Am I justified in cutting employee health insurance????

[harry chickpea]

Forgive me for saying so, but you don't seem like the type of couple that should be in business on their own, and would do well to get some review or oversight from some outside source like the small business administration, SCORE, a competent CPA, or at least advice from a local business group.

50K profit is about as low as you want to go in most small business situations, unless you have unique circumstances. You don't mention the type of business, overhead, or interface with the public (if any).

While I agree that you have to put the business first, there is no reason to be cold at it, as the other posts seem to indicate. Right off the top, I see a possible judgment error in your having an employee continue working at 30% efficiency, if this is what you mean. I sense that this employee has stuck in your craw for a while and you are looking for a way to do an end run around your spouse to get rid of her. The insurance cost seems to be more an excuse than anything else.

If what you say is correct, and she is only needed 4 or 5 times a year, then you might want to eliminate the position entirely and hire from a temp service. It is hard to tell whether this is feasible or not, with the little info you have provided.

I will caution you that some employees are a lot more valuable to a business than they might seem at first glance. An employee with strong personal relationships with customers can not do a lick of work and still be an asset to the company through customer loyalty. An employee who is not treated fairly and has contact with customers can be a kiss of death, especially in tight times. You also don't mention the personal interactions between the two employees. If you tick off or fire one, do you lose the other?

I have managed hundreds of employees, both part and full time, with benefits and without. If the woman was a problem employee, and worked for me, she would have been guided in ways to turn herself around, and given clear goals to meet. If those weren't met, she would know up front that she should be looking for work elsewhere within the first year, not four years later in a recession and at an age when she is unlikely to find other employment.

You and your husband are at fault for allowing the situation, not the employee, and it speaks to your need for a strong guiding hand.

At this point, I almost agree with your husband to just let things continue. Dropping their insurance is in a very real way cutting their wages. When you suggest a "token" raise, that comes across to employees as your offering an aspirin when you are about to perform a broomstick colonoscopy on them. You could end up with no employees at all, and if they stay, theri attitudes may be so sour that you wish they had quit.

If you drop the insurance, be a mench and split the cost you no longer have 50/50 with the employees. Let them know at the same time that times are tough and both of them need to pull their own weight without excess supervision, and try to bring in more business, or you may have to cut a position.

As for the previous post that claims you have no "moral, ethical or legal obligation," take that in a very limited context. You have every obligation to treat employees fairly and as people, unless you want them to treat you with an attitude that is as cavalier as the one where you play with their lives at a whim. I can point out business after business that has gone belly up because of lack of rapport between owners and employees.

[f_m]

You may want to investigate possible options like HRA or HSA medical plans. Although for such a small business it might be more complicated than it needs to be. However, the plans allow use of pre-tax money, which your current situation may not be doing. I thought this article was useful.

Healthy Choice - June 1, 2005