Are Benefits Part of Your Salary?


Yes. Most companies include benefits as part of your overall compensation. Sometimes, a starting salary will be higher to make up for poor benefits or lower because benefits are plentiful. According to Forbes and the Bureau of Labor Statistics, benefits accounted for about 32% of compensation for U.S. workers in June 2018.

Voluntary vs. Obligatory Benefits

Unfortunately, most benefits are not as protected as salary, which makes up the other 68% of employer compensation costs. If an employer reduces or terminates your benefits, you may not have legal recourse – unless, of course, your benefits are legally or contractually obliged.

Generally, the only benefits an employer is required to offer include:

  • Workers’ compensation
  • Social Security
  • Sick leave (in some states)
  • Leave under the Family and Medical Leave Act (FMLA)
  • Insurance coverage under the Affordable Care Act (ACA)

When it comes to voluntary benefits, employers may change or remove them at any time, as long as they give the correct notice first. If employers change their health insurance benefits, for example, they must give 60 days of advance notice under the ACA. In some states, employees are still entitled to old benefits, such as previously accrued PTO.

To save money, some companies also terminate 401(k) retirement plans. Employers must adhere to complex tax rules and may not favor certain employees over others.

Employers will only face legal consequences for changing or removing benefits if they break contracts, laws, and tax rules.

Stricter Regulations for Salary

Changes to salary, on the other hand, may be more carefully regulated. Your employer must notify you before cutting your pay or be liable for breach of contract. Employers must also pay all their employees at least minimum wage, avoid pay discrimination, pay non-exempt employees overtime pay, and follow other guidelines set by the Fair Labor Standards Act (FSLA).

Read our blog, “Does the Fair Labor Standards Act (FLSA) Prohibit the Reduction of Wages?” to learn more.

What To Do When An Employer Makes Changes to Your Total Compensation

In most cases, employers must notify you when they make changes to your total compensation, which includes your base salary and benefits, such as:

  • Paid vacation, sick days, and holidays
  • Medical, dental, life, and disability insurance
  • Retirement plan
  • Bonuses and commissions
  • Profit-sharing distributions
  • Gym memberships
  • Childcare
  • Employee assistance programs

If you work without notice that your total compensation has changed or your employer breaches your contract, Donati Law, PLLC may be able to help. We have been representing employees for more than 35 years, and our mission is to improve the lives of our clients.

As an employee, you have rights. Call us at (901) 209-5500 or fill out our employment law questionnaire to learn more about yours today.

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To discuss your case with an accomplished attorney who cares, give our firm a call at (901) 209-5500 or fill out the form below.

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