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Marsha411JD
Marsha411JD, Lawyer
Category: Employment Law
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Experience:  Licensed Attorney with 28 yrs. exp in Employment Law
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Is it legal for an employer to charge an administrative fee

Resolved Question:

Is it legal for an employer to charge an administrative fee to employees opting for benefits such as 401k, healthcare, relocation assistance, etc.?
Submitted: 8 months ago.
Category: Employment Law
Expert:  Marsha411JD replied 8 months ago.
Hello,

Thank you for your question, however, I will need some clarification about how and why these fees would be charged. Can you explain a bit please?
Customer: replied 8 months ago.

Sorry to be confusing, i will use a specific example.

 

Would it be ok for an employer to give an employee two options before agreeing on salary/pay rate. They could choose either:

1. agree to flat salary without any benefits such as a 401K (lets say $100,000)

2. agree to a lower rate (such as $95,000) with the ability to contribute to 401K with employer matching.'

 

The employer would not necessarily be taking funds out of the employees wages in order to fund the 401K but rather the employee would agree to a lower rate in order for the ability to access a 401K

 

Expert:  Marsha411JD replied 8 months ago.
Hello again and thank you for your reply. In general, no, if the employee's job position is included in the company's pension/401K plan, then under ERISA, they must be allowed to participate in the plan like other included employees. However, if an employer only cover certain types of jobs, for example, only non-exempt or only exempt workers, or only administrative, in their Plan, then if this employee falls outside the inclusions, they could be denied participation. However, the employer is always free to set wages in whatever way they choose. That though can't be a fee, it is just an adjustment in a wage offer based on the fact that the employee may participate in a company 401K.

This though is a very complex area of the law and I strongly urge your company to sit down with an ERISA law firm or ERISA specialist to go over the company's plans and policies. In the meantime, you might want to do some reading on the issue at:
http://www.dol.gov/ebsa/faqs/faq_compliance_pension.html
http://workplaceflexibility2010.org/images/uploads/ERISA%20FACTS.pdf

Please let me know if you need any clarification. I would be glad to attempt to assist you further if I can.
Marsha411JD, Lawyer
Category: Employment Law
Satisfied Customers: 16973
Experience: Licensed Attorney with 28 yrs. exp in Employment Law
Marsha411JD and 4 other Employment Law Specialists are ready to help you
Customer: replied 8 months ago.

Thank you for your help Marsha this clears things up, I just want to further clarify.


 


So while there can't be a "fee" charged to the employee, an adjustment in wage may possibly be allowed? This adjustment of course would occur before any final agreement between the employer and employee as to what the wage rate will be.


 


So it can't be stated to employee:


You are earning $100,000 but with a fee for 401K participation you will earn $95,000


but possibly may be able to say you will be earning $95,000


 


Further, The employer in this case is in fact a consulting firm that pays employees working for clients with funds from the client when approved.


So if the Client is offering to pay for the employee $100,000 can the employer/firm tell the employee they are being offered $95,000 if they take the 401K option with employer matching, or $100,000 if they dont take the 401K


 


 


Thank you again for your help.

Expert:  Marsha411JD replied 8 months ago.
Hello again and thank you for your reply. I would still highly recommend that your company consults with a local ERISA specialist, but in general an employer can offer whatever they want for salary unless there is a contract that states the employee is entitled to receive the entire amount a client contracts at. The key here is that someone's eligibility for an employer contribution 401K cannot be made dependent on them agreeing to basically pay for that right. The job position or category is either entitled to participation in a 401K plan or they are not. But again, the employer going into the hiring negotiations can offer less pay knowing that they offer good benefits, including employer contribution into a 401K.
Customer: replied 8 months ago.

Great thanks so much for your help. Have a better understanding to now discuss with an ERISA specialist,

Expert:  Marsha411JD replied 8 months ago.
You're welcome and best of luck to you.

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