In an effort to support and retain their working parent employees, many companies are offering childcare subsidies. Are they right for your organization?
Here's what you need to know:
- Childcare subsidies are usually employer-provided spending accounts or bonuses to help employees cover part or all of their daycare costs and other educational expenses
- Companies that offer childcare subsidies can increase employee engagement and satisfaction
- Employers that supply childcare subsidies will also benefit financially from a yearly tax credit
- Alternatives to providing childcare subsidies include offering all employees PTO, offering onsite childcare, and more
Working parents struggle with work-life balance and childcare management when the world is moving regularly. When the pandemic hit, those workers struggled even more because they were suddenly trying to maintain a workflow while becoming teachers, full-time childcare workers, and full-time parents.
Many had no choice but to quit their jobs. Many were forced to make the difficult decision to refrain from seeking new employment when they no longer had jobs due to the economic downturn.
Employers seek to retain their employees. That has led to the consideration of childcare subsidies as part of benefits packages.
Childcare subsidies are usually employer-provided spending accounts or bonuses to help employees cover part or all of their daycare costs and other educational expenses.
How can employers make childcare subsidies fair?
Many companies aren’t offering childcare subsidies to the parents in their workforce. The main reason they cite for foregoing this benefit is that those who have no children or those who have grown children might feel slighted by an employer that offered a benefit they couldn’t receive. Some employees might claim discrimination which could lower productivity or morale.
Some companies provide different benefits instead of childcare subsidies to those who don’t need childcare. One of the options is offering elder care subsidies instead.
Other suggestions include adjusting deductibles for company-provided healthcare plans, adjusting contributions to the 401k retirement plans, contributions to health savings accounts, life or disability insurance coverage, and even considering tuition reimbursement. Each of these allotments can vary based on eligibility for the childcare stipend.
Some companies offering subsidies have opted to explain that assisting those workers will help keep workloads in the office balanced. For example, if a parent must take paid time off or call out at the last minute because childcare arrangements fell through, the brunt of their workload could fall to their colleagues to handle.
How can employers reduce costs and stress for parents?
Parents who don’t receive a subsidy and can’t afford to pay for childcare on their own have an increased stress level.
Working from home while little Johnny or Susie is constantly begging for attention causes undue pressure on someone who is choosing to work from home. Managing a full-time job is hard enough without combining it with full-time parenting during the same hours.
Companies that offer childcare subsidies can increase employee engagement and satisfaction. They can accomplish this while also earning loyalty and increased productivity from those same employees.
Tax credits for employers who supply childcare subsidies
Employers that supply childcare subsidies will also benefit financially from a yearly tax credit. The credit is up to $150,000 for those who use it for qualified childcare services or facilities. Employers must complete IRS Form 8882 to receive this tax credit.
Childcare subsidies can be started with a flexible spending account (FSA). One benefit of using an FSA for childcare subsidies is that payroll taxes are reduced. This is because employers contribute pretax dollars to the FSA.
Employers that supply childcare subsidies will also benefit financially from a yearly tax credit.
Employees can decide what amount to contribute to this kind of childcare subsidy. Those who want to send their children to a more expensive childcare program can use pretax dollars to pay for it using an FSA.
Workplaces that hire essential workers could have the option to take advantage of government-run programs for childcare. Employers could also access employee assistance programs (EAP) to help employees find childcare or pay for it.
Companies can offer PTO to all employees
Ideas include granting every employee personal time off for special circumstances. Those circumstances include a sick child who is unable to attend childcare programs one day, or when childcare is closed.
If a company opts to handle things this way, management can also offer this kind of personal time off to those who don’t have children. Those employees can use personal time off for appointments or other obligations that must be taken care of during business hours.
This solution may not entirely correct the issue of absent employees. However, it might help that everyone would receive the same PTO.
Another option for helping with childcare is for HR to find a nearby childcare facility willing to offer discounted rates to the company’s employees. Larger employers or those with more money to allocate to employee benefits might consider establishing a childcare center onsite for employee use.
Onsite facilities should offer childcare at a reduced rate, so employees can easily afford to take advantage of it. Allowing employees to access their children during the workday can boost employee loyalty and morale.
Considerations when offering childcare at the workplace
Since the pandemic began, childcare has become an ever-increasing issue for workers. Some childcare centers have remained closed even after many companies reopened for in-office workers.
Others have changed their healthcare policies in response to the pandemic. Now, issues that were once no big deal (a runny nose due to allergies, for example) could now cause children to be turned away from their daycare center.
Here are some things companies should consider before offering childcare in the workplace.
Is the workplace safe?
Some worksites are not safe for children. For example, those who work in a factory probably shouldn’t have their children on the factory floor with them. Some restaurants might consider allowing children to be in front-of-house while servers work. However, they shouldn’t be allowed in the kitchen area.
Offices might be open to having children quietly “work” alongside a parent if there isn’t childcare available. However, it’s likely to be considered unfair if a company offers the benefit to one group of workers but can’t offer it to everyone.
Will children affect productivity?
Children who occasionally come to the workplace may distract workers somewhat because the workers want to say hello. However, children being in the workplace may cause serious detriment to productivity. At that point, a company should assess whether allowing children to come to work is of greater value than cost.
Children who spend time napping, reading, quietly doing homework, or watching videos likely won’t be as much of a distraction as those who constantly need someone to play with them or find things to keep them occupied.
Where will children stay during the workday?
An empty conference room could be used for a temporary “child zone” at the office. Alternative ideas are placing a beanbag or small chair near the parent’s work area.
How will the presence of children affect customers?
Whether customers will object to seeing children in the workplace largely depends on the type and size of the business making the accommodations for them.
Small retail shops or private offices may not be affected as much as larger businesses or businesses with a magnitude of clients who enter and exit regularly. Employees will be responsible for overseeing their children’s activities unless the company opens a full-time daycare center.
Working with parents to find solutions is a must for retention
The pandemic changed the workplace dynamic. There is no way around that. Companies that want to retain their employees must reconsider how they work with parents who need childcare solutions. HR and management can consider options such as flexible schedules, childcare stipends, and in-house childcare solutions.