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What Is Considered Other Compensation?

payroll help with other compensationOther compensation may include educational assistance, non-production cash bonuses, and medical reimbursement accounts.

Small- and medium-sized businesses may find that offering other types of compensation can offset an inability to provide big pay increases, making the prospect of joining a company or continuing employment more attractive.

The Fair Labor Standards Act does not address other compensation; these benefits are often decided between the employer and the employee while hiring, and may be altered during the course of employment.

A non-production cash pay bonus is a popular example of other compensation. These bonuses can be offered to employees when they meet certain fixed thresholds. Such benefits not only make the prospect of joining or staying with a firm more attractive for employees, but also motivate them to give their best. This benefits the company by boosting revenue and ensuring high retention rates.

Educational assistance is also included under the category of other compensation. Employers can encourage their employee’s potential by offering non-taxable tuition reimbursement. Here the employers are betting that the productivity of their employees will grow with higher education. Offering other compensation can be an effective method of retaining talented professionals, as they are likely to recognize the benefits of educational assistance and stay with the company at least for the duration of the contract.

For more information on other compensation, refer to the W-2 instructions for Box 1.

2 Responses to What Is Considered Other Compensation?

  1. Shelley Van Hoy March 28, 2014 at 5:17 pm #

    My niece began employment with a gas/market company in Michigan. She was told by the manager that she would make $10 for her training hours after which she would be paid at minimum wage. When she received her first check she was not paid the training rate. When questioned, the manager said, “I made a mistake”. Does my niece have any recourse to this blatant untruthful hiring practice? This is not the first indicator that she is working for an unethical company.

  2. Mike Kappel March 31, 2014 at 11:23 am #

    I can see you are concerned about your niece’s new employer. I am not a lawyer, so I am not in a position to offer advice to employees who have a verbal agreement that is not honored by their employers. With any dispute, the first step is usually communication, and it sounds like your niece did ask about the unexpected paycheck total. Your comment also states that the manager said a mistake had been made. Hopefully, any mistakes have been corrected, and your niece has been able to resolve her concerns about her employer. On the other hand, sometimes the best option is to “vote with your feet” and seek new employment…

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