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Scott Putman owns and operates a lawn care company

I need help writing a 1 Page Paper outlining the ethical misconduct of the company I have attached in this problem.

Scott Putman owns and operates a lawn care company. Like most companies in the lawn care business, his company experiences high level of employee turnover. However, he finds it relatively easy to replace employees because he pays above market wages. He attributes his ability to pay high wages to s little accounting trick he discovered several years ago. Instead of paying his half of each employee's FICA taxes to the government, he decided to pay that money to the employees in the form of higher wages.

He then doubled their FICA tax payroll deduction and uses half of the deduction to pay his share of the Social Security tax. For example, suppose he plans to pay an employee $2,000 per month. Technically, the employee would have to pay 7.5 percent FICA and Medicare tax ($2,000 X .075 = $150) and Mr. Putman's company would have to make a $150 matching payment. Instead of doing it this way, he devised the following plan. He pays the employee $2,150 and then deducts $300 for FICA and Medicare tax from the employee's salary. The end result is the same. Either way he employee ends up with net pay of $1850 ($2,000 = $150 - $1,850 or $2,150 - $300 = $1,850).

Also, the government gets $300 FICA tax, regardless of how it gets divided between the employee and the employer. Mr. Putman is convinced that he is right in what he was doing. Certainly, it benefits his company allowing him to offer higher starting salaries. Further, he believes it is a more honest way of showing the real cost of Social Security and Medicare.

Solution Preview

This is an issue of business ethics, which is the branch of ethics that examines ethical rules and principles within a commercial context; the various moral or ethical problems that can arise in a business setting; and any special duties or obligations that apply to persons who are engaged in commerce.

The Federal Insurance Contributions Act (FICA) tax is a United States employment tax imposed by the federal government on both employees and employers to fund Social Security and Medicare. (Wikipedia) Thus both employees and employers are responsible for ...

Solution Summary

Scott Putman owns and operates a lawn care company. Like most companies in the lawn care business, his company experiences high level of employee turnover. However, he finds it relatively easy to replace employees because he pays above market wages. He attributes his ability to pay high wages to s little accounting trick he discovered several years ago. Instead of paying his half of each employee's FICA taxes to the government, he decided to pay that money to the employees in the form of higher wages.

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