Can an employer offer different benefits plans based on employment-based classifications?


Question: Can an employer have one paid time off and insurance policy for employees with fewer than 25 years of service and a different paid time off and insurance policy for employees with more than 25 years of service? – Vicky

Answer: Employers can offer different paid time off plans and distinct insurance policies for employee groupings based on an employment-based classification such as tenure or length of service. However, they cannot establish eligibility for benefits on protected categories under federal and state anti-discrimination laws like age, sex, race, or religion. It is common practice to distinguish benefits by other job-related classifications such as full- or part-time status, exempt/nonexempt status, job group, geographic location, or even by department.

You may be asking why employers would do this. This practice may improve employee retention and reduce turnover by recognizing and rewarding employees' experience and loyalty to a company. An employer may realize cost savings by offering less expensive benefits to new employees and more robust benefits to long-term employees. This strategy might prove especially effective in high-turnover industries. Loyalty and company-specific experience can be valuable employee characteristics to an organization. Conversely, shorter-term employees may perceive this practice as unfair and hurt retention among their ranks.

When designing a benefit plan, employers explore myriad offerings to create a benefits portfolio to attract and retain talented employees. If they feel a plan is not performing as intended, they should consider changing it. I say this to encourage you to share your candid feedback with Human Resources. Benefit plans aren’t set in stone. If enough people feel as you do, things can change.

In today's workplace, it is rare for employees to stay at the same company for 25 years. Offering enhanced benefits to reward these long-term employees' loyalty and institutional knowledge may not seem unfair after all. Again, I recommend you reach out to your HR department with any questions you may have.

During a recent job search, I was contacted by a recruiter. One of her questions struck me as unusual. She asked if I owned a car. The position didn't involve driving, so it was unexpected. I assumed they were concerned about reliability. Is this an appropriate question for a prospective employer to ask? – Shazeer

Unless a personal vehicle is required to travel between work sites or other destinations as an essential part of the job, an employer should not ask that question. Not only is inquiring whether an applicant owns a car inappropriate in most instances but it could also be considered discriminatory. Screening out candidates based on car ownership could inadvertently discriminate against individuals who are unable to drive due to a disability or financial status, which may be prohibited under state laws.

In addition, the Equal Employment Opportunity Commission considers car ownership financial information. Employers may not ask about financial information, or in other words, have a financial requirement, if it is unrelated to the position and disparately impacts applicants of a particular protected status, such as race, color, religion, sex, or national origin.

To your point, employers are typically concerned about reliability when considering job candidates. But owning a vehicle is not a predictor of punctuality and attendance. Whether applicants drive their own car, take public transportation, bike, walk, or carpool to work generally does not determine whether they are reliable. More appropriate queries include whether a candidate has dependable transportation, is available for specific work shifts, or can work late when needed.

Sticking to job-related questions in an interview is a good rule of thumb and can help employers avoid discriminatory practices and costly claims.

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