Employee Benefits

13 Employee Benefits

Case 13.1. Statutory Benefits: Companies Kicking Your Spouse Off of Your Health Care Plans Dennis Ferry works for Compatible Technology in its customer service department. Dennis knows he will have to make plenty of decisions when open enrollment for his company health plan, Health New England, rolls around July 1 each year. Dennis’s health-care coverage was totally free for employees in 1982 when he was just out of college. That was a long time ago—and health care in the United States has changed dramatically.

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Today, companies are looking to save as much money as possible when designing a health-care program. Each employee who signs up for the company health-care program can cost the company between $4,000 and $10,000 a year, depending on the program selected. Of course, it would be nice to think that the companies (and our government) are also trying to make sure we receive the best health care possible.

Dennis’s wife, Janice Ferry, is employed by LEGO. Dennis and Janice have three daughters under 10 years old. As a family, they can expect to pay about $300 a month for the plan offered by Compatible Technology. They can also expect a deductible around $2,500 to $4,000. The Compatible health-care plan has a deductible of $2,500, which means the Ferrys will have to pay $2,500 in actual medical costs for pharma- ceutical drugs, office visits, hospital stays, and so on before they can expect to receive “free” health service until July 1 rolls around again.

If Dennis worked for UPS, Janice would have to take health-care insurance from her job at LEGO, since she would not be allowed to stay on the Compatible plan. That would happen because UPS informed their employees that their spouses would be dropped from their health-care plan if the spouse can obtain health care at his or her own place of employment.1 This measure was taken as a reaction to the Affordable Care Act (ACA). UPS expects to save money by avoiding paying the premiums for each person on the plan. These premiums were implemented as part of the ACA.2

In Dennis’s case, he recently had to decide if he wanted to receive a $3,000 pay- ment from his employer, Compatible Technology, to not take his health-care benefits.




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The $3,000 must be used to pay for a spouse’s health-care program. Thus, if Dennis didn’t take Compatible’s health-care plan from Health New England, he would be paid $3,000 to help pay for health-care benefits at LEGO, where his wife works. Proof of the other health-care plan must be provided. In Dennis’s case, since his wife Janice worked for LEGO with a generous health-care plan, they decided to take the offer from Compatible for $3,000 and would apply it to a family plan offered by LEGO. This appears to be a positive switch in plans, since even Compatible will be happy that it will not have to pay its portion of Dennis’s health-care plan, which would be greater than $3,000.

Case Questions

1. Approximately how much money would a company spend on a health-care plan for Janice as compared to her own cost?

2. What did UPS claim as the reason for dropping spouses from its health- care plans?

3. What decisions does Janice have to make in regard to selecting her health-care plan?

4. At UPS, what would be the result if your spouse was forced to use his or her own company plan?

5. What health-care plan are you covered by at this time? Are you working for a company and have you accepted the company plan? Are you on your parents’ plan, which you can be covered on until age 26?

Case 13.2. Trends and Issues in HRM: Managing New Laws Regarding Sick Leave It might be surprising to know, but there is no general legal requirement that employ- ers give employees sick leave in the United States. While most employers do give employees some paid time off each year to be used for sick leave, the law does not require employers to do so in most circumstances. Since there is no requirement under federal law that employees be given sick leave, there also is no legal requirement that sick leave, if given by an employer, be paid leave.

The following passage is from the U.S. Department of Labor.

Currently, there are no federal legal requirements for paid sick leave. For compa- nies subject to the Family and Medical Leave Act (FMLA), the Act does require unpaid sick leave. FMLA provides for up to 12 weeks of unpaid leave for cer- tain medical situations for either the employee or a member of the employee’s immediate family. In many instances paid leave may be substituted for unpaid FMLA leave.

Employees are eligible to take FMLA leave if they have worked for their employer for at least 12 months, and have worked for at least 1,250 hours over




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the previous 12 months, and work at a location where at least 50 employees are employed by the employer within 75 miles.3

An estimated 43 million people nationwide have no paid sick time. Employees without time for sick leave often make up excuses to take time off or try to work when they are sick. Employees also have to figure out what to do when their child is sick and needs to stay home, when they need to go to their own doctor, or when they need to help a sick relative.

However, cities and states are starting to propose and pass laws that provide work- ers with sick leave time. A city of Pittsburgh councilman has proposed an ordinance that allows employees to earn sick days based upon the number of hours they have worked. The draft legislation allows 30 hours of work to equal 1 hour of sick time. Employees cannot earn more than 72 hours of sick time in a year. Businesses with fewer than 15 employees can limit sick time to 40 hours.4

Effective July 1, 2015, the state of Massachusetts passed the Earned Sick Time Law, which provides 1 hour of sick time for 40 hours of work. Earned sick time is paid at the employee’s normal rate of pay. Employers that have 11 employees or more must allow their employees to earn and use up to 40 hours of paid sick time per calendar year. Employees working for an employer with fewer than 11 employees can earn up to 40 hours of unpaid sick leave per calendar year. An employee may miss work (1) to care for a physical or mental illness, injury, or medical condition affecting the employee or the employee’s child, spouse, parent, or parent of a spouse; (2) to attend routine medical appointments or those of a child, spouse, parent, or parent of a spouse; or (3) to address the effects of domestic violence on the employee or the employee’s dependent child.5

Six and a half million people in California became eligible for paid sick leave for the first time starting July 1, 2015. The Healthy Workplace Healthy Family Act of 2014 guarantees up to three days of paid sick leave for all California workers who work for 30 or more days within a year of becoming employed. The law will help employees in the retail and fast food industry, since those employees often have young children and often need to take sick time to tend to those children when they are ill.

Overall, as of July 2015, California, Connecticut, Massachusetts, and the District of Columbia, as well as at least 18 cities, have laws mandating paid sick days.6

Case Questions

1. Is sick time part of paid time off benefits?

2. Do you believe that employees abuse sick leave by using a “use it or lose it” approach?

3. Does having a sick leave policy help reduce overall stress?

4. Why doesn’t a national sick leave law exist?

5. Does the company you (or your relative) work for have a sick leave policy? If so, what is that policy?




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1. Ponder, Crissinda, “Will Company Health Plans Drop Spouses?” Bankrate.com, http://www .bankrate.com/finance/insurance/employer-health-plans-drop-spouses.aspx.

2. Greenhouse, Steven, “U.P.S. to End Health Benefits for Spouses of Some Workers,” New York Times, August 21, 2013.

3. United States Department of Labor, “Work Hours: Sick Leave,” http://www.dol.gov/dol/topic/ workhours/sickleave.htm.

4. Zullo, Robert, “Pittsburgh Council to Introduce Paid Sick-Leave Legislation,” Pittsburgh Post- Gazette, July 6, 2015, http://www.post-gazette.com/local/2015/07/06/Council-to-introduce- paid-sick-leave-legislation/stories/201507030268.

5. http://smcattorneys.com/employment-law-update-massachusetts-sick-leave-law/. 6. Karol, Gabrielle, “California Paid Sick Leave Act Goes Into Effect July 1,” USA Today Network,






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