Can an Employer Provide Different Benefits to Different Classes of Employees?

When running a business, coming up with a compensation and benefits package can be a challenging task when you want to ensure that your employees are happy. When you create a benefits package, you may be interested in creating a tiered system in which different employees receive different benefits. This practice is actually common in many businesses and can help motivate employees.

Benefits Packages

When coming up with a benefits package, there are no laws that require you to provide the same benefits package to everyone. If you want to make one benefits package available to the executives of the company and another one available to the lower-level employees, you have the option to do so. You may need to create a more attractive benefits package to lure in top executives, but it would not be cost-effective to offer the same benefits to other employees.

Discrimination

Although you have the option of creating separate benefits packages for your employees, you have to be careful that you do not engage in discrimination. For example, you cannot offer one benefits packages to members of a certain race or religion while offering another benefits package to those of another race. When drawing the lines for qualifying for a particular benefits package, you have to use guidelines that divide the employees strictly by employment classifications.

Health Insurance

In many cases, you may decide to offer health insurance as part of your benefits package. While it is legal to offer different health insurance plans for different members of your workforce, you cannot offer coverage based on health issues. For example, you cannot discriminate against people who have chronic health problems because you are afraid that it would lead to higher group health insurance premiums. You have to offer the same benefits to everyone within a certain class of employees.

Motivation

In some cases, offering differing benefits packages can actually work as a motivating factor for employees. For example, if it is known that upper-level executives receive better benefits packages, lower-level employees may want to perform better so that they can eventually make their way into upper-level management positions. If you know that you will get better insurance, a better retirement plan, bonuses and more vacation time, it could seriously motivate you to perform better as an employee.