They cut my 401(k) match!

[ziggy29]

You're right about that, but what will probably happen is that you're going to leave your company for mine, not knowing that I was getting screwed during the hard times, and I'm going to jump to yours, not knowing you were getting screwed.

True -- but in both cases, these businesses have to eat the costs of recruiting and training new hires, whereas a business that has earned some employee loyalty may not.

 

[FUEGO]

You're right about that, but what will probably happen is that you're going to leave your company for mine, not knowing that I was getting screwed during the hard times, and I'm going to jump to yours, not knowing you were getting screwed.

As one looking for a job with better compensation, I would be looking at companies that have a 401k, and a match, and actual benefits instead of places where you get compensated like an independent contractor plus the employer pays their share of payroll taxes (which is how my current firm basically ended up after all the cuts).

 

[WanderALot]

Isn't the company legally obligated to deposit the money by the 15th of the month following the contribution? For example, if you made a contribution on January 1 the contribution must be deposited in the 401(k) by February 15th. Sounds like your company is (or was) breaking the law.

Absolutely. I believe IRS regulations require they be submitted in 90 days though. I've brought it to them twice and they pretty much admitted it. I don't see any benefit to reporting them especially since it looks like we got a few contracts approved and have some breathing room. They've promised that they will start catching up starting at the end of this month and will finish by October. I've already cut my loss and quit contributing, but if they don't catch up by Nov, I'm outta here.

 

[Sarah in SC]

Wander, I promise that is a complete untruth. It is 2-4 weeks. Period.

Please call the Department of Labor. They will confirm that the IRS says that your contributions mush be made within "a reasonable time" which has been shown in specific cases to be less than 4 weeks.

 

[missionfinder]

Same thing happened at my company about 4 months back. Additionally, they are behind about 4 months in sending in my contributions (ie MY money, not the match!) I stopped my 401k and nearly quit (had another job lined up), but decided to stay after a promise to catch up by the end of the year. We'll see.

What they are doing is illegal. They can't just catch-up, or be behind. The money is not their's to hold. I'd file a complaint with the IRS and the company handling the 401K. Its fraud as well, and maybe you can sick the local police on them. Sounds like they see you as a push-over and you're readily accepting that role.

 

[Sarah in SC]

Department of Labor would be all over this, I agree.

 

[WanderALot]

Thanks for info! I know it's not legal for them to do this. I've long stopped my 401k contribution. I don't *think* they are seeing me a pushover since I was the first to complain and instigated others to stop their 401ks. No one else seemed to care ("at least I have a job" was one of my coworkers response). But who knows.

BTW, it wasn't them who said 90 days, I thought I read it online. I told them that I thought breaking the law by not contributing the amount within 90 days.

I will be complaining to the DOL if they don't at least start catching up by the first week of next month.

 

[bssc]

The DOL is very helpful. A former boss sees the light and it includes the hotline number (from 2002 at least)

 

[trirod]

Absolutely. I believe IRS regulations require they be submitted in 90 days though. I've brought it to them twice and they pretty much admitted it. I don't see any benefit to reporting them especially since it looks like we got a few contracts approved and have some breathing room. They've promised that they will start catching up starting at the end of this month and will finish by October. I've already cut my loss and quit contributing, but if they don't catch up by Nov, I'm outta here.

The rule is that they have to get your contribution into the plan as soon as practicable, but no later than 15 business days after the payroll date. That "soon as practicable" is as little as 3 days if your firm has electronic payroll (which nearly all firms do these days).

There are big penalties for noncompliance. If your plan has more than 100 participants then it requires an annual audit - the auditors would be all over this too.

An anonymous call to the DOL (not the IRS) would likely produce results if they don't start catching up soon.

 

[StockSlinger]

Sorry to hear about the cut, but it seems like many companies are having to scale back benefits in order to remain competitive. It reminds me of this Onion article I recently read, the author doesn't happen to be your boss, does he?

We've Got Some Great News For Those Employees Who Hate Our 401(k) Matching Program

 

[Milton]

Unfortunately in a job market like this one, employers can screw their workers and get away with it. One can only hope the ones that do so when it's not a matter of corporate survival get their comeuppance when the economy turns and the market once again becomes a job seekers' market and they find their best people leaving in droves. Feels like a long ways away, but you never know.

For an employer not to provide certain benefits may or may not be competitive, but it is not "screwing their workers": who are free to move on to a different job, if they think they can get better terms elsewhere.

Some businesses choose to pay above market rates, hoping that it will buy some extra effort and/or loyalty. That is their choice, and it is certainly a legitimate strategy. But let's not waste time or energy demonizing those employers who choose otherwise: that's just promoting an unrealistic sense of entitlement.

 

[quietman]

I agree that dropping the 401k match as a cost cutting measure is not necessarily "screwing their workers" but if the workers were enticed to join the company on the strength of the wonderful match program (unlikely) then it could be. I know of a company who paid lower than average salaries but used generous stock options to convince workers to join. When the economy soured, just before many options vested, they instituted mandatory 8AM desk checks, mandatory 7PM desk checks, required attendance on Saturdays and used "at will employment" rules to dump anyone who didn't play along - in most cases before the bulk of their options vested. Employees who did want to leave found finding new employment more difficult than usual because of the economy. Yes, some companies can and do deliberately take advantage of the economy to screw workers.

