What are rules concerning giving benefits to certain employees and not to others?

Can you legally give certain benefits, like retirement benefits, to particular employees, and not to others?You might be surprised to learn that you can, in fact, give some people benefits that you don't give to other employees.However, there are a lot of very particular rules governing how you work your benefits.For help, contact the Department of Labor.

Technically, equal benefits doesn't mean that you give everyone the same amount of benefits monetarily.Instead, equal benefits actually means that benefits are equal when older and younger employees have them in every respect.If you as an employer are going to have different benefits for older and younger workers, then you have to be able to justify the difference in your offerings and in the options available.

Both older and younger employees have to have the same payment options.This means that you can't offer employees who are 50 the option to choose between lump-sum pension distributions and annuities, but your employees who are 65 have to take an annuity.

Older and younger employees also have to have the same types of benefits.Let's go beyond retirement, for a moment.Monetary value doesn't matter here.If your 45 year old employees get laid off, and are given both job retraining and severance pay, you have to give the same benefit package to a 65 year old employee who is laid off.You can't give life insurance instead of job retraining.

You must offer employees the same amount of benefitsThis means that you must offer a 55 year old employee and a 70 year old employee a death benefit that is worth the same amount, say $50,000.However, it is also considered the same amount if you give employees a life insurance benefit that is 3.5 times the amount of their annual salary, even if their salaries are different amounts.The same percentage of salary paid as part of a severance package is also considered to be equal.

It is also considered to be equal benefits if the benefit plan makes provision for all employees, no matter the age, to be paid the same amount of money until their deaths.Technically, the older employee will probably receive less money, but the fundamental underlying idea is equality.

If your plan has a cut-off for benefits based on age, then it is not considered equal.This is because older employees will get fewer payments simply because of their age.Any payment plan that links payment to and ends payment based on age is considered unequal.

So when can you provide different benefits to different employees?You can give additional benefits to older employees in an effort to counteract age discrimination problems.For example, if you have to lay off 6 employees, and two of them are 62 while the rest are between 40 and 45, you can give a higher severance package to the older employees to offset the probability that they will not be able to find another job.

There are several possible justifications for giving lower benefits for older workers.

If you generally spend the same amount of money on benefits for older works and younger workers, you may provide particular fringe benefits in smaller amounts or for less time for older workers.This is called the equal cost defense.The only benefits that this may be used for are:
1.life insurance benefits
2.health insurance benefits
3.disability benefits

However, the equal cost defense can never be used to justify age discrimination or unfair treatment and benefits for older employers.Also, you can never use the equal cost defense for severance packages, retirement packages, paid vacations, and sick leave.For more information, visit this website:

http://www.eeoc.gov/policy/docs/benefits.html#A.%20Introduction