Can an employer make a higher payroll deduct for health insurance premiums than agreed upon?

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Can an employer make a higher payroll deduct for health insurance premiums than agreed upon?

I recently uncovered that the President of our company is deducting more money from employees than what was agreed upon for our health insurance. I confronted him and he admitted he was but he will not repay the employees and states he is justified in doing what he wants. He is taking that money he stole and putting it toward the 70% he agreed to pay for our health insurance to offset his own costs. What can I do since I am still employed there and currently don’t have another job to go to? I have to continue to watch him steal from the employees and it is not easy but I have nowhere to go right now. He is trying to state that health insurance benefits and compensation are lumped into one pool of money and he states the benefits are a raise in salaries that he has to offset from. Are health insurance benefits and compensation lumped into one pool of money or seperate?

Asked on November 9, 2010 under Employment Labor Law, Pennsylvania

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

From an HR perspective, benefits, salary, insurance, etc. are all part of an employee's total compensation. From a legal perspective, an employer may not take a larger share of employee's salary for their health insurance premiums than the current authorized share. It is against the law to take out from exmployee's salaries other than for agreed upon purposes. That said, the amount companies take out can change over time:

1) If the premiums rise, then companies may, pass on those increases as long as the extra money taken from employees is put to the premiums (i.e. it can't be diverted to other purposes). In other words, if costs rise, the company is under no obligation to absorb the increase itself.

2) Similarly, since companies are not even obligated to provide health insurance, they can choose to pass on any portion of the premiums to employees--anything from 0% to 100%. They may be more or less generous--their choice--each year.

The restrictions on 1) and 2) are that any changes can only be forward looking, not retroactive; all employees must be treated the same; the money must be used for the employee's own health insurance; and usually, changes can only be made for a new plan year, since health insurance is a contract and all parties are bound by its terms during the course of a plan year.

So retroactive changes, misapplied funds, unequal treatment of different employees--no. Being less generous on a forward-looking basis--yes.

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

It seems to me that your employer is stealing from you.  I would contact the Department of Labor and the State Attorney General's Office and discuss with them what measures need to be taken here.  I can not imagine that the state or the federal government would allow him to be able to lump together both of those benefits and basically - you are right - steal from you to avoid paying his portion of the benefit.  And is he tacking a tax break for the 70%?  Probably.  I understand that things are tough right now and you are a bit afraid about your job but you can not let him continue to do this.  Call these state agencies and report him.  They can guide you to the right party if need be.  Good luck. 


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