By: Martin M. Shenkman, CPA, MBA, JD
The phrase "compensation policies" can refer to a number of things. Your employer should have an employee manual that details company policy on a range of matters, including some general aspects of compensation. You should obtain a copy of that employee manual and review it and be familiar with it. If any issues arise as to the appropriateness of your compensation or perquisites you should review the contents of the employee manual as a starting point. The second point, if the situation cannot be resolved, is for you to consult with an employment attorney. Employment law is quite specialized and you will often be best off hiring either an attorney that specializes in employment law only, or at least an attorney that devotes a significant portion of his or her time to the field (you don't want to be the first employment case for someone who is otherwise a real estate attorney). Another application or interpretation of the phrase "compensation policies" is for a closely held or family business there are a range of tax implications to compensation. For example, if compensation is not "reasonable" the IRS may reallocate it as something else. If compensation is too high to a child employee the IRS might argue it is a disguised gift, etc. Thus, many closely held and family businesses establish compensation policies in conjunction with their accountant and tax advisers to address these concerns.
Subscribe to our email list to receive information on consumer webcasts and blogs, for practical legal information in simple English, delivered to your inbox. For more professional driven information, please visit Shenkman Law to subscribe.