Employee benefits ‘package’ legality

UPDATED: Sep 30, 2022

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Employee benefits ‘package’ legality

Hello, I have a question about the legality of how the agency I work for
handles employee benefits. I began working through a contracting agency back in
2014 with a major technology corporation. When I was hired, I was given an
hourly rate at which I would be paid, but was also offered a variety of benefit
‘packages’. These packages included such basic things as health insurance and
paid time off sick, holiday, whatever. In order to obtain any of these
benefits, I would be required to take a cut in my hourly pay. This gets renewed
once a year, so a few months ago I was offered the exact same options.

I’ve worked for many companies over the years, and this is the first I’ve ever
encountered this sort of thing. Every other employer offers a pay rate, health
insurance, and paid time off as one package, take it or leave it. The agency is
based out of Texas, and I work in Washington State.

Anyway, this whole thing seemed kind of fishy to me from the start, so I
thought I’d ask if this is legal or not. Thank you for your time.

Asked on March 24, 2016 under Employment Labor Law, Washington


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 6 years ago | Contributor

It is unusual, but it is legal: employers have free rein to set compensation--pay plus benefits (health insurance, PTO, etc.)--and nothing says that they can't balance these out against one another, so that as you get more of A, you give up some of B, C, and/or D. As long as wages remain at or above minimum at all times (they can't go under that), this is legal.

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