A 42-year-old male suddenly and unexpectedly died of a brain tumor, leaving behind a wife and a small child. During a review of his employee benefits, it was noted that although he was eligible for an additional company-sponsored life insurance plan used for plant decommissioning purposes, his name was not identified on the insurance rolls. 

  

Evaluation

It was determined that when the employee was promoted to supervisor three years before his death, his paperwork had been submitted to the corporate office for inclusion in the program. Coincidentally, the program was under review at the time, and the employee was not entered into the program due to administrative oversight. Legal Review A legal department review determined that the program was offered to certain supervisory employees at the discretion of the company. Therefore, there was no legal obligation to pay. 

 

Dilemma

  

The death benefit was twice the employee’s salary. Because the employee was not enrolled in the life insurance program, if the company were to pay any benefit, it would have to come from the general fund (paid from the business unit’s annual operating budget).

 

To Pay or Not to Pay?  

 

The company could argue that it must start acting like a business and use its head, not its heart. Existing company programs adequately compensate the individual’s family; no additional dollars * This case was prepared by David A. Levigne. should be paid. On the other hand, it was an administrative oversight that failed to enter the employee into the program.

 

QUESTION FOR DISCUSSION   

 

As a manager, you are a steward of the company’s funds. Are you willing to forgo departmental improvements and potential salary increases to honor this claim? Remember, there is no legal obligation to pay.