 

[stoutboy]

For an employer not to provide certain benefits may or may not be competitive, but it is not "screwing their workers": who are free to move on to a different job, if they think they can get better terms elsewhere.

Some businesses choose to pay above market rates, hoping that it will buy some extra effort and/or loyalty. That is their choice, and it is certainly a legitimate strategy. But let's not waste time or energy demonizing those employers who choose otherwise: that's just promoting an unrealistic sense of entitlement.

these companies certainly are screwing their workers. an expectation of a decent retirement after a career of dedicated service to one's company is not an 'unrealistic sense of entitlement'.

the american worker is putting in longer hours for lower pay and fewer benefits (adjusted for inflation), while execs are seeing obscene increases in salaries and other bonuses. very few businesses pay above market rates in salaries for the jobs most americans have.

 

[bssc]

For an employer not to provide certain benefits may or may not be competitive, but it is not "screwing their workers": who are free to move on to a different job, if they think they can get better terms elsewhere.

Changing the terms of a retirement plan is messing with their employees. IBM found that out in 2003 when a judge told them that changing their retirement plan for existing workers was illegal. Many workers stuck with IBM for the retirement plan and it was illegal to change it on them.

 

[ziggy29]

For an employer not to provide certain benefits may or may not be competitive, but it is not "screwing their workers": who are free to move on to a different job, if they think they can get better terms elsewhere.

Legal or not, I think it's shady. For one thing, once you've put enough time into a certain job, you can't easily just up and go somewhere else and lose all that seniority you earned. Not many people who have put in 20 years somewhere -- with the 4-5 weeks of vacation among other things -- isn't likely to want to become low person on the totem pole and get 1-2 weeks off again, and that assumes such an employee would not face rampant age discrimination if they went looking elsewhere (and be first on the chopping block in terms of layoff actions).

Frankly, changing the retirement deal on existing workers is pretty slimy whether it's legal or not. At least part of the reason they chose their employer and to stay with an employer was that the deal they made encouraged longevity and retention. It's poor business ethics to do otherwise unless it's a clear and present threat to survival.

 

[ERD50]

Legal or not, I think it's shady. For one thing, once you've put enough time into a certain job, you can't easily just up and go somewhere else and lose all that seniority you earned. ....

This is why I wish companies provided no benefits at all, but particularly no future "promised" benefits. It messes with our ability to move from job-to-job, so that is really a "sneaky" way to infringe on the free market. The worker is hurt in the long run, but it looks like they won because they got these "benefits" (paid for out of their salary anyhow).

That is exactly what happened when companies were given a tax break for providing health insurance. The employees ended up getting tied to their job to stay insured. No good comes from this.

If every company just said "we will offer you $X", it would add to the transparency of choosing a job. Sure, you need to evaluate job security, the environment and so forth, but you still need to do that anyway. Attempting to put a value on these "benefits" and weighing future "golden handcuff" situations (unpredictable anyhow) just compounds the issue.

-ERD50

 

[bssc]

This is why I wish companies provided no benefits at all, but particularly no future "promised" benefits. It messes with our ability to move from job-to-job, so that is really a "sneaky" way to infringe on the free market. The worker is hurt in the long run, but it looks like they won because they got these "benefits" (paid for out of their salary anyhow).

That is exactly what happened when companies were given a tax break for providing health insurance. The employees ended up getting tied to their job to stay insured. No good comes from this.

If every company just said "we will offer you $X", it would add to the transparency of choosing a job. Sure, you need to evaluate job security, the environment and so forth, but you still need to do that anyway. Attempting to put a value on these "benefits" and weighing future "golden handcuff" situations (unpredictable anyhow) just compounds the issue.

-ERD50

In our MegaCorp senior management gets graded on the number of employees they retain, usually in the 95% range. Any lower, then they get dinged on their annual review. So, the guy next to me got a higher paying job elsewhere but since he has 20+ years of experience on the MegaCorp computer systems, they matched his other offer and was retained.

I also think that our MegaCorp would be happy with socialized medicine for the reasons you mention. They would not have to compete with that aspect of the benefits package (although my friends in Canada and the UK talk about special executive care in private hospitals).

But since benefits is estimated to be 25% of the compensation package, I suspect it won't be going away soon.

 

[ziggy29]

I also think that our MegaCorp would be happy with socialized medicine for the reasons you mention. They would not have to compete with that aspect of the benefits package (although my friends in Canada and the UK talk about special executive care in private hospitals).

MegaCorp health insurance is a double-edged sword for the company. On one hand, it's a huge expense; on the other hand, it's a huge retention advantage.

Sometimes I lament how much potential there is out there that isn't being fulfilled because people are afraid to give up MegaCorp health insurance. I have to think that a lot of entrepreneurial spirit has been trapped because people were afraid to lose that health insurance to pursue their ideas.

 

[bssc]

MegaCorp health insurance is a double-edged sword for the company. On one hand, it's a huge expense; on the other hand, it's a huge retention advantage.

