Employee Benefits

[mywbusiness]

What is the name of your state (only U.S. law)?
Missouri

We have an employee whom we have been paying $700 per month and showing on his check stub that this is a "benefit". It amounted to $350 per pay period (because we pay twice monthly). This began more than two years ago, and at that time he was paying around $450 per month for him insurance. We gave him the amount of $700 to more than cover that insurance premium, plus enough to cover a cell bill, because he often uses it for work-related business.
In December 2009 we asked him to update the information and show us a statement with the amount he currently pays for insurance. He refused, then he informed us he had dropped the coverage many months ago. We cut his "benefit" in half, now giving him a total of $350/month. He insists we need to tell him why, does not understand what benefits means, so we are going to change that on his check stub to explicitly say, "insurance benefit".
Is there anything wrong legally in the way we handled this? We did not feel we needed to give him written notice for anything, since we are the ones paying him the benefit, not taking anything out of his check or changing his base pay in any way.

 

[pattytx]

Or you could just drop the "benefit" altogether for him being such a PITA (unless there is a valid contract requiring you provide this benefit). Not exactly the brightest pencil in the box, is he?

 

[swalsh411]

Are you taxing this benefit and does it go on his W-2? If not, why not?

 

[pattytx]

I saw nothing in the original post that would indicate the OP wasn't reporting this payment as wages and withholding the appropriate taxes.

Was there a bona fide contract or other written agreement regarding this arrangement? Without one, it's as simple as "Bill, you are no longer purchasing medical insurance on your own, therefore, your additional compensation (that's all it is, really) has been reduced from $700 per month to $350 per month. If you don't like it, go pound sand."

I'm not sure I'd refer to it as a "benefit" though. You could call it "additional pay" or something; actually additional pay is probably the best description. That doesn't imply anything. And, without a valid agreement or contract to the contrary, the law doesn't require you give the employee anything in writing when you are decreasing his pay; not in your state.

What does he THINK you should be doing?

 

[mywbusiness]

Employee Benefit

Thanks for all your help. We feel we are being more than generous by allowing any benefit at all, considering the fact that he no longer has that coverage. We are going to suggest he acquire health insurance for himself, show us proof of such, then continue the current benefit amount of $350 if he does so. We are a small company and are not bound by law (right now) to offer group coverage.
I talked to my accountant and she thought our 'benefit' line on his check was o.k., but in his file we need to define that more in detail and maybe have him sign something to show that he understands the meaning. I'll have to ask her about if he's taxed on that 'benefit' or not. Thanks again!

 

[mywbusiness]

P.s.

Yes, we report it on his W-2 and withhold the appropriate taxes.

 

[pattytx]

Yes, we report it on his W-2 and withhold the appropriate taxes.

Good for you.