AmTrust Workplace

Employers Giving Tax Windfalls Back To Employees: Are There Risks?

The recent tax overhaul dropped the U.S. corporate tax rate to 21 percent. As a result, some companies are giving back to their employees.

Home Depot recently announced all hourly employees would receive a $1,000 bonus because of the tax reform law. Lauren Thomas "Home Depot hourly employees to receive up to $1,000 bonus due to tax reform" (Jan. 25, 2018).

Starbucks recently announced it plans to expand the benefits offered its employees by $250 million and provide a pay boost for workers. Leslie Patton "Starbucks Employees are Getting a Pay Raise" (Jan. 24, 2018).

Apple announced it will provide employees a $2,500 bonus in restricted stock units as a result of the new tax law. Chaim Gartenberg "Apple is giving employees $2,500 bonuses in restricted stock units after new tax law" (Jan. 17, 2018).

Verizon announced it is providing 50 shares of restricted stock to employees who are not executives, approximately 150,000 employees. Scott Moritz "Verizon Using Some Tax Savings to Give Each Employee 50 Shares" (Jan. 23, 2018).

Disney announced it will provide 125,000 employees a $1,000 cash bonus and will reinvest $50 million in tuition assistance for employees who are not executives. Christopher Palmeri "Disney to Give Employees $1,000 Bonuses in Wake of Tax Reform" (Jan. 23, 2018).

Commentary by Jack McCalmon

Giving back to employees from a tax cut is a smart employee relations move. In addition to helping employees and their families, it builds good will; helps talent retention; is positive for public relations; and attracts talent. It is a win-win, but not without some risk.

If bonuses and benefits are not dispersed equally among rank-and-file employees, employers run a risk of equal pay or discrimination claims. If unequal distribution is viewed to favor or disfavor a particular group of employees because of age, race, national origin, gender, or other protected status, employers may lose all the value provided with these financial benefits.

For that reason, you can see how the above-listed employers provided the bonus to a large class of employees, typically non-executives.

Is it okay to differentiate between executives and non-executives? There is a risk, in particular the risk of age discrimination charges because executives tend to be older. However, if worded correctly, and all executives are excluded, the risk is minimized, especially because of the pay differential between executives and non-executives.

Employers that plan to give a bonus in cash or stock should provide notice that the bonus is a "one-time only" benefit; that it is because of the new tax law; and that it will be distributed equally among all employees, without regard to performance.


Finally, your opinion is important to us. Please complete the opinion survey:

Are you a new user?

Register Here


Retrieve Password

Recent News

Do You Need Social Cause Programs To Attract Millennials?

A report claims Millennials want employers to be involved with social causes. Jack McCalmon examines the actual motivating factor employers need to consider. Read More

Ann Curry And Gretchen Carlson: How Their Sexual Harassment Charges Show The Demise Of Employer Sexual Harassment Defenses

Jack McCalmon, Esq. examines how sexual harassment charges in 2012 and in 2017 differ and how this affects employer defenses today. Read More

SSL-Enabled Does Not Mean "Malware Safe"

Cybercriminals created a fake, SSL-enabled website to trick users into downloading a "security patch" that actually contained malware. Learn how to spot a phishing site. Read More

Recent Articles

Do You Have "Roman Candle" Employees In Your Ranks? How Do You Keep Them From Burning Out?

A new survey challenges whether being completely engaged is always positive. Jack McCalmon examines how to keep your engaged employees engaged long-term. Read More

Odds Are Your Next Employment Claim Will Be For Retaliation

EEOC charge numbers give employers insight into litigants' minds. Jack McCalmon explains why bringing a retaliation claim is what most employers will face in the future. Read More

Should Service Dogs Be Considered A Reasonable Accommodation Under The ADA? You Make The Call

You make the call and join the conversation. Read More