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Can I Offer Different Employee Benefits Packages To Different Groups?

January 17, 2022 by New City Insurance

Employee benefits can be a complex topic that many employers struggle to navigate. A common question that many employers have regarding benefits is whether they can offer different employee benefits packages to different groups. The simple answer to this question is yes; however, there are some key factors to consider before deciding to offer different employee benefits packages.

Learn more about the legality of offering different benefits packages and how to properly differentiate employee benefits packages based on the group type.

Can Employers Offer Different Benefits Packages To Different Employees?

individuals discussing employee benefits packagesThere are currently no laws that require plans to provide the same benefits coverage to all employees. Some states in the U.S. do govern how certain benefits are handled, such as paid sick leave, which applies to all employees.

Employers do have the right to offer different benefits to different employees under certain conditions. An employer must approach “similarly situated individuals” with equality, meaning all employees within a designated “class” created by the business must receive benefits at the same level. Employers have flexibility in the way that their benefits plans are structured for each group.

Companies must create employee benefits packages that are based on bona fide employment-based classification. This means that benefits are not based on any discriminatory criteria, such as age, race, religion, sexual orientation, disability, or gender. For example, an employer can offer healthcare coverage to full-time employees but cannot offer healthcare coverage to only male employees or employees of a certain race.

Some laws mandate that certain employers offer benefits. The Patient Protection and Affordable Care Act (PPACA) requires any employer with 50 or more employees to offer healthcare coverage or pay a penalty. This law does not require coverage for part-time employees.

What Are Similarly Situated Employees?

young business man learning his Employee Benefits PackagesEmployees that fall within a certain group of similarly situated employees may receive a different benefits package than another group of similarly situated employees. Distinctions between different employee benefits packages may include eligibility rules, pricing, or various restrictions. Any distinctions must directly relate to a worker’s status within the organization and reflect an employer’s usual business practice.

Examples of classifications that may reflect similarly situated employees or distinct groups include:

  • Participants or beneficiaries
  • Full-time employees or part-time employees
  • Union members or nonunion members
  • Employees hired on various dates
  • Memberships in collective bargaining units
  • Current employees vs. former employees
  • Employees employed in different geographic locations

How Should Benefits Packages Be Differentiated For Different Groups?

Employees may fall into different employment classes based on their earnings, the length of their employment, or other distinctions. Equal employment opportunity regulations enable employers to offer different benefits to various groups of employees based on these distinctions. However, companies must ensure that their benefits packages are nondiscriminatory.

Companies may choose to offer different employee benefits to different groups based on the following categories:

1. Employee Benefits Based On Seniority

Many businesses choose to provide different employee benefits packages to different groups based on seniority. Employees may become eligible for bigger or better benefits packages once they reach certain milestones established by the company. For example, some benefits may become available to employees once they have worked for the business for at least 10 years. Benefits packages may also become available to workers who were hired at various times. However, this practice must be widespread across the organization.

2. Employee Benefits Based On Position

Some businesses may also offer different employee benefits packages to different groups based on position. For example, a retail store usually has a job hierarchy consisting of positions like sales associates, cashiers, customer service representatives, store managers, and assistant store managers. Each group may receive a different benefits package based on their position. However, the store cannot assign employees with the same roles into different classes.

How Can Employers Prevent Discrimination In A Benefits Package?

young working people looking at their employee benefits packagesEmployers need to understand the differences between discrimination and unfairness when approaching issues with employee benefits packages. Discrimination refers to the prejudicial or unjust treatment of different people, specifically on the basis of age, race, religion, sexual orientation, disability, or gender. In comparison, unfairness refers to a lack of equity, meaning not everyone is treated the same way.

The law states that employees can be offered different benefits packages if an employer can demonstrate that the individuals fall into different bona fide employment-based classifications. For example, it is acceptable to offer full-time workers different benefits than part-time workers. It is also okay to offer senior-level employees different benefits if they were “grandfathered in” with an old benefits plan.

Speak With An Employee Benefits Consulting Firm

It is the responsibility of employers to ensure that their employee benefits packages are nondiscriminatory and comply with all applicable employment laws and regulations. For more information about offering different employee benefits packages to different groups, reach out to the knowledgeable employee benefits consultants at New City Insurance.

