowances be taxable?

Do your managers have limited discretion in setting pay? If so, you may have a built-in way to prevent large class-action lawsuits over equal pay. It’s all because of last summer’s big Supreme Court decision in Wal-Mart, Inc. v. Dukes.

If your company has a top pay level for each job classification, you probably end up giving some older workers smaller raises than less-tenured employees. That’s fine as long as you can explain that the difference is because of your wage schedules, not age discrimination.
Q. Due to recent snowstorms, some exempt employees have not been able to get to work. Can we dock the pay or accrued leave of employees who do not come to work? Can we do so even if the office is closed?

Some jobs require employees to always show up on time. Nursing homes, day care centers, hospitals and the like are obvious examples. Draconian attendance policies may be necessary to ensure coverage. As long as they allow for FMLA leave and consider reasonable accommodations for disabled workers, such rules are fine.

Many employers automatically deduct meal period breaks from time worked to simplify wage-and-hour calculations. That’s fine, but you must make sure there is an easy way for employees who work through their meal breaks to report the additional paid time.
Q. We recently fired an employee for misconduct. She now claims we have to buy out all the vacation time she had not used. Do we have a legal obligation to pay her for accrued and unused vacation time?
Employees who quit usually aren’t eligible for unemployment compensation. Only those who quit for “a good reason caused by their employer” are eligible for benefits.
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