PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

WELTMAN: New Employee Benefits to Consider

By at 28 March, 2022, 10:00 am

By Barbara Weltman –

Anne M. Mulcahy, former CEO of Xerox, said: “Employees who believe that management is concerned about them as a whole person – not just an employee – are more productive, more satisfied, more fulfilled. Satisfied employees mean satisfied customers, which leads to profitability.”

In this tight labor market, employers are looking for new benefits to show they value employees. Benefits can be tailored to meet the company’s needs while providing desirable things—cash, time off, etc.—to employees.

Why not consider these new benefits for your employees:

Lifestyle Spending Accounts

Think of these as a “piggy bank” created by employers for employees to use for approved products and services to enhance their health and wellness. The company sets the annual contribution (e.g., $500, $1,000); it is essentially a bookkeeping entry. The funds are disbursed only when and to the extent used by employees for approved purposes. The company can craft the program in any way it wants as long as it’s nondiscriminatory. The program may or may not allow a carryover of unused amounts. Examples of approved products and services:

● Athletic equipment (e.g., golf clubs)

● Personal trainers

● Nutritional training and cookbooks for healthier eating

● Gym memberships

The employer contributions are treated as taxable compensation when they are used by employees. These amounts are included in the employees’ W-2 wages and subject to employment taxes.

Employers may want to handle the administration of lifestyle spending accounts in-house. However, if they want to outsource this, there are many vendors that can handle the administration.

Employee Referral Bonuses

About one-third of new hires are through employee referrals. Getting employees to refer people for open positions in the company can be a win-win:

● The company does not have to recruit from the outside, with the time and cost entailed.

● The employee earns a referral bonus, which may be payable if the referred person gets the job or is simply interviewed (the company sets up the parameters in advance).

The bonus may be cash (e.g., $1,000 or more) or other rewards (e.g., gifts, paid time off). Again, the company can set the rules—what constitutes a valid referral, how soon the bonus is paid after the triggering event. Just make it easy for employees to refer prospects by letting employees know about job openings and simplifying the referral process, perhaps through mobile portal for this purpose.

Like the lifestyle spending accounts, employee referral bonuses—whether paid in cash or property—are taxable compensation.

Health Issues for Women Employees

2019 survey in the UK found that 59% of women ages 45 to 55 said menopause symptoms had a negative impact on them at work. The traditional “don’t ask, don’t tell” approach to menopause is giving way to open discussions and accommodations.

Time-off policies can incorporate the need to use flex time for doctor’s appointments or merely for down time when menopause-related issues are bad. Employers may also accommodate those who’ve had sleep issues due to menopause by allowing a later start time for them. Get creative. Menopause symptoms pass and making accommodations will help retain valued employees for the long run.

Paid Leave for Grieving

Some companies provide paid leave time for employees to care for a sick spouse or child. They also pay for maternity/paternity leave for having or adopting a child. The concept of paid time off is being expanded to cover time for grieving…the loss of a family member or a miscarriage.

The federal tax credit for paid family and medical leave does not currently cover time off for grieving. It is restricted to leave for:

1.) Birth of an employee’s child and to care for the child.

2.) Placement of a child with the employee for adoption or foster care.

3.) To care for the employee’s spouse, child, or parent who has a serious health condition.

4.) A serious health condition that makes the employee unable to perform the functions of his or her position.

5.) Any qualifying exigency due to an employee’s spouse, child, or parent being on covered active duty (or having been notified of an impending call or order to covered active duty) in the Armed Forces.

6.) To care for a service member who is the employee’s spouse, child, parent, or next of kin.

Final Thought

As the tight labor market continues, it up to you to craft winning employee benefits programs. Here’s a list of 101 unique benefit ideas, including gas reimbursements for commuting—something very helpful as the price at the pump continues to soar.

Don’t forget to factor in the tax ramifications of benefits offerings. Taxable benefits mean the added cost of employment taxes. Find more details in IRS Publication 15-B.

Barbara Weltman is a member of SBE Council’s advisory board, and has been a leading consultant for small businesses of every kind for over twenty years. She’s the founder of Big Ideas for Small Business® and has written numerous books on small business operations, including J.K. Lasser’s Small Business Taxes, Complete Idiot’s Guide to Starting a Home-Based Business, and The Rational Guide to Building Small Business Credit. Follow Barbara on Twitter @BigIdeas4SB.

 

 

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