The Cost of Going Green

Several employers have recently begun offering various benefits to employees to offset the rising cost of gasoline.  http://www.shrm.org/hrnews_published/ARCHIVES/CMS_017366.asp.  Locally, one company's incentive costs the employer almost $5,000/year.   http://www.oregonlive.com/weblogs/atwork/index.ssf?/mtlogs/olive_atwork/archives/2006_07.html#166529.  Gas cards or subsidized automobiles are allowable employee benefits.  But employers considering such programs should consider the following.

First, these benefits, like any other, are taxable income to the employee and considered wages.  So that $100 gas card needs to be included on the employees W-2, and is subject to FICA and FUTA.  For large subsidies, such as the $400/month hybrid car payment, the employee will have to consider adjusting their income tax withholding amounts to ensure that the proper amount is withheld.  The employer will have to ensure that its payroll staff considers the subsidy when computing FICA, FUTA and other wage-based taxes.  The IRS recently issued a press release reminding employers of these issues.  http://www.irs.gov/newsroom/article/0,,id=160030,00.html

Second, programs requiring on-going benefit administration or claims processing are likely to be subject to ERISA, unless sponsored by a governmental or church entity.  That may trigger discrimination or eligibility rules, disclosure requirements such as Summary Plan Descriptions or fiduciary duties and compliance with the U.S. Dept. of Labor's claims processing regulations.

Finally, the employer should consider what strategic business objective any of its benefit programs advance, and whether the perceived value of the benefit to the employees will exceed its cost.  With the rising cost of gas for employees, perhaps these types of programs will become more common and valuable as a retention tool.