{"id":11740,"date":"2019-01-01T17:07:04","date_gmt":"2019-01-01T17:07:04","guid":{"rendered":"https:\/\/insulation.org\/io\/?post_type=articles&p=11740"},"modified":"2019-02-05T17:08:28","modified_gmt":"2019-02-05T17:08:28","slug":"affordable-worker-magnets","status":"publish","type":"articles","link":"https:\/\/insulation.org\/io\/articles\/affordable-worker-magnets\/","title":{"rendered":"Affordable Worker Magnets"},"content":{"rendered":"

Whether as a result of a booming economy, tighter immigration laws, or an educational system gone astray, finding qualified job applicants has become increasingly more difficult for those in the construction and engineering industries. Even more troubling for many smaller businesses is the question of how they can compete for badly needed, qualified workers?<\/p>\n

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Fortunately, thanks to our unique tax laws, every construction company and engineering firm can afford to offer fringe benefits to their workers, and may even be able to benefit themselves. That’s right, our tax laws merely prevent employers from discriminating in favor of owners, key employees, or other highly-compensated individuals when setting up any benefits plan that is to be tax deductible by the business and tax free to the recipient.<\/p>\n

Fringe Benefits<\/h2>\n

Fringe benefits are often defined as property and\/or services whose benefit to employees frequently outweighs the cost to the employer. With a number of notable exceptions, fringe benefits are generally included in an employee\u2019s gross, taxable income where they are subject to income tax withholding and employment taxes.<\/p>\n

However, while some fringe benefits are included in an employees\u2019 taxable wages, other fringe benefits aren\u2019t taxable wages and, yet, remain deductible by the employer. Among these exceptions are nontaxable fringe benefits, so-called \u201cqualified\u201d fringe benefits such as health insurance, medical expense reimbursements, dental insurance, education assistance, and day-care assistance. Tax-qualified benefits are deductible by employers and totally free of federal and state income taxes as well as the employee\u2019s Social Security and Medicare taxes.<\/p>\n

These tax savings obviously make fringe benefits an attraction. However, thanks to last December\u2019s Tax Cuts and Jobs Act, the array of tax-free fringe benefits that employers can provide employees is not quite as generous as it used to be.<\/p>\n

Benefits to Attract and Retain Workers<\/h2>\n

Surprisingly, survey after survey shows that it is not money alone that attracts new workers and keeps existing employees on the job\u2014the benefits are also a big pull. In fact, currently treasured by job seekers\u2014and employees\u2014are flexibility and the opportunity to balance work with other life responsibilities, interests, and issues. But, obviously, no engineering firm or construction business can be an employer of choice without a good benefits package. Job training, educational assistance, and employer-provided vehicles used for business are among the common working-condition fringe benefits for many small businesses.<\/p>\n

Job Training and Educational Assistance<\/h2>\n

On-the-job training provided by an employer is a tax-free hiring incentive and functions well as an invaluable \u201cperk\u201d for current employees. Educational assistance and tuition reimbursement are also welcome fringe benefits.<\/p>\n

A formal, written educational assistance plan doesn\u2019t require immediate employer funding, only to provide reimbursement for an employee\u2019s educational expenses\u2014up to $5,250 per employee, per year and exempt from tax. Educational assistance doesn\u2019t just include tuition assistance, but also payments for books, equipment, and other expenses related to continuing education.<\/p>\n

Paying Better than the Competition<\/h2>\n

Job seekers and employees are increasingly looking for cafeteria-style benefit plans in which they can balance their choices with those of a working spouse or partner. Profit-sharing plans and bonuses that pay employees for measurable achievements and contributions are invaluable.<\/p>\n

Every engineering firm principal and construction business owner should keep in mind that, in today\u2019s job market, compensation remains an important factor. By surveying the local job market and the compensation offered by others in the construction and engineering industries, an employer can pay better than average to attract the best candidates.<\/p>\n

Benefits offered by a construction company or engineering firm should also be above industry standards with new fringe benefits added\u2014when they are affordable. Existing employees should be educated about the true dollar value of their benefits so they appreciate that their needs are being addressed.<\/p>\n

Bonuses and Taxes<\/h2>\n

Bonuses and awards must, as mentioned, be included in an employee’s taxable income. Should the bonus or award be in the form of goods or services, employees must include the fair market value of those goods or services in their income. The same applies to holiday gifts. However, employees receiving turkeys, hams, or similar items of nominal value from their employers at Christmas or other holidays may exclude the value of the gift from their income.<\/p>\n

Profit-Sharing Plans<\/h2>\n

A profit-sharing plan, often called a deferred profit-sharing plan (DPSP), is a plan that gives employees a share in the profits of the business. Under this type of plan, an employee receives a percentage of the operation\u2019s profits based on its quarterly or annual earnings. This is a great incentive to attract new workers and a way to give employees a sense of ownership in the business. Not too surprisingly, however, there are restrictions as to when and how a person can withdraw these funds without a penalty.<\/p>\n

The contribution limit for a engineering firm or construction company sharing its profits with an employee is the lesser of 25% of the employee\u2019s compensation, or a maximum of $56,000 ($55,000 in 2018). In order to implement a profit-sharing plan, the business must file a Form 5500-series return\/report and disclose all participants of the plan. Early withdrawals, just as with other retirement plans, are subject to penalties.<\/p>\n

Employee Stock Ownership Plan<\/h2>\n

An Employee Stock Ownership Plan, or ESOP, is an employee-owner program that provides workers with an ownership interest in the business\u2014tax free. An ESOP is a qualified defined contribution employee benefit plan designed to invest primarily in the stock of the employer.<\/p>\n

In general, employees are provided with ownership with no upfront cost. The shares provided can be held in trust for safety and growth until the employee retires or resigns. At that time, the shares go back to the business for further redistribution or are completely voided.<\/p>\n

What Do They Want?<\/h2>\n

Among the more common, tax-free employee fringe benefits are the following:<\/p>\n