Your Hidden Paycheck
An Employee Communication Presentation
Introduction
Most employers are diligent about providing information to
employees on the company’s pay structure and how an
individual employee’s pay is calculated. However, many
employers fail to communicate to their employees the total
value of their compensation which includes the “hidden
paycheck” of all the benefits, mandatory and voluntary, to which
the employer contributes and sponsors. Periodic personalized
documentation to each employee on annual pay and the
“hidden paycheck” results in increased awareness and
appreciation for the costs of benefits, higher employee morale
and retention.
This sample presentation is intended for presentation to all
employees. It is designed to be presented by an individual who
has knowledge of the employer’s benefit programs. This is a
sample presentation that must be customized to include and
match the employer’s own benefit package.
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Agenda
During this meeting, we will review:
•
•
•
•
What the term “hidden paycheck” means.
The benefits we legally provide to you.
The benefits we voluntarily provide to you.
The value of all benefits you receive as a percentage of your pay.
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What Does the Term “Hidden Paycheck” Mean?
HR professionals often use the term “hidden paycheck” to refer
to the employer’s contributions to employee benefits of which
employees are generally unaware.
Statements documenting these contributions are also called
“Total Compensation Statements” or “Total Rewards
Statements.”
Here at [Company Name] we call these statements (fill in for
your own company).
You will receive your [Statement Title] next [date]. We are
having this meeting today to help you better understand the
statement when you do receive it.
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What Does the Term “Hidden Paycheck” Mean? (cont’d)
•
•
Your [Statement Title] lists your total annual pay, the amount
[Company Name] spends on benefits we legally contribute to,
and the amount spent on benefits provided voluntarily.
The statement also includes benchmark data on the amount
employers spend on benefits as a percentage of payroll and
how our company compares to the national average.
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Legally Provided Benefits
Legally provided or mandated benefits are those required by
federal and state laws. These include contributions for:
•
Social Security and Medicare:
 These are federally mandated and administered benefits.
 The cost is shared equally by the employer and employee.
 The maximum wage base for the Social Security tax is set
annually; if an employee earns over the amount, the excess is not
taxed.
 The Medicare tax does NOT have a wage base limit; all earnings
are subject to this tax.
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Legally Provided Benefits (cont’d)
Other legally provided benefits are:
• Workers Compensation
 This is a state-based program that provides medical
treatment, wage loss reimbursement, vocational
rehabilitation, and death/burial benefits to victims (or
surviving dependents) for industrial accidents and
occupational diseases.
 In most states, the employer is the sole contributor to
this program.
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Legally Provided Benefits (cont’d)
•
Unemployment Insurance
 This is a combined federal and state program that
began during the Great Depression.
 Unemployment benefits are awarded to individuals
who are ready, willing, and able to work and unable to
find suitable work.
 The cost is shared by the employer and employee.
•
Some states also have disability programs which
require contributions from the employer and
employee.
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Questions? Comments?
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Benefits Provided Voluntarily
(Note to presenter: Customize for your company!)
The benefits that [Company Name] provides voluntarily
and that the company and employees share in the
cost are:
• Health insurance
• Prescription drug insurance
• Dental insurance
• Vision insurance
• Commuter benefits (parking, van pools, mass transit
tokens)
(Employee contributions for the preceding plans may be
made on a pre-tax contribution resulting in lower income
taxes)
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Benefits Provided Voluntarily (cont’d)
The benefits that [Company Name] provides voluntarily and
that the company pays 100% of the cost are:
• Retirement/pension plan (a defined benefit plan)
• Employer match to employee 401(k) contributions
• Term life insurance
• Accidental death and dismemberment insurance
• Short-term disability insurance
• Long-term disability insurance
• Long-term care insurance
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Benefits Provided Voluntarily (cont’d)
Other benefits that [Company Name] provides voluntarily
and that the company pays 100% of the cost are:
• Incentive bonuses
• Paid time off:
 Vacation leave
 Sick leave
 Holidays
 Personal Days
 Bereavement Leave
 Paid weather-related emergency closing leave
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Benefits Provided Voluntarily (cont’d)
Additional benefits that [Company Name] provides
voluntarily and that the company pays 100% of the cost
are:
•
•
•
•
•
•
•
•
•
Tuition assistance (up to $5,250 tax-free per year)
Employee assistance program (EAP)
On-site fitness center
On-site child care
Computer purchase assistance
Scholarships for children of employees
Paid sabbaticals
Direct deposit of pay
Social gatherings (holiday party, summer picnic)
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Benefits Provided Voluntarily (cont’d)
In addition [Company Name] sponsors and pays the administration
fees for the following benefit plans which employees may
participate in by making contributions:
•
•
•
•
401(k) savings and retirement plan
Health savings account
Health flexible spending account
Dependent care flexible spending account
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Value of Benefits as a Percentage of Pay
•
According to the 2008 SHRM Employee Benefits Report,
employers spent an average of 39% of an employee’s annual
pay on mandatory and voluntary benefits. Of the 39%, 21%
was spent on mandatory benefits and 18% on voluntary
benefits.
•
[Company Name] spends an average of [use your calculation]
of an employee’s annual pay on mandatory and voluntary
benefits. Of the (_ %), (_%) is spent on mandatory benefits and
(_%) on voluntary benefits.
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Questions? Comments?
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Summary
The term “hidden paycheck” refers to the employer’s
contributions to employee benefits of which employees are
generally unaware. Statements documenting these
contributions are also called “Total Compensation Statements”
or “Total Rewards Statements.” These statements list annual
pay, the amount the company spends on mandatory benefits,
and the amount spend on benefits provided voluntarily.
Mandated benefit programs are Social Security, Medicare,
Workers Compensation and Unemployment Insurance
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Summary (cont’d)
Benefit programs offered voluntarily include various types of
insurance such as medical, dental, disability and life. Others
are bonuses, paid time off, tuition assistance, retirement and
flexible spending accounts.
According to the 2008 SHRM Employee Benefits Report,
employers spent an average of 39% of an employee’s annual
pay on mandatory and voluntary benefits.
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Course Evaluation
Please be sure to complete and leave the evaluation sheet you
received with your handouts
Thank you for your attention and interest !
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