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Cost of Living Allowance?
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Cost of Living Allowance?
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An employee living in the Washington DC area has asked for -okay, demanded - an "allowance" based on the fact that DC is such an expensive city. He claims that this is common in the DC area. I have he
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Forums » Topic Forums » General Forum » Cost of Living Allowance?
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Cost of Living Allowance?
posted at 11/3/1999 6:17 AM EDT
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Posts: 399
First: 6/21/1999 Last: 9/14/2005 |
An employee living in the Washington DC area has asked for -okay, demanded - an "allowance" based on the fact that DC is such an expensive city. He claims that this is common in the DC area. I have heard of such a benefit but is it really as wide spread as he claims? He is asking for $350-400 a month tax free and claims this is the norm. Is he right? |
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Cost of Living Allowance?
posted at 11/3/1999 10:32 AM EDT
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Posts: 15
First: 6/21/1999 Last: 3/7/2003 |
I've never heard of it being used in that manner - usually cost of living is taken into consideration during increase time (certain percent each year). Even so, many companies have moved away from using that as a variable in increases. He chose to live there, and you can certainly tell him that your compensation system has already taken into consideration all aspects of the position - including the market where the job is based.
Can you believe how sassy these folks are getting as the labor market is tighter? It is crazier each day! Good luck! |
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Cost of Living Allowance?
posted at 11/4/1999 12:48 AM EDT
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Posts: 26
First: 7/14/1999 Last: 10/6/2003 |
One of the difficulties that you are facd is that any benefit that is relocation oriented which you pay to or on behalf of the employee is considered income to that employee. If you get gracious enough to gross up his salary to cover the tax liabilities of the COLA, the gross up is taxable to the employee. According to the Employee Relocation Council, COLA's tend to focus on either housing costs or the over all cost of living differences. There is no single correct payment process or policy.These COLA's typically are paid for a set period of time, not for the duration of the assignment. Another factor is that COLA's are extremely income sensitive, so it would be difficult to try a blanket figure without some documentation to back the number up. I agree with CarynPH, that the transferee should have researched the differenc ein costs before he took the assignment. |
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Cost of Living Allowance?
posted at 11/4/1999 12:54 AM EDT
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Posts: 26
First: 7/14/1999 Last: 10/6/2003 |
I know that the demands of the transferee sound excessive, but the market has changed. One of the problems,you as HR professionals are faced with is the new market. As late as the mid 1980's the typical new hire would ask whether you had a relocation policy or not and if you said yes, that was the end of the question.Today, that question is expected to generate a response which indicates EXACTLY what you are providing and this is compared to the other opportunities that they are investigating. If you get a chance either go to ERC's site at www.erc.org and click on Mobility Magazine. Go to the link for the archives and click on the article Who's Driving Relocation Policy or go to my website at dbaiconsulting.com, click on In the Press and you will find the article there. The preparation for the article was an eye opener as to what is being offered in the market today.
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Forums » Topic Forums » General Forum » Cost of Living Allowance?
