Compensation and Fringe Benefits
Date: July 29, 2009
It is the policy of the university to compensate all employees in accordance with state and federal laws, applicable documentation, and university transaction approval procedures.
Employees should not be compensated for any work, nor provided any fringe benefits unless appropriate and prior authorizations are obtained and confirmed by Human Resource Services (HRS). All compensation provided employees must translate to a legitimate documented work activity. Therefore, all payments of salary, additional compensation, overtime, supplemental pay, compensatory release time “comp time,” sick leave, vacation leave, and other forms of employee compensation (including fringe benefits) must adhere to established payroll procedures.
The Internal Revenue Service (IRS) requires fringe benefits to be included in employee earnings and proper taxation applied with limited exceptions. These benefits are outlined in IRS publication 15b Employer’s Tax Guide to Fringe Benefits. The necessity of maintaining strict compliance with applicable sections of the Internal Revenue Code requires that benefits and compensation be thoroughly reviewed and approved within the context of university policies. When approved, a payroll procedure exists to assure inclusion of fringe benefit earnings in the employee’s reportable income. Departments seeking to provide employees with taxable fringe benefits, not specifically authorized as part of NIU’s existing salary and benefit package, should consult with the HRS Payroll Office and secure appropriate divisional approval. Divisional/HRS consultations and approvals will be required prior to granting of the fringe benefit.
Examples of unapproved forms of compensation include:
- Payment of an employee’s rent or household expenses.
- Reimbursement for tuition, other than those provided by the tuition waiver benefit.
- Cash or gift cards carrying a specific dollar value (including any such items offered as cash equivalent and non-cash purchase inducements, rebates, and other program incentives from vendors).
- Payment of an employee’s utilities or other bills.
- Reimbursement of a personal expense from the Accounts Payable Office (Note: Please check with the Accounts Payable Office as to which business related expenses may or may not be reimbursed).
- Purchase of a non-inventoried item unrelated to job (e.g., a camera, book, or computer accessory).
- Prizes and awards, such as those for competing in a contest.
Human Resource Services encourages all departments to provide employees with the best possible working environment. However, departments are required to discuss any new or creative means of rewarding employees with Human Resource Services before making any plans or commitments.