Rethinking Employee Benefits

By Robin Page West

There’s an old story about a solo practitioner who received a surprise visit from the State Department of Wages and Hours asking how much she paid her employees. “My secretary works 9 to 5, gets $750 a week, plus matching 401K, sick leave, personal leave, disability, life and health insurance, a raise every year, and I pay her Blackberry bill,” the lawyer told the agent. “My paralegal, who’s part-time, gets $30 an hour, all the same benefits as the secretary, plus parking.”

“Also,” the attorney volunteered, “there’s the half-wit who works 18 hours a day and does 90 percent of the work. After the other two, there’s not enough left to pay her anything, but fortunately having her name on the door in big letters is enough to keep her coming back.”

How true. But eventually something’s gotta give. According to the May 4, 2008, New York Times article, “Even the Insured Feel Strain of Health Costs,” health insurance costs are “burying small business” because we lack clout to negotiate for lower premiums. To bring premium costs back in line, we are being forced to raise employees’ deductibles and co-pays, and/or reduce their coverage.

One way a solo/small firm practice can avoid disappointing employees is to consider asking them to trade benefits for a salary and bonus that’s a little bigger, hours that are a little shorter, and/or vacations that are a little longer.

A compensation package like this will be attractive to workers who may have access to health insurance elsewhere, such as through a spouse’s employment, those who want a job that allows them to spend more time with their children, aging parent, or in leisure pursuits, and/or those who have the desire and self discipline to save on their own for retirement.

Offering a comprehensive benefits package may be the moral, altruistic, and paternalistic thing to do, but the fact remains that many solos and small firms simply do not have the wherewithal to support these benefits, especially in today’s economy.

Instead of making promises you may not be able to keep, which can lead to employee resentment, and worse yet, unwanted employee turnover, think creatively; offer employees only what you know you can afford to sustain for the long haul, and let them know from the outset that they will need to make other arrangements for their retirement and insurance needs. And of course, before designing any benefits package, make sure to check all applicable laws and regulations. Some benefits may be mandated or regulated.

Robin Page West is the founding and former editor–in–chief of SOLO newsletter and a principal in the Baltimore firm of Cohan, West, Rifkin & Cohen, P.C. where she maintains a practice focusing on qui tam whistleblower litigation. Contact her at .

Copyright 2008

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