Sometimes I lament how much potential there is out there that isn't being fulfilled because people are afraid to give up MegaCorp health insurance. I have to think that a lot of entrepreneurial spirit has been trapped because people were afraid to lose that health insurance to pursue their ideas.

I think for most programming companies, health insurance is standard, especially since I believe you cannot offer it selectively. I worked for a four person company and it offered it. However, I know that companies that only require a minimum of a high school degree (health home care, auto parts stores and manufacturing plants) do not since their competitors do not.

I forgot to mention that in our MegaCorp a larger and larger percentage of compensation as you move up the latter is based on future performance (e.g., stock grants and stock options). In my band it averages 10% but increases steadily up the ladder. How do you match a present day salary with one that could be 10 to 20% higher.

And, of course, sticking to the topic, part of that compensation is profit sharing which goes into the 401(k) plan. Some years we have had none and some 5%.

 

[ziggy29]

I think for most programming companies, health insurance is standard, especially since I believe you cannot offer it selectively. I worked for a four person company and it offered it.

True. To clarify my previous remarks, I was speaking not so much of jumping from one company to another, but rather of chucking it all and starting your own business (or becoming an independent contractor). Losing gold-plated employer-provided health insurance is a HUGE roadblock when it comes to people taking risks that involve losing health insurance. You have to hope to have a spouse with a secure j*b and great benefits to seriously consider it in many cases.

 

[bssc]

True. To clarify my previous remarks, I was speaking not so much of jumping from one company to another, but rather of chucking it all and starting your own business (or becoming an independent contractor). Losing gold-plated employer-provided health insurance is a HUGE roadblock when it comes to people taking risks that involve losing health insurance. You have to hope to have a spouse with a secure j*b and great benefits to seriously consider it in many cases.

Well, for the two startups I worked for, not only did they have to offer health insurance to be competitive they also offered life insurance and 401(k)s. But the big difference is that I got an equity position in the company (1/60th and something smaller) so that they could compete with the MegaCorps. I ended up liking the Megacorps better when the small companies couldn't meet payroll. Something that you might run across starting your own business.

 

[Texas Proud]

I think for most programming companies, health insurance is standard, especially since I believe you cannot offer it selectively. I worked for a four person company and it offered it. However, I know that companies that only require a minimum of a high school degree (health home care, auto parts stores and manufacturing plants) do not since their competitors do not.

I forgot to mention that in our MegaCorp a larger and larger percentage of compensation as you move up the latter is based on future performance (e.g., stock grants and stock options). In my band it averages 10% but increases steadily up the ladder. How do you match a present day salary with one that could be 10 to 20% higher.

And, of course, sticking to the topic, part of that compensation is profit sharing which goes into the 401(k) plan. Some years we have had none and some 5%.

One of the problems on the health insurance side is that the small companies get screwed... I used to be in Mega and the insurance options were a lot... you could chose low deductible or high... HMO or PPO and pay the premium you wanted..... and the rest of the people at the company did not get hit if someone got sick...

At my current small company... we high only one choice... and it cost us a LOT because we are 'older' and 'sicker'.... we had one employees wife have brain problems for the last few years... and a few babies born... and this year someone with cancer... so they rate us as a high risk company and our premiums go up accordingly... and if we tried to move, they want a medical history from everybody in the firm and they will not cover preexisting conditions.... so sometimes mega is better in this regard..

 

[Milton]

an expectation of a decent retirement after a career of dedicated service to one's company is not an 'unrealistic sense of entitlement'.

You are certainly entitled to hold that opinion, but I suspect it is becoming increasingly unrealistic in the globalized economy.

 

[ERD50]

But since benefits is estimated to be 25% of the compensation package, I suspect it won't be going away soon.

Oh yes, I certainly don't expect the benefits to go away, they have become too ingrained into the comp package. But I still think we would be better off w/o.

an expectation of a decent retirement after a career of dedicated service to one's company is not an 'unrealistic sense of entitlement'.

Just an add-on to Milton's comments:

I always thought it was an interesting view that someone was entitled to anything "after a career of dedicated service to one's company". If you look at it as the owner of the company, you might say - " The wages I paid that employee put food on their table, bought their home, put their kid's through school, etc. I appreciate the work they did, and they were paid for it. Why should they expect anything past that agreement?".

Sure, if promises are made, they become part of the compensation package and we expect the promises to be lived up to. But that's all it is, part of a compensation package, it isn't an "entitlement".

the american worker is putting in longer hours for lower pay and fewer benefits (adjusted for inflation), while execs are seeing obscene increases in salaries and other bonuses. very few businesses pay above market rates in salaries for the jobs most americans have.

Global competition has a lot to do with that. Would you deny some poor person in a third world country a wage that would greatly improve their standard of living, just so us (relatively speaking) fat cats can maintain our standard of living (A/C, central heat, color TVs with sat/cable DVR, more food choices than is good for us, etc, etc)?

Are executives seeing (overall) obscenely higher compensation? Maybe so, but I was wondering if that was a verifiable fact, or just an attack. References please, I'm curious myself.

-ERD50