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New City Insurance
New City Insurance
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Carol Zhang
Carol Zhang
04:29 06 Mar 22
As a rapidly expanding national media organization, the employee benefits strategy and administration that New City has provided us during our growth has been invaluable. They have been proactive about informing us of the different benefit strategies available to us as we grow as well as managing the additional compliance laws and reporting requirements at each stage of our growth.
Claudia Villalobos
Claudia Villalobos
20:14 03 Mar 22
New City Insurance made navigating through all the health insurances super EASY. Their documents are highly informative, professional, and easy to work with. Thank you for making the process of choosing a health plan so simple. You guys are THE BEST!
Philippe Salas
Philippe Salas
17:02 22 Feb 22
I never expected to have a good time talking to an insurance salesman, but let me tell you Brendan was quite the treat. He was very helpful explaining the options and has a wonderful sense of humor. I hope to speak with him every time I call.
Jennifer Polito
Jennifer Polito
17:15 09 Feb 22
Super easy enrollment process. Fast and friendly customer service. If you are looking for an insurance company that is there for you every step of the way I highly recommend New City Insurance.
Rocky Salas
Rocky Salas
23:46 07 Jan 22
So friendly, I hope to speak to him again in all my future insurance needs.
Rocky Salas
Rocky Salas
23:38 07 Jan 22
So friendly and soft spoken. I hope to speak to him again in all my future insurance needs.
Jose Brena
Jose Brena
13:20 06 Jan 22
Eric Calciano has been extremely helpful in finding and selecting the right insurance coverage for our company. With many options out there Eric assisted us on getting a low cost provider saving more than 20% than from our competitors and providing excellent coverage for our employees.
Anastasia Beaverhousen
Anastasia Beaverhousen
17:05 28 Dec 21
Signing up for insurance was quick and easy. Felicity Sundsboe
SFCC
SFCC
22:08 29 Nov 21
Jeff Stoltey and his team provide excellent customer service. Jeff has always provided my company SFCC with straightforward options. I went to a larger insurance company only to RUN BACK to Jeff at New City Insurance. I recommend them to anyone needing insurance without hesitation.
Kevin Luby
Kevin Luby
19:13 22 Oct 21
Quick, easy & informative. We were able to secure quality insurance for our small business on a tight deadline. Thanks for the help New City.
Theresa Ruybol
Theresa Ruybol
19:30 01 Jul 21
Eric was so great with us. He was very patient and kind as we are a newer smaller organization who is growing rapidly. With that said, we had made our inquiry, he had great rapid response and mostly had to wait on me. Any request that we made and/or questions we had, he was great answering and helping us understand. Then when we were ready for all documents and to move forward, Brendan helped with getting that together and the two of them worked their magic on New City's end to notify me of what was needed, assist me in that process and confirming that all was complete and approved for the coverage. I just want to say thank you all again so much, as insurance has always been confusing to me, and you all made that process go a lot smoother.Thank you
Andrea Ordendorff
Andrea Ordendorff
21:06 07 May 21
I've been working with both Clayton and Brendan for well over a year. As the purchase of our dental practice was delayed well over 14 months they both patiently supported me and continued to make themselves available. When we were officially ready to sign up they made the whole process seamless and super easy. This team is highly knowledgeable, professional, supportive, and efficient! I can't thank them enough for everything they've done.
T W
T W
22:32 30 Aug 20
I love New City Insurance. I never had a good experience dealing with insurance brokers until I started working with Brendan. He’s awesome! He is patient with me and takes the time to answer all my questions. I’m very grateful for all his help and hard work!
Mary Jane Deyette
Mary Jane Deyette
00:57 11 May 20
Jeff Stoltey is so awesome...even thru my company had only two employees, he took the time each year to research and find the best plan for us. The only reason I am leaving New City Insurance is because we no longer have any employees. Thank you Jeff
Alma Ortiz
Alma Ortiz
22:25 23 Feb 20
Brendan was awesome! I couldn't figure out how to pick my plan and he returned my call on a weekend to help me. Outstansing service!
jessica kavanagh
jessica kavanagh
19:53 13 Feb 20
Brendan was so helpful I definitely recommend him if you’re in need of good help and getting it done promptly. Thankyou so much again.
Tricia DeYoung
Tricia DeYoung
19:49 13 Feb 20
I was very thankful I inquired about this info. with Brendan. He was very helpful so I understand the benefits available much better now. Thank you Brendan.
B Bayer
B Bayer
17:43 24 Sep 19
NCI handled almost everything from start to finish. Clayton and Brendan made the plans easy to understand and walked me through the application process. They got me my ID numbers before my cards arrived so that I could keep an appointment I had already scheduled. My last broker wouldn't have done that. 5 stars!
Jessica Lehr
Jessica Lehr
03:36 07 Jun 19
Our staff was interested in a health plan, but we didn't know how beneficial a solid employee benefits package would be for our business to expand. We'd lose prospective employees because they had more options for their medical insurance which was sometimes more valuable than more pay. The New City team was amazing and gave us as many affordable options as possible so that everyone had their needs met.
Mike McClay
Mike McClay
19:36 03 May 19
My employer uses New City as their insurance broker, and I'm always amazed when I call in for assistance by how knowledgeable and attentive their staff is with my requests. Their online benefits platform makes selecting insurance plans pretty darn easy. I would highly recommend their services.
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