Expert: Shirley McAllister, CPP, PHR - 12/13/2008

Question
I have a small law firm.  One of our attorney employees entered an substance abuse treatment program for alcoholism this calendar year.  The treatment cost 30,000.

The firm would like to assist this employee in the cost of his treatment, and foresee two options.  First, the firm could give this employee a bonus to cover the cost of the program, which would subject us both to additional taxes.  In the alternative, the firm could pay for the treatment.

Would both the firm and attorney employee benefit tax-wise if the firm paid for this treatment?  Would it make a difference if this treatment cost was incurred to maintain the attorney's state bar license?  

Thank you in advance.  

Answer
It would make a difference. You could pay the treatment as an accommodation of the ADA (American with disabilities act) because recivering alcoholics are protected class under the new ADA laws.

I would make this an ADA accomodation in order for the employee to continue working and retain his bar license.

If you pay a bonus you will both pay taxes and it has to be taxed as a supplemental wage. This would not be the best use of funds.

Shirley