Discussion:Compensation to former employee
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Discussion Forum Index --> Basic Tax Questions --> Compensation to former employee
Discussion Forum Index --> Tax Questions --> Compensation to former employee
| September 6, 2008 | |
| Nonprofit client has decided to continue paying "salary" and medical/dental benefits to employee who voluntarily left the organization at the end of the year (6/30). Bookkeeper continued paying the employer portion of the retirement plan, which is when I started questioning the whole compensation issue.
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| 6 September 2008 | |
| There may have been an employment contract between the employer and employee. Or maybe a voluntary resignation instead of being fired. Maybe there was compensation time due to the employee which was owed to her and is being paid out.
All payments going to the former employee should be through the payroll. So long as there is payroll, there is no need for cobra. When the payroll ends, then cobra begins. All taxes must be paid for this person during the period that p/r is being paid. That includes Futa, Suta, Fica/ medicare state and fed w/h w/c and dbl. | |
| September 7, 2008 | |
| No contract with employee. This was a verbal thing near the end of the year. Yes, it was a voluntary termination as I stated above. No additional compensation is due for services that were performed. Client just basically wants to be "nice" and provide this benefit.
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Southparkcpa (talk|edits) said: | 7 September 2008 |
| I believe the bigger problem here is that this is most likely in violation of the organization charter and can subject the organization to serious scrutiny (newspaper, IRS etc...) Has the board appoved this? When will the salary end? | |
| September 7, 2008 | |
| I don't think there's any violation here, Southpark. This is a nonprofit corporation. There is nothing in the by-laws that says employees are not allowed severance packages or continued benefits after employment.
"Salary" ends this month; medical/dental at the end of the year. No, the board did not approve this. It was recommended to the board to stay out of HR except for with respect to the executive director. I don't think this will raise any questions in the community. Even with the continued salary, the gross compensation for the year is < $50,000. | |
| 7 September 2008 | |
| Since the board is responsible for the spending of funds of a non profit, it most certainly must be approved by the board! | |
| September 7, 2008 | |
| My client has been around for over 40 years. Before I got involved with them, the board was making hiring decisions and recommendations about salary for some of the employees. It was recommended to them that they stop that practice for liability reasons. As I stated, there is a separate committee that approves these kinds of things.
Thanks for the definition. | |
Southparkcpa (talk|edits) said: | 7 September 2008 |
| I totally understand. Here in NC there is a United Way scandal where the CEO was paid 1 mil last year. Donations have come to a HALT and the press is all bad. In your case, I was just curious if this was signed off by the board or just the CEO. If I donated to this prganization and learned of this, I would find another organization perhaps. Just a non accounting angle. | |
| September 8, 2008 | |
| United Way has had serious issues with compensation of its management, and not just in NC. While I don't like this whole issue, I don't think anyone outside of the HR committee, the bookkeeper, ED and me will find out about it, but thanks for the thought. Hopefully the bookkeeper will get an answer in the next day or two. | |
