[rsj_hn]

I think these companies are exploiting the fact that many tech employees value the $20 lunch perk more than an extra $5K in salary. I've seen this first hand, and for a lot of employees, a paid lunch is valued far more than it should be.

This is the basic reason for a lot of office perks. I'd personally prefer the cash and arrange for my own gym/lunch/coffee bar, as I don't want work to swallow up my life, but I'm in the minority.

[neilknowsbest]

To be sure, $20 per day at ~250 days per year is $5k. And that's tax-free to the employee, so if they're going to be spending that money on lunch anyways, it is better for the employee to trade the $5k pretax salary for the lunch benefit.

[rsj_hn]

It's not tax-free. It's compensation and taxes must be paid on it. It makes no difference whether your employer buys a sandwich and gives it to you or gives you money to buy a sandwich, it all adds to your income and is taxable, as is your gym reimbursement, etc. Firms that do this increase the withholding taxes and add these benefits to your total compensation which you can review -- go take a look at your employer-provided withholding forms.

[neilknowsbest]

Interesting, I hadn't realized that. I always assumed that firms doing this were just reimbursing the employee and then putting the lunch/whatever expense onto their own books.