Legal Question in Employment Law in Georgia

free trip by employer then deducted from employee without notice

My husband was informed, that he was one of the top salesmen in the company, and thus won a trip to Las Vegas. The company sent five employees, and their spouses, on the trip. The company paid for the plane and hotel accomodations. The company sent, via email, the itenarary booked by Orbitz.com. The company stated, each employee would be responsible for all other expenses, ie. baggage fees, airport shuttle, food, entertainement, etc. The only fees paid by the company would be the air and hotel expenses for the employee and one family member. Thus, we agreed to take the trip (Jan. 14-17, 2009).

Yesterday, Feb. 6, 2009, my husband received his weekly paycheck. The company added the cost of his trip, $957, to his paycheck as 'prize money' and was taxed at a higher rate. The taxes and the $957 was then deducted from his net pay.

Can the company give a 'free trip' and then deduct the cost from an employees paycheck. If we had known the cost of air and hotel would be deducted, we would not have taken the trip.

Any advice is greatly appreciated. All five employees are extremely upset by the company's actions.

Carol Prince

GA


Asked on 2/07/09, 9:12 am

2 Answers from Attorneys
Gregory Fidlon Law Offices of Gregory R. Fidlon, P.C.

Re: free trip by employer then deducted from employee without notice

I believe the company was correct. The IRS treats these types of benefits as "income" to the employee. To account for this, the company reported the cost of the trip as income (thus, increasing your husband's gross pay), and then deducted it as a business expense (reducing your husband's net pay). The net effect was that your husband paid the taxes on an additional $957 in income. Not such a bad deal.

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Answered on 2/07/09, 1:14 pm
Scott Riddle Law Office of Scott B. Riddle, LLC

Re: free trip by employer then deducted from employee without notice

As stated, this is correct. The cost of he trip was apparently NOT deducted from his paycheck as you claim (and as posted in the original misleading one-sentence question) - just the taxes. The simple question is "is the value of prizes/trips taxable as income." The answer is yes.

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Answered on 2/07/09, 5:24 pm


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