Pay student loan or join 401(k)? Help millennials do both

What if there was a way to help your employees repay their student loans and increase your company’s retention rates?

Because student loan debt