Employee passes away, how long to continue paycheck?

motojoel1 · Jan 1, 2014

Maybe a strange question, I do not know the answer.
A employee for about 4 years, friend and mentor for about 20, passed away unexpectedly the 30th. He was very close to retirement, he and I talked about cutting his work back during the next year.
He leaves behind his stay at home wife, and grown out on thier own kids.
I will be keeping his salary going for a time. I do not know for how long. That is my query, is there a rule of thumb for this sort of thing? My only thought was if I were to close up or sell out I would probably look at a month severance per year of employment.
Thank you for your thoughts.

toolmaker96 · Jan 1, 2014

Tough one, I think you pay it for as long as you can without putting yourself, your other employees, & your shop in financial jeopardy. A tough fact of this situation is that you be paying out money, without getting any work return benefit from it.

You might also offer to help sell of his tools (when the time is right). Depending on the extent of his box, this can be a fair amount of cash if handled properly.

Cole2534 · Jan 1, 2014

I think you're quite generous to consider it at all.

motojoel1 · Jan 1, 2014

Giving til it hurts isn't really an answer for me. Not meaning to sound rude or high and mighty.

I will be visiting with his wife and kids to help dispose of anything I can help with. My brother is coming along to value his firearms. There are a lot of people who will take advantage of a widow, I'll be damned it it happens to her.

He was more generous to me when I was a willing pupil and he an excellent teacher.

toolmaker96 · Jan 1, 2014

motojoel1 said:
Giving til it hurts isn't really an answer for me. Not meaning to sound rude or high and mighty.

I will be visiting with his wife and kids to help dispose of anything I can help with. My brother is coming along to value his firearms. There are a lot of people who will take advantage of a widow, I'll be damned it it happens to her.

He was more generous to me when I was a willing pupil and he an excellent teacher.

In that case, only you can how long (if at all) to pay is salary. My point was simply, do not do it if you are putting your situation at risk.

Ohio Mike · Jan 1, 2014

Something to keep in mind is it is possible continuing to pay could hurt her more due to tax liability and the possibility she wouldn't qualify for government programs etc. We don't know her age or financial situation. Just something to keep in mind. The most valuable thing now is your personal assistance. Good luck.

allloutmx · Jan 1, 2014

This may sound corny but whatever, it is what it is
I would do whatever I could for the family that I knew was right by me and my morals at heart.

motojoel1 · Jan 1, 2014

Ohio Mike said:
Something to keep in mind is it is possible continuing to pay could hurt her more due to tax liability and the possibility she wouldn't qualify for government programs etc. We don't know her age or financial situation. Just something to keep in mind. The most valuable thing now is your personal assistance. Good luck.

Thanks Mike. I will be chatting with my accountant tomorrow with the very same thoughts. If there were a few days left to the year, i could have made a lump sum type payment maybe, but with his death just prior to the new year I was concerned that any payment that I make in the new year could screw things up for her. That is why I like my accountant, they know the rules.
She is about 60, financially I know they do not have debt.

And thanks to all for comments/thoughts.

toolmaker96 · Jan 1, 2014

Do you know if he had life insurance, or did you provide?

mjk · Jan 1, 2014

I commend you for considering this as many companies would find it easy to cut the pay the day the employee passed. But some do offer payment under the same guidelines as severance pay.
What ever amount you decide on, you will be setting a precedent for your own future employee situations.
If you don't have an employee manual it may be time to write one.
The other option may be to offer financial assistance as a gift.
Speak to your accountant.
As mentioned above, it would be a shame to offer financial assistance and have the family loose other help.
Good luck with your decision, sorry for your and the families loss
Mike

snowman · Jan 1, 2014

I will just say that the fact that you are considering a month per year is pretty damn awesome in and of itself.

Or the fact that you are considering any continuation whatsoever.

snowman · Jan 1, 2014

Another possibility, just to throw this out there...is maybe offer to pay or help pay for the burial services.

This would not be taxable income for the widow.

Chip Chester · Jan 1, 2014

Good on ya', and good idea to bring in the accountant, too. Maybe his executor/team, also. Lots of variables on this one.

Chip

Spyderedge · Jan 1, 2014

Sorry I don't have any advise for you, but I'm sorry for your loss.
It sucks when someone (especially a mentor and good friend) passes. You soon realize
how much you could have asked, or done with that person.
Cheers

bryan_machine · Jan 1, 2014

Sigh. Listen to the accoutant and maybe talk to an expert on labor law. When you are paying someone for working that is "wages" and has one kind of tax treatment. What you are proposing to do now may be 'different' and have all sorts of complicating issues (or not.) I hate this issue where doing some sensible "right thing" may have knarly legal or tax implications - but it exists.

As for the passing of a friend and mentor, my sympathies.

Doran · Jan 2, 2014

motojoel1 said:
My brother is coming along to value his firearms. There are a lot of people who will take advantage of a widow, I'll be damned it it happens to her.

Good. I recently helped dispose of a friend's estate for his wife. I got her several thousand dollars for just the "junk" a guy accumulates over a lifetime of shooting.

doug8cat · Jan 2, 2014

The world needs more folks like you; someone with morals and exemplary character. Sounds like a very personal / accountant decision. Not to take away or attempt to hijack the thread, but it makes me think as business owners, should we maybe give this some thought. Obviously (I am assuming here) this is a fairly rare situation to find ones self in. That being said would it not be prudent to have some monies "put aside / ear marked" each month till you reach a sum that could cover this kind tragedy. I will call it slush fund for lack of a better term, although it is not, but enough to say help a lone wife if a husband were to get hurt and unable to work for a period you could help where disability falls short, things like that. Or in this worst case situation have a leg up so you would have the resources already in place to help you do what you felt was needed.

My condolences.

shotline · Jan 2, 2014

Very noble of you to even think of paying his salarie. Others have mentioned tax consequence, I'd ask an attorney for everyone's safety. things I would consider are a %, like 60,70~something that lets you provide support longer and maintain your shops cash flow. Another thing to look into for support would be to pay or provide insurance or help to the wife and her children, if that is feasible somehow. I think your thoughts are above and beyond, very commendable. Your help with hiss tools and firearms is very nice, bringing in a knowledgeable person is invaluable to the wife if she has no knowledge of guns. It would be nice if more shop owners thought like you do; I don't see many employees that think in much of positive way about staying or liking there work, you shed a nice lite on changing that!

omrc7771 · Jan 2, 2014

mjk said:
I commend you for considering this as many companies would find it easy to cut the pay the day the employee passed. But some do offer payment under the same guidelines as severance pay.
What ever amount you decide on, you will be setting a precedent for your own future employee situations.
If you don't have an employee manual it may be time to write one.
The other option may be to offer financial assistance as a gift.
Speak to your accountant.
As mentioned above, it would be a shame to offer financial assistance and have the family loose other help.
Good luck with your decision, sorry for your and the families loss
Mike

Disagree, It should be kept confidential and therefore no precedent is set at all. Handle on a case by case basis

SIM · Jan 2, 2014

Accountant and/or lawyer most definitely.
Nothing worse then trying to do the right thing to find out all your doing is causing problems or paying Uncle Sam more then his fair share.

Hopefully he was smart enough to send a few bucks each month into a good Life Insurance policy and your financial help is nothing more then a token of appreciation or a financial bridge till policy kicks in.

Sorry for your loss...

Employee passes away, how long to continue paycheck?

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