What is a fringe benefit?

A fringe benefit is something other than an hourly wage that benefits the employee or enhances the employment relationship.  A fringe benefit refers, obviously, to compensation or benefit other than wages.

Sometimes its easier to describe something by what it is not.  The courts have determined that clearly it is not overtime, premium pay, or cost of living adjustment.  Also it is not employer contributions to union funds, the employer's social security and unemployment compensation contributions, and the employer's workers' compensation insurance premiums.  Although these items may benefit the employee and enhance the employment relationship, they are statutorily mandated and every employer must provide these items and therefore they are not a fringe benefits.

The Michigan courts have determined that fringes include all items of compensation or advantage agreed upon in a contract of hiring which are measurable in money, whether in the form of cash or as an economic gain to the employee.  Hite v. Evart Prod.s Co. 34 Mich. App. 247 (1971).  Furthermore, a fringe benefit "represents a loss to the employee that the employee has to either replace independently or not receive at all." Ember v. Wayne Village, 197 Mich App 307, 311 (1992).

Traditionally, an employer's contribution to health insurance, group insurance benefits, dental benefits, and an employer's contribution to a pension plain are all common fringe benefits. Also, use of a company truck and an employee's receipt of a monthly housing allowance are items that have been determined to be fringe benefits.  Lastly, rent on the company house plaintiff lived in, his phone bill and free beef, could be bargained for as fringe benefits within the meaning of MCL 418.371(2).

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Although these items may benefit the employee and enhance the employment relationship, they are statutorily mandated and every employer must provide these items and therefore they are not a fringe benefits.

[Pat Rojas]

If an employer decides to remove your fringe benefit, is it considered a reduction in compensation?