Can Employers Offer Different Benefits to Different Employees?

can employers offer different benefits to different employees

A common question that human resource professionals all over the country are asking is: “can my company offer different benefits to different employees?


In this article, we’ll delve into some specifics, but the short answer is, “yes, but…”. First things first: there are no federal laws currently in place that require employers to provide the same benefit coverage to all employees. You should be aware, though, that state laws vary. For example, some states require employers to provide the same amount of paid sick leave to all of their employees.


Read on for an overview of when and how you can offer different benefits to different employees. Keep in mind, though, that to make sure your health benefits offerings are fully compliant with state laws, it’s always a great idea to consult an employee benefits and compliance expert.


When Can Employers Offer Different Benefits to Different Employees?


In answering this, it’s best to start with the answer to a slightly different question, “what do we have to do?”  Under the Affordable Care Act, employees with fifty or more employees must either offer health care coverage to all full-time employees, or they must pay a fee. This means that no employer has to offer health care coverage to their part-time employees. 


Generally, companies have the ability to make distinctions in their health benefit offerings as long as the distinctions they make are consistent among groups, and nondiscriminatory. For example, offering a better benefits package to the members of your C-Suite than you offer to support staff is okay, assuming the division is made only on an “employment-based classification.” This means a division can never be made based on race, religion, gender, or any other factor that does not directly relate to work.  


A company might also offer more time off to employees who have been with the company longer, or a more expensive wellness package to employees in a certain geographic region; these differences are perfectly legitimate under federal law.  However, HIPAA mandates employers cannot discriminate based on medical information, such as current or past conditions. And Title VII and the Family and Medical Leave Act require companies to provide the same length of maternity and paternity leave if the leave period isn’t based on pregnancy-related disability.


Should Our Company Offer Different Benefits to Different Employees?


This is where things get tricky, and consultation with an expert is key! According to the Society for Human Resource Management, under the PPACA (Patient Protection and Affordable Care Act), “fully insured plans providing more generous premium subsidy levels to highly compensated employees will be in violation of PPACA nondiscrimination rules once final regulations are issued and enforced on this provision.” While that time hasn’t yet come, it’s something human resource professionals should have on their radar for the future.


For now, if you decide to offer different benefits to different employees, (or even if you don’t!) the best practice is to get an expert in benefits compliance to look over your policies. Your company cares about doing the right thing by its employees, and so does Benely. Contact Benely for a free demo today.