{"id":3766,"date":"2022-01-11T22:01:07","date_gmt":"2022-01-11T22:01:07","guid":{"rendered":"https:\/\/melodybenefits.com\/?p=3766"},"modified":"2022-06-08T20:45:17","modified_gmt":"2022-06-08T20:45:17","slug":"cash-in-lieu-of-wage-parity-benefits-5-reason-not-to","status":"publish","type":"post","link":"https:\/\/melodybenefits.com\/cash-in-lieu-of-wage-parity-benefits-5-reason-not-to\/","title":{"rendered":"Cash in Lieu of Wage Parity Benefits: 5 Reason NOT To"},"content":{"rendered":"
In a complicated business, the cash vs. benefits decision doesn\u2019t have to be complicated, too.<\/span><\/p>\n Since the <\/span>Home Care Worker Wage Parity Act<\/span><\/a> of 2011, New York home health care agencies must pay a minimum base pay of $15 an hour to home health care workers plus an additional $3 – $4.09, depending on location. Agencies can choose whether to pay the additional amount in <\/span>employer benefits or wages<\/b>.<\/span><\/p>\n Some agencies struggle with the decision. Paying in wage parity benefits<\/a> is a program unto itself and takes time and attention. Most businesses need to hire a third party company to manage those benefits<\/a>. Cash benefits for employees may, therefore, seem easier and cheaper.\u00a0<\/span><\/p>\n But Shaya Sternhill, Melody\u2019s Head of Marketing and Business Development, explains that reality is just the opposite.<\/span><\/p>\n <\/p>\n Here\u2019s why giving cash in lieu of benefits is almost never a good idea:<\/b><\/p>\n It\u2019s simple math, says Shaya.\u00a0<\/span><\/p>\n Every dollar you pay your employees is subject to payroll taxes, such as FICA, worker\u2019s comp, unemployment taxes, and more. Average total cost is 15%.\u00a0<\/span><\/p>\n Those taxes apply to wage parity cash benefits, too. In NYC, for example, if you\u2019re paying your home health care workers in cash only, that\u2019s $19.09 per hour. ($15 base pay + $4.09 wage parity.) The bottom line is you\u2019ll be paying approximately $2.86 an hour in payroll taxes\u2014 a whopping15% of $19.09.<\/span><\/p>\n Most wage parity benefits, however, aren\u2019t taxed. Going back to our NYC example, let\u2019s say you\u2019re paying $15 per hour in cash and $4.09 in medical, dental, and dependent care benefits. In this case, you\u2019d only pay the 15% taxes on the $15 base.<\/span><\/p>\n Your net savings? $.61 per hour. That doesn\u2019t sound like much, but when you multiply 61 cents by an annual average of 1560 hours, <\/span>you save $951.60 per employee per year<\/b>!<\/span><\/p>\n Net savings for a 1000-employee agency paying wage parity benefits can be close to $1,000,000 annually!<\/span><\/p>\n Multiply $951.60 by 100 or even 1000 employees, and your savings reach 5 or 6 digits.<\/span><\/p>\n <\/p>\n Building on point #1, Shaya adds that offering benefits does more than save you money. Benefits can directly impact your cash flow, too.<\/span><\/p>\n How? Your aides work this week and get paid at the end of next week. In other words, you need enough positive cash flow to pay wages weekly or bi-weekly.\u00a0<\/span><\/p>\n Unfortunately, your agency doesn\u2019t get reimbursed that quickly. Many agencies work with multiple <\/span>MLTC<\/span><\/a> (Managed Long Term Care) systems to pay them. Agencies often have to wait for their payments, creating a crunch when they need to pay their employees more quickly and more often.<\/span><\/p>\n Wage parity benefits break this cycle because they are paid out once a month. \u201cReducing your weekly cash wages responsibility gives your agency breathing room,\u201d says Shaya.\u00a0<\/span><\/p>\n <\/p>\n Once again, some basic arithmetic shows the benefits of benefits.<\/span><\/p>\n An HHA who works more than 40 hours a week is entitled to <\/span>overtime pay<\/span><\/a> at time and a half. Looking at an NYC example again, if an agency pays aides the full $19.09 in cash, time and a half is $28.64.<\/span><\/p>\n But wage parity benefits aren\u2019t subject to overtime regulations. So if an agency pays $15 cash and $4.09 in benefits, only the $15 is multiplied. The total overtime pay adds up to only $26.59.<\/span><\/p>\n That’s a $2.05 savings per overtime hour<\/b>. And we saw in the previous examples that the savings multiply quickly.<\/span><\/p>\n As Shaya says, \u201cPaying overtime is a killer for home health care agencies<\/a>.\u201d Paying wage parity in benefits can help contain the ballooning cost of overtime.<\/span><\/p>\n <\/p>\n Consider these available wage parity benefits<\/a>:<\/span><\/p>\n <\/p>\n Giving wage parity benefits is giving essential benefits to your employees.<\/span><\/p>\n Employees without phone service can miss important agency calls. Without money for transit, they can\u2019t come to work. Aides without proper health insurance may take more sick leave. Moms without childcare\u2014you get the idea.<\/span><\/p>\n Employees getting wage parity benefits have the tools to succeed at work. By setting up your HHAs with benefits, you set up your business for success, too.<\/span><\/p>\n <\/p>\n Shaya explains that aides like wage parity benefits for a few reasons:<\/span><\/p>\n <\/p>\n Keeping your employees happy is always good for business. <\/span>High retention and engagement rates save an agency time and money. <\/b>They give you a competitive edge in an industry plagued with record-breaking churn rates<\/a>.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":" Should you pay wage parity in cash vs. benefits? Here\u2019s why benefits can save you thousands of dollars and help you retain home health care workers.<\/p>\n","protected":false},"author":1,"featured_media":5422,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","_vp_format_video_url":"","_vp_image_focal_point":[],"footnotes":""},"categories":[16],"tags":[],"acf":[],"yoast_head":"\n1. Wage parity benefits save agencies money on taxes<\/span><\/h3>\n
2. Benefits are better for cash flow<\/span><\/h3>\n
3. Cash in lieu of benefits costs you more in overtime<\/span><\/h3>\n
4. Taking care of your employees is good for your business<\/span><\/h3>\n
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\n<\/span><\/li>\n<\/ul>\n5. Employees like wage parity benefits<\/span><\/h3>\n
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