Benefits and Final Pay

Benefits and Final Pay 2017-08-04T16:39:32+00:00

The Little Extras

What are employment benefits?

In this FAQ section, when we use the term “benefits,” we are referring to perks and assistance programs that exceed regular wages and bonuses. Viewed another way, wages and bonuses are, generally, tied to factors like the number of hours or weeks worked or to skill/performance levels, whereas benefits can be seen as entitlements simply by virtue of the employment relationship. This manner of distinguishing between benefits and wages/bonuses is not necessarily the universal approach, but it will help you better understand the points made at this website. Moreover, for these purposes, we include in the definition of benefits things like medical, dental and visions programs, vacation and sick pay, employer-sponsored and/or -funded retirement accounts, reimbursement for non-business related expenses, educational, family and relocation assistance programs. So-called “signing bonuses,” stock options, other incentives for inducing or maintaining employment (e.g., a corner office, deferred compensation plans, free coffee and snacks) are too trivial, unique or numerous to cover here and are, therefore, beyond the scope of this FAQ page.

Am I entitled to employment benefits?

If you work for the government or are subject to a collective bargaining agreement (“CBA”), chances are you know the answer already. Having said that, this FAQ page cannot meaningfully address employment benefits for unionized or governmental workers. Why? Because, every CBA is subject to change each negotiating cycle, and is specific to the bargaining unit(s) at issue. This page cannot meaningfully address governmental benefits for similar reasons: those benefits can change based on budgetary and other restrictions, and they are often job position- and/or grade-specific.

For employees of private companies (i.e., the focus of this FAQ page), the list of benefits provided are usually spelled out in orientation documents or handbooks provided at the commencement of employment. Except in the instance of health benefits, paid leave and sick time pay (all of which may be required by local, state and/or federal law, depending on employment location and circumstances such as pay levels, number of hours worked, etc.), most benefits in private sector employment are simply contractual and, therefore highly negotiable, between employer and employee. Before accepting and beginning new employment, you should ask what benefits are being offered with the position.

Can my employer change my benefits while still employed?

To understand your right to continued benefits, it’s important to first understand the concept of “vesting.” Simply put, vesting is the process by which an employee accrues a non-forfeitable right to something of value from the employer. Other pages at this website, for example, discuss the notion of “at will” employment; the fact that an employee may be “at-will” means that employment is forfeitable, at any time and for virtually any reason. When employment is “at will,” the employee has no vested right to demand that it continue. The same goes for most forms of benefits, with certain exceptions discussed below. For most forms of benefits, you must “use it or lose it” (meaning that there is no compensation exchanged for them upon termination of employment) and there is no guarantee that the benefit will still be offered tomorrow.

What benefits survive the termination of employment?

Sick time pay (while required in some jurisdictions, such as in California) is generally a “use it or lose it” benefit. You may accrue it during employment, but the employer is not required to compensate you for your accrued sick time hours at the end of your employment.

Vacation pay is, in most situations, completely contractual between employer and employee. However, in some jurisdictions (e.g., California), you are entitled to compensation for the number of vacation time hours you have accrued but not used during your employment, at the end of your employment. An employer’s failure to pay out those accrued vacation hours at the end of employment can subject the employer to a hefty penalty (see below for a discussion about final paychecks).

Holiday pay and Paid Time Off benefits are tricky ones to discuss on a general page like this because these benefits vary widely from employer to employer. Generally speaking, Holiday pay is nothing more than compensation provided for special days upon which you are not required to work. Generally speaking, employees are only paid if the particular holiday falls on a day when work would otherwise have been required. Some employers also provide extra (e.g., “time and a half”) pay to employee who elect to work anyway on a particular holiday. Paid Time Off (PTO) benefits can vary even more widely. Some employers do not provide them at all; others provide them as floating days, to be enjoyed for only particular reasons (e.g., a birthday, time off when vested vacation time is insufficient) or, sometimes, for any reason at all. Holiday pay is usually a “use it or lose it” benefit. Paid Time Off, depending on the terms set by the employer, may or may not be a vested benefit for which compensation is given at termination.

Health care programs, while once highly contractual between employer and employee are often governed largely by local, state and/or federal law. Even in situations where health care is mandatory benefit, there is usually no extra compensation for them paid out at termination of employment. Most employees are, however, allowed to continue health benefits for limited periods of time and at reduced group rates through the Consolidated Omnibus Budget Reconciliation Act (COBRA). For more information, you should consult one of our attorneys or visit the United States Department of Labor’s website.

Pension/Retirement account are governed by the Employee Retirement Income Security Act of 1974 (ERISA), a federal law that sets minimum standards for most voluntarily-established plans, requires plan features and funding information be made available to participants, provides fiduciary responsibilities and provide enforcement mechanisms. As you’d expect, as retirement accounts, employer responsivities connected with ERISA-governed plans survive termination of employment. For more information, you should consult one of our attorneys or visit the United States Department of Labor’s website.

Worker assistance programs such as relocation services and tuition reimbursement are highly individualized, only rarely legally-mandated (e.g., vocational rehabilitation programs pursuant to workers’ compensation laws) and often paid by employer-funded insurance plans. Other sundry benefits, such as the corner office and free coffee are, obviously, not benefits that survive termination, nor is there any duty for the employer to provide extra compensation to you once you’ve lost the privilege of employment there.

If you’re still wondering whether a benefit is a vested one, or whether you are entitled to payment for its loss at termination of employment, consider this: Employers cannot retroactively reduce your pay or your benefits. If you worked under a particular pay/benefit arrangement, you are vested in those payments/benefits. Whether an employer can prospectively change your employment compensation or benefit structure depends on factors such as those discussed here. Having said that, benefits law is a complicated field. Consult an attorney if you have questions.

If my employment ends, when should I expect my final paycheck?

By now, you should understand that you are entitled to receive all wages and all vested bonuses and benefits upon termination of employment. However, what “wages” means can be complicated, as can determining when employment has actually terminated. For illustrative purposes only, this section will focus on California law.

In California (and barring another valid agreement or in some cases of group terminations), your full and final paycheck is due to you (1) immediately upon discharge or (2) within 72 hours of your voluntary resignation (unless you gave 72 hours previous notice of your intention to quit, in which case you are entitled to your wages at the time of quitting).

My final paycheck was deficient, or late or never provided. What can I do?

Contact an attorney. While it may be that your employer had every intention of paying you, the failure could be indicative of a bigger issue that could be affecting many people just like you. An attorney can help fix that. If it appears that your employer has failed to pay you fully and/or timely, contact us to discuss your options. It may be our quick phone to the employer solves the problem, or it may be that you wish to seek the full compensation available for this violation. Under California law, in the event of a willful non-payment, not only can you collect all your final wages but you are also entitled to be paid a penalty up to 30 extra days of wages. As you can see, this penalty itself may far surpass the final pay you deserve and create an excellent incentive for the employer to not treat others as it treated you.

This information is for illustrative and educational purposes only. It should not be construed as legal advice, the establishment of an attorney-client relationship, or as indicative of a particular outcome regarding any legal issue you might have.