Home Forums Discussions General Discussion Pay raises

Once again, I come to the wise ones on a question on pay raises. This year, we have decided to do them based on percentages bases on cost of living. My question isn't really meant to be how everyone does it, etc., but I will take that.

My question is this. We have two employees getting 3% raises. The issue is that they also get health insurance paid for by the company, while they pay a small amount each month. This gives them a $4,000 bonus each year even after their contributions.

So, the question is how would you figure that in to their raises or percentages?

The other question is one MA was set to get a certain raise but is also likely to get our standard $1.00 per hour raise for sitting for and passing her MA boards. I contend that this should have nothing to do with her regular raise. My office manager thinks it should lower her raise or wipe it out altogether. Oh, and we have less than 24 hours to figure this out. Tick, tock.

How you count the $4,000 for health insurance is tricky - does it go on their W-2 as Taxable income ? If it does then I would take 3% of it too - but if not I would not count it.

I think the $1.00 for MA boards should be over and above the 3% raise as it is based on accomplishing a task and she should not be penalized. Just my opinion.

The last thing is that you should do what you want - what you pay them is based on how you are doing and if you value what they do then reward them. Don't let someone else decide that.....

Thanks Steven.

As on office manager I think your interpretation of the 1.00 for the MA and her regular cost of living raise is correct. On the other, I too have something similar and raises never include the health insurance amount. But as Steven said, definitely your choice

Bert, there are no rules for this; except the ones you choose to make.

The major portion of raises is often based on somewhat arbitrary factors (length of service, education/licensure, cost of living). Nonetheless, I try to find a place to reward merit and quality of performance whenever I can. So when you have options (like the two you mention), I would take the opportunity to let their performance be the determining factor. If you are thrilled with their work, give them the extra dollars. If not...then don't.

I, personally, would base the employees' wages on my needs for that employee to be certified and any value that such certification would provides to me and to my practice. On the other hand, if it's your desire to provide a bonus for board certification (something that neither you nor I currently get from our payors) as a means or reward or retention of an employee, the first thing to do is to determine if it is a one-time bonus or an ongoing per-hour bonus. It appears that it is your established policy to have it as an ongoing per-hour bonus, in which case the total raise should be 3% of the employee's hourly wage (for cost-of-living/years of service) PLUS the $1.00 per hour for getting boarded PLUS any other bonuses/rewards.

Additionally, I would calculate the company's cost of medical insurance as a percentage of the hourly wage for each employee and let each employee then know how much per hour is contributed by the employer towards the employee's health insurance as well as the percentage increase from year-to-year of that benefit as an itemized amount and also as factored in to the hourly wage equivalent.

You could also factor in vacation and holiday pay, employer contribution to 401k/pension plans, the employer share of the payroll tax deduction (Medicare 1.45% of wages plus Social Security/FICA 6.2% of wages) plus any additional amounts paid on the employee's behalf and add to the total wages and benefits and calculate a total dollar-per-hour-worked amount. A bit of calculating the first time around, but then just set up a spreadsheet and plug in the numbers for each employee scenario on an annual basis.

It never hurts to let the employees know the total COST to your practice of their employment. They will get a better appreciation of the VALUE of the job that they have and the cost to you. Employees often lose sight of anything but the hourly wage.

For example, an employee making $20.00 per hour, working 40 hour per week, with 4 weeks of paid vacation per year, plus six paid holidays (New Years Day, Memorial Day, Labor Day, July 4th, Memorial Day, Thanksgiving Day, Christmas Day), plus taking 4 paid sick days per year, plus 2/3 of the cost of single-person health insurance premium paid by employer, plus 15% of wages contributed to retirement plan, plus 7.65% of wages as payroll taxes paid by employer would really cost the practice $29.76 per hour worked--almost 150% of the hourly wage. For employees offered a family plan for health insurance coverage paid at 2/3 by the employer, the hourly equivalent would be $33.43 per hour, or 167% of the hourly wage. [Health insurance rates based on Kaiser/HRET Survey of Employer-Sponsored Health Benefits 2012, http://ehbs.kff.org/?page=charts&id=1&sn=6&ch=2650, http://www.pmanet.org/?cmd=main.content&id_content=2142627292]

Obviously, the actual per-hour-worked wages will vary based on the hourly wage and benefit package provided including the number of weeks of paid vacation, paid sick days taken by employee and the cost of health insurance and employer contribution, but as you can see, the total wage and benefit package provided can be substantial as a percentage of hourly wage, fact often overlooked by employees and by those who say "you didn't build that."

Looking at this in the strictness amount of fairness (did I just come up with a new phrase?), it does seem not fair to give employees health benefits but then give them less of a raise because of the "bonus" they received from it. I think it comes across more fairly and actually is a better way to just say "or not say" that we have had additional expenditures and therefore the raises will be slightly lowere across the board.

This has something to do with what Jon said. I always have a difficult time giving different amount of raises. Then, there are employees that simply just out perform others staff members. On top of that, there are employees that have jobs where they have a much better opportunity to "look good" than another. An MA who is running patients, answering triage calls, doing all the ordering, giving shots, etc. can appear to or actually does work harder than a receptionist. Then again, I guess you could look at it like the receptionist knew when she applied for the job that she would not only start at a lower wage but would likely not have higher pay raises.

Bert.

I do not want to sound too pedantic, but I am going to quote yet another one of my father in law's favorite sayings, as I think it has merit in this discussion.
"What is fair is not always equal."

That is a great quote.

And, don't use words like pedantic. can you translate?

Simplistic may have been a better choice.
Pedantic--marked by a narrow focus on or display of learning.
This quote may come in handy when divvying up one's estate.

Guess I would have lost out on the money, lol.

Hell I don't even understand your Avatar.

Bert- you don't remember the 1960's?

Gene

Well, I remember the 60s as it pertained to the new Avatar, but not quite the first one. I loved the 60s and 70s but than any of the other decades.

Out of courtesy to Bert, I made the change to my original Avatar, to hopefully reduce the befuddlement, lol.
The previous Avatar was a picture my wife took of the kids standing on the windowsill, blinds in front with Creeper the cat between, and the sun behind.
The current Avatar was gifted from my Grandmother, made in a country that is no more.

I give you full right to Hijack! lol

The awful thing is I don't know which description is for which. But, to be fair, please use whichever you want to use. Maybe others could chime in.

Thanks everyone for the feedback so a good fork in the road won't hurt me at all.

the original and current is the hippie van.
the most recent previous is the silhouette of the kids and cat.
I have had 3 avatars, the combine being the 2nd used, but I prefer the hippie van, and will likely stick with this one.
You helped confirm my choice, and no more hijacking

And hopefully my father in laws quote helped with your decision.

Put another way, that I heard at my first job...

The only way to be fair to everyone is to be "equally unfair" to everyone.

Bert,

One additional observation which seems a bit dichotomous, but I think has a universal theme, is often the lowest paid employee is the one that can hurt or help one's business the most, and that employee is the receptionist. If I call my dentist's office and am greeted warmly, and am recognized and feel wanted, and my needs are met quickly and efficiently, I am impressed and whether it is true or not then make the association my dentist knows how to run his business. If the opposite scenario unfolds, and it may be superficial on my part, I start to wonder about other aspects of his dental skills.
So even though the receptionist is usually the lowest paid employee, it has been my experience that position is the one that should be most scrutinized because it is the one that displays your professional persona to the public. Now I am being pedantic I swear I will never use that awful word again.

We have no issue there. You can call our office any time. You will always get a warm greeting. That is if I don't answer the phone.