Legally required benefits in employment and compensation

Legally Required Benefits

The subject of benefits for employees is multi-faceted and sometimes controversial. Of course, there are those benefits that are legally required while others are discretionary. When it comes to the discretionary benefits, there is much talk about what is standard and customary for full-time employees and what is called for with part-time employees. This report shall answer whether firms should offer benefits to part-time workers. If they should, there are questions whether they should offer one or more things like paid time off (PTO), 401(k) retirement contributions and health insurance. While some may think it generous and perhaps even ethically required to offer such benefits to part time workers, there is also a cost-benefit dimension to this decision that business owners and managers must properly consider.

Analysis

Before getting into whether the aforementioned benefits should be extended to part-time workers, one has to remember that the primary objective of any business is to make a profit. If a business cannot at least break even, the business will almost certainly eventually fail unless there is a money supply to prop up said business. Part and parcel of employee people while at the same time maintaining a profit is a compensation plan that is strategic and that makes business sense (Martocchio, 2014). With that in mind, one could take the Milton Friedman point-of-view and look at whether it makes monetary sense to offer discretionary benefits like paid time off, 401(k) (including match) and health insurance to part-time employees. So often, the practice makes little to no monetary sense and is often not really needed from a business standpoint. Further, doing so would reduce profits and that is the antithesis of the Friedman point-of-view since the decision would be entirely voluntary (Friedman, 1970). Indeed, part-time workers are often paid a fairly low wage and giving them extra benefits could lead to the employee costing more than what they bring to the company in terms of return. Even if the extension of benefits like that yield a net gain, there is the question of profit maximization and whether the benefits really do help the business more than they cost.

There is another angle to this discussion and that is the subject of corporate social responsibility, or CSR for short. Even if such benefits are not legally required, it can obviously raise the standard of living and level of benefit to the employee. It also stands to reason that they would be happier and more content employees (Thorpe, 2013). At the same time, turnover and such with part-time employees is much higher due to shifts in business volume, the desire for some part-time employees to be full-time employees and so forth (Gustafson, 2014). Given the above, the author of this report would say the following. First, the extension of 401(k) match/contributions as well as paid time off is fairly easy to justify given that these benefits can be prorated based on what the employee contributes to their retirement and how many hours they work, which will obviously be less than full-time employees. For example, if a 40-hour a week person earns 80 hours a year of PTO, a 20-hour person could earn 40 hours a year (All Business, 2015). However, health insurance is entirely too expensive to offer to employees that bring relatively little to the firm in terms of net gain and the chances that they will stay long-term in general is not all that high. Further, a lot of part-time employees are just seeking extra money or have a working spouse or other living arrangement where a full-time job is not required. So long as a business is practicing in line with standards for their geographical area and industry, not extending the healthcare benefits would be the wiser course (Biz Filings, 2014).