The cost of so-called "fringe benefits" has increased to a national average of more than 40 percent of employees' wages. But few employees know that. Employers miss a good opportunity if they don't communicate to employees how much the company pays in benefits, in addition to their regular earnings.
One effective way to inform employees is to send a benefits cost story along with their W-2 earnings statement. Fringe benefits cost figures can be reported as averages, or they can be reported on a personalized, individual basis. Listed below are some suggestions on what to include in the "hidden paycheck."
For example, "Dear Employee: Most of us realize that in addition to our paychecks there are several benefits provided by the company. But do you realize their value when they're all added up? Shown below are the figures-see what you're really worth!"
- Your total paycheck in 2004
- Your gross earnings, before deductions, were $_____________
- Deductions from your paycheck amounted to:
-Income taxes (city, state, federal) $____________
-Social Security taxes $____________
-Your share of group insurance premiums $__________
-Your charitable contribution deductions $___________
- Total deductions $____________
- Your net earnings (take-home pay) were $____________
- In addition to wages, the company paid on your behalf:
-Matching Social Security taxes $____________
-State Unemployment Compensation taxes $____________
-Federal Unemployment Compensation taxes $____________
-Workers' Compensation Insurance $____________
-Pension plan contributions $____________
-Life insurance premiums $____________
-Health insurance premiums $____________
-Dental insurance premiums $____________
-Other: _______ $____________
-Total fringe benefits paid by company $__________
-What you're worth in salary and fringe benefits $________
- Your wages include these amounts for time paid but not worked:
-Two weeks paid vacations (or applicable number) $____________
-Paid sick leave $____________
-Paid rest periods/lunch periods $___________
-Total benefit you received for time paid but not worked $_________
- Therefore, for each hour you actually worked, you were really worth **$__________ in wages and other benefits, totaling $__________ for the entire year. (**cost for wages and benefits + cost for hours not worked ÷ total hours worked = your value for one year)
- Optional comment to employee: "This statement isn't sent to prove that our company is generous; you earned the amount on the bottom line. You and your family should know what fringe benefits and protection programs you have and have a clear idea of the real cost of your services to the company. All these items are included in the cost of our product/service. We ask that you remember your real value when you think of the price charged to our customer. That's where we-as a team-must remain competitive. Call _______________________ if you have questions or suggestions."
Knowledge is power, and the more you educate employees on the hidden value of their total compensation package, the greater the likelihood that they might think twice about taking advantage of a situation. IBI