Different Perks for Different Employees

The Question of the Month is provided by Zywave®, a company wholly independent from Federated Insurance. Federated provides its clients access to this information through the Federated Employment Practices Network with the understanding that neither Federated nor its employees provide legal or employment advice. As such, Federated does not warrant the accuracy, adequacy, or completeness of the information herein. This information may be subject to restrictions and regulation in your state. Consult with your own qualified legal counsel regarding your specific facts and circumstances.

Question

One of our high-level employees is requesting additional vacation hours. For example, if her kids have a day off from school, she wants extra vacation hours to spend time with them. She gets the same amount of vacation as everyone else at our company, and we don’t want other employees to claim that we’re being unfair or are discriminating if we give her more. However, we also don’t want to risk losing this valuable employee. Are we allowed to give one employee more vacation time than everyone else?

Answer

It is a general best practice to offer perks and apply policies consistently to similarly situated employees to avoid claims of discrimination and unfair treatment. That said, absent a contract to the contrary, employers can generally offer different perks to employees who work in different capacities (for example, executive versus nonexecutive), so long as the criteria for doing so are not unlawfully discriminatory and comply with applicable law. Giving some employees (or even just one) a more attractive vacation package and not providing the same to others is a form of discrimination, but it is not unlawful discrimination unless the basis for excluding others is membership in a protected class.

However, even if this kind of discrimination is not expressly unlawful, there can be significant issues associated with providing certain employees (or just one) with enhanced perks. Those who do not enjoy the perks may resent the employer for the differentiation, and this can lower morale and have consequences for employee relations. Additionally, even though an employer’s policy may appear neutral on its face, if it has a disproportionate effect upon a protected class of workers, there may be exposure to discrimination claims on a theory of disparate impact.

A claim in such a scenario may be able to be defended with evidence of legitimate, nondiscriminatory reasons for an exception (for example, sometimes employers need to provide enhanced vacation perks to attract or retain talent).That said, employee relations and potential discrimination risks exist even if the facts do not legally support such claim. In other words, while an employer is generally within its rights to establish different policies or provide an enhanced perk along neutral and legitimate lines, doing so may not necessarily be the best practice if there will be employee relations backlash as a result. Generally, it is best practice to have uniformity and consistency in company policies and perks.