Employers who are facing poor financial conditions may reduce the benefits which they offer employees, but there are guidelines which they must follow.
Generally, an employer cannot reduce benefits by more than fifteen percent. If the employer reduces the benefits by more than fifteen percent, the employees is entitled to leave the employer and sue for damages. Because reducing the benefits produces hardship for the employee, he/she has a right to ask the employer to reinstate the benefits, or ask for compensation in order to purchase a plan on their own. At times, employees accept a job with benefits as an inducement to take the job. A situation such as this would strengthen the employee’s position.
The Federal government has set down guidelines for reducing employees’ benefits and laying off employees. Additionally, each of the states have their own guidelines and it is important for the employer to investigate the guidelines and ensure they are acting within them. The only exception to this would be that if the employer promised certain benefits for a certain amount of time, the employer would not be able to change them. Therefore, employers should review the laws in their own state as well as the laws of the Federal government relative to reducing employees’ benefits.