If you are a business owner and wondering if you can have different Benefits for the management or higher paid staff, there are some things to consider. Independent brokers used to be able to obtain what they call “management carve out” benefits, meaning Employee Benefits or insurance for JUST the managers and/or the higher paid employees as a perk. The Affordable Care Act (ACA) has disallowed that, but not enforcing penalties at this time. Employers have been given a sort of pass for 2014 and 2015. They are calling the practice, “employee discrimination”. There is a specific nondiscrimination section of the ACA that addresses it.
Nondiscrimination of employees and the practice of giving management better benefits
The ACA is not enforcing any penalties at the moment, but honestly, my advice would be to maybe increase the salaries of the management that you would like to offer better benefits and have them buy up to a better Employee Benefits plan. That way, everyone in the company is offered the same Employee Benefits, with the option of buying up, and there is no issue around discrimination. Some companies still have their Employee Handbooks designating different benefits for different classes of workers, but you may at some point, end up speaking to the Dept. of Labor and defending yourself.
The fun of having to defend yourself with the Dept of Labor, or the Labor Board
Having owned multiple pizza stores in the 80’s and 90’s, a trip to the Labor Board is not fun. You are always looked at as the rich business owner and the scales are definitely tipped in the employee’s favor. I always advise our insurance clients to think about how this would play out IF you had to defend yourself in a lawsuit. Sometime when you look at it in those terms, a little planning and forethought can save you some gray hairs. One of the biggest issues that companies face is their Employee Handbook. They either don’t have one, or it was created many years ago and not updated. Folks, dust if off, have an attorney look it over. It will be the best $1500 you every spent….trust me.