Chicago Employment Attorney Timothy Coffey Outlines Legal Requirements for Employee Benefits
Dec 15, 2014
Chicago, IL (Law Firm Newswire) December 15, 2014 – Everyone with a job should have benefits of some kind. The law mandates that an employer must provide them.
“Working full-time usually means you get a paycheck – cash to be put into the bank. But you get more than that; you also receive benefits. Those benefits may take the form of paid vacation or health insurance, referred to as non-cash benefits,” stated Timothy J. Coffey, a Chicago employment attorney. Benefits received are to provide for family and improve quality of life. The IRS allows certain tax breaks for many employment benefits.
Employers must offer their workers clear information about health and retirement plans and about how they operate. That information must also include standards for participation in various plans and eligibility requirements. Any employer that does not provide the required information is in violation of the Employee Retirement Income Security Act of 1974 (ERISA).
“This Act has not remained stagnant over the years,” Coffey pointed out. “ERISA has been expanded to encompass the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), which allows workers or family members to continue paying for COBRA on their own if they lost health care coverage after losing their job.”
The IRS regards employee benefits and fringe benefits as payment for services rendered. But this regard does not apply to health care benefits, as they are not subject to withholding for Medicare or Social Security. Vacation pay is subject to full taxation, though other items, such as educational assistance, may be tax-exempt up to a certain amount.
Medicare, Social Security and unemployment benefits are required by law. The employer makes payments into those funds while the worker is employed. The worker must also make payments into the funds, which are generally taken off each paycheck. Usually, the contribution amounts are the same each year, but there are instances where employers pay more than workers. In the case of unemployment benefits, a worker does not pay state or federal benefits. The employer covers their full cost.
Benefits may also be pertinent if a worker is fired. Negotiating a severance package can be tricky, but seasoned employment counsel can make this minefield easier to maneuver. Workers may ask for additional funds to help them find a new job or extend health coverage for a few extra months. Overall, the package should to benefit the worker and support a fair separation.
A large number of employers once offered pension plans to their workers. Given the state of the economy today, employers now lean towards 401(k) plans. Workers contribute their own money into these plans. “The employer may match contributions up to a specified amount, so always check what your company offers if you have the opportunity to contribute to a 401(k) plan,” Coffey added.
Since a 401(k) is considered a retirement fund, workers do not normally pay taxes on their contributions. Nor do they pay taxes on the employer’s contributions or on any investment growth sustained within their plans. However, on retirement, money released from the fund is taxable as regular income.
Learn more at http://www.employmentlawcounsel.com/
THE COFFEY LAW OFFICE, P.C.
351 W. Hubbard Street, Suite 602
Chicago, IL 60654
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