Doing wage parity the wrong way is throwing money down the drain.
That said, wage parity benefits can offer multiple benefits that cash wages don’t quite accomplish:
- Save money on payroll taxes.
- Improve cash flow
- Contain overtime costs
- Boost employee morale
But these benefits only kick in when wage parity is administered effectively.
Here are 5 common mistakes to avoid:
Mistake #1 – Giving benefits that don’t qualify under the law
Giving qualified benefits is no joke. In 2018, 42 agencies were investigated for labor law non-compliance. Many were slapped with heavy fines and penalties.
But it was only partially their fault.
The original Wage Parity Act was extremely vague about which benefits could qualify for the supplemental portion of an employee’s wages. The only guidance it gave was that:
- Benefits COULD include
- Pension benefits
- Supplements in lieu of benefits
- Compensated time off
- Benefits COULD NOT include:
- Employer taxes
- Employer portion of statutory benefits such as FICA
That information wasn’t enough. Agencies didn’t know how to comply with the law.
Non-compliance with wage parity law can incur a $1000 fine and 30 days imprisonment.
As questions poured in from home healthcare agencies, the DOH published FAQs that clarified the rules. Things have improved since then, but non-specific language continues to be a pitfall for agencies.
|How Non-Specific Language Makes Compliance Difficult|
|Wage Parity Update||What it said||Conflicting or Confusing Factors|
|Jan 2012 FAQs||Employers can get wage parity credit for benefits administered through a plan or program.||In 2018, the state ruled that captive insurance companies were not allowed.|
|Feb 2012 FAQs||Any non-wage payment that primarily benefits the employee is allowable.||The “primary beneficiary” of benefits such as education or cell phone can be open to interpretation and may affect tax eligibility.|
|Jan 2014 FAQs||Wage parity benefits may include ERISA (Employee Retirement Income Security Act) benefits or New York Labor Law wage deductions.||In that case, the benefits need to satisfy multiple levels of government regulations.|
As you can see, wage parity law is not simple. Legal counsel is a must for any agency that wants to avoid fines or even jail time.
Mistake #2 – Giving the wrong benefits to your employees
In an industry where agencies compete for workforce share, choosing the right benefits is a high-stakes game. Pick the right ones, and you’ll be rewarded with loyal,engaged employees.
Choose the wrong ones, and aides will leave your agency for greener pastures.
The median HHA churn rate was 64.3% in 2019.
(Home Care Pulse Annual Home Care Benchmarking Study)
But it’s not easy to pick the right benefits. You have an array of wage parity options to offer:
- PTO days
- Dependent care
- Medical and pharmacy
- Supplemental insurance
- Life insurance
- AFLAC disability insurance
How do you choose?
The answer may surprise you.
You don’t choose, explains Yehuda Reiss, CMO at Four Seasons Healthcare Solutions.
“You can’t entice employees with what YOU think are good benefits,” he says. “You have to identify what your HHAs want as benefits.”
Yehuda recommends two strategies:
- Get feedback and input from your employees when you put together your benefits package. Unused benefits are wasted benefits, but top benefits that fit your employees’ needs boost retention and loyalty.
- Be flexible! Even within your employee population, one size won’t fit all. Offering employees a choice in how they receive their benefits can be a huge selling point for recruitment.
Mistake #3 – Not educating employees
Neglecting education is quitting the race inches from the finish line.
Will those employees be happy, engaged, and loyal? Highly unlikely.
Royal Care focuses on employee benefits education and sees more than 90% of employees using their benefits down to the last penny.
Sarah recommends educating employees with two goals:
- Employees should know how to use the benefits cards. Benefits cards are easy to use, but there can be a learning curve. Employees may have questions like:
- How can I create a PIN?
- Where can I use my card?
- Which purchases qualify for benefits?
And so many more! When you teach your employees how to use their cards, you empower them to benefit from their benefits.
- Employees should understand why benefits are better than cash. Cash wages may be more enticing, but the extra money could cause the aides to lose their Medicaid eligibility. Most wage parity benefits are pre-tax and don’t affect reported income.
Make sure your employees are informed. Here are just a few tools you can use:
- Clear informational brochures
- Live presentations at in-services
- Excellent, accessible customer service
- Careful oversight of employee benefits usage
Agencies who educate their employees can see 99% usage rates on benefits cards.
Mistake #4 – Not distributing benefits efficiently
It can be all to easy to fall into this trap:
An agency offers legal benefits. It surveys employees to know what benefits they want. It educates their aides. And then—
The agency doesn’t distribute the benefits efficiently and on time.
The problem is that wage parity accounting is complicated. First, there’s the 3-tiered pay structure of the base, additional, and supplemental wages. Then, the wages are different depending on where in New York the work is done. Each aide requires a complex calculation.
It’s easy to understand why an agency can get behind on benefits.
But employees aren’t interested in excuses. They’re counting on their monthly benefits.
In a bad scenario, employees may become unreliable or quit. In a worst case scenario, they may even report you to the DOH.
“It’s not enough just to offer the best benefits; you have to come through for your employees,” says Yehuda.
Mistake #5 – Choosing the wrong TPA
While you could administer wage parity in-house, that would be a mistake in and of itself.
Assuming you outsourced to a TPA (third party administrator), the question becomes: Which one?
“The quality of your employees’ wage parity experience depends on the quality of your benefits provider,” says Yehuda.
What to look for in a TPA:
- Efficiency – You need your TPA to be on top of its game so your employees receive their benefits on time. (See Mistake #4)
- Knowledge– Wage parity law is constantly evolving. A TPA needs to be up to date on the legalities of the system so you stay compliant. (See Mistake #1)
- Transparency – As an agency, you need to report an exact breakdown of your wage parity spending to your aides and the government. Choose a TPA that reports all information back to you in clear, monthly reports.
- Customer service – Whom can you and your employees turn to when you have questions? Top-notch customer service will clear up potential issues to keep your usage rates robust. (See Mistake #3)
Hiring the right TPA pulls all the pieces together for an outstanding wage parity program: compliant, smooth, and meeting your employees’ needs.
At Melody Benefits, we see that our services save agencies time and money in administrative duties. Plus, our agencies’ high retention and engagement rates keep costs down and productivity up.