Fringe Benefits: Giving Perks to Employees

Some US employers provide workers with fringe benefits which is a nonwage compensation that is usually given to those who provide notable work contributions to their companies.

Examples of Fringe Benefits:

• Retirement benefit plans
• Group health insurance
• Medical, prescription, dental, and vision plans
• Long-term care insurance plans
• Life insurance coverage
• Relocation assistance
• Legal assistance plans
• Transportation benefits
• Child care benefits
• Adoption assistance
• Employee discounts (e.g. wellness programs, hotels and resorts, movie theaters, theme parks, business establishments, etc.)

Usually, fringe benefits are tax deductible from the employer’s gross income and not from the workers’. However, some nonwage benefits are not taxable particularly when these are requirements for the employment.

For example, an employer provided a clothing allowance to a factory worker whose job requires handling corrosive chemicals. If the money is for buying special clothing to protect the worker from injuries, this fringe benefit will not be subjected to any tax deduction.
Also, some fringe benefits, especially those that provide health coverage, are usually not subjected to federal income tax.

Advantages of Giving Fringe Benefits

Employers have several reasons why they provide fringe benefits even if this means additional expenses.
• With extensive health coverage plans, companies can keep their key employees and workers who provide satisfying service.
• Usually, most employers enjoy tax breaks especially if they provide group health plans.
• Workers will usually prefer better fringe benefits than higher salary, allowing employers to reduce their expenses.
• Several studies suggested that employees who are covered by a good health insurance are less likely to be absent from their work.
• When receiving benefits, workers will think that their companies are good employers, boosting their morale and improving their work ethics.
• Employers may get personal benefits for less money if they will purchase a group health coverage for their workers.

Disadvantages of Giving Fringe Benefits

While giving fringe benefits will have significant advantages to employers and workers, these are some of the drawbacks according to an employment attorney:
• For small employers, fringe benefits will cost more. Also, they have less choice in drafting their worker’s retirement or health plan because of administrative costs.
• The cost of health insurance coverage is steadily rising in the US, making it less affordable to most employers especially in tough economic times.
• The more benefits a company will provide, the higher the administrative fees will cost.
• Employers may face lawsuit (usually on the basis of discrimination) if they fail to provide fringe benefits to all workers or exclude someone from receiving this.

ABOUT THE AUTHOR: Mesriani Law Group
Mesriani Law Group is an LA-based law firm that specializes in personal injury, employment and labor, social security and disability, and business and corporate cases. Under the helm of its founder, Rodney Mesriani the firm has been successfully representing clients for more than 15 years now. As a full service law firm, Mesriani Law Group provides high-quality and efficient legal representation by combining its unique business structure with the application of high-tech, cutting edge technology.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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