United States: Compensation Packages: Finding The Right Fit

Last Updated: January 3 2017
Article by Adam Guldan

The third quarter 2016 Manufacturer's Outlook Survey published by the National Association of Manufacturers cited health care costs, worker retention and government compliance as primary concerns. To manage these issues, manufactures need to take an active approach in review of their compensation packages and make decisions mutually beneficial to the company as well as the employees. The following discusses some of the human resource challenges impacting manufacturers.

Trends in Health Care Benefits

The Employee Benefit Research Institute (EBRI) recently compared health insurance benefits before and after the shared-responsibility provisions of the ACA (Affordable Care Act) went into effect.

The study revealed that larger employers continue to offer health insurance benefits to their workers. In fact, about 99% of employers with 1,000 or more employees provide health insurance benefits. The coverage rate among employers with 100 to 999 employees ranges between 93% and 95%.

However, coverage among smaller employers has fallen dramatically since 2009. The coverage rate for employers with 25 to 99 employees fell from 81% in 2008 to 74% in 2015. For employers with 10 to 24 employees, the rate went from 66% in 2008 to 49% in 2015. And, the coverage rate for employers with fewer than 10 employees decreased from 36% in 2008 to only 23% in 2015.

Reasons to Provide Coverage

There are many compelling reasons to offer health care benefits.  Foremost, employers should care about their workers and families and want them to be healthy. Additionally, health insurance coverage could offer a competitive advantage for attracting and retaining employees.

Failure to comply with the shared-responsibility provisions of the ACA can lead to steep penalties. In 2016, "large" employers that do not offer affordable coverage or offer coverage that does not provide minimum value face a penalty equal to the lesser of:

  1. $3,240 per full-time employee who receives a premium tax credit; or
  2. $2,160 per full-time employee in excess of 30.

In 2016, the full-time-employee (or equivalent) threshold for large employers is 50. Previously, the threshold was 100 full-time employees (or the equivalent).

Alternative Cutbacks

To help pay for medical care benefits, which are valued by most employees, there may be other offerings that you can eliminate or scale back. One suggestions is to compile a list of your current benefits, such as retirement savings plans, dependent-care and educational assistance, life and disability insurance and health club memberships. Then, ask employees to rate their favorites.

Small changes, based on the needs and preferences of your workers, can save money without lowering morale. For example, a plastics manufacturer reduced benefit costs by 20% with three simple changes: It increased health insurance policy deductibles, decreased the number of retirement plan options and eliminated company-provided disability insurance coverage.

You can also substitute less conventional offerings if you need to eliminate a popular item from your benefits package. One idea is employee stock options, which preserve cash flow while giving employees the opportunity to purchase shares of the company's stock at a predetermined exercise price.

Make an Informed Decision

Many small businesses have avoided the ACA since it passed in 2010. However, doing so can lower morale, make it harder to attract and retain skilled workers and lead to steep penalties. Before taking such a radical step, consider alternatives that can save money while continuing to offer health insurance coverage to employees.

Sidebar: Help Wanted? Consider Hiring a Veteran

Small-business owners often struggle to find qualified workers. Some manufacturers are finding a good fit with veterans, who generally possess technical skills, a strong work ethic and resilience. Veterans also may have strong team-building and problem-solving abilities, because the military provides contingency and scenario-based training.

As an added bonus, hiring a vet may qualify your company for the Work Opportunity Credit (WOC). The maximum wage that can be used to calculate the credit for hiring a qualifying veteran generally is $6,000. However, it can be as high as $12,000, $14,000 or $24,000, depending on whether the veteran is disabled, whether he or she has been unemployed, and the length of time he or she has been unemployed relative to the credit-eligible hiring date.

However the WOC doesn't just apply to veterans, hiring other employees from a targeted group could qualify for the credit. This includes qualified long-term unemployment recipients hired after December 31, 2015 who have been designated by a local agency as being unemployed for at least 27 weeks. Employers would be eligible for a maximum $2,400 credit for such hires.

The WOC was scheduled to expire after December 31, 2014, however the PATH Act extends WOC for five years. The credit is available through tax years beginning on or before December 31, 2019.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Adam Guldan
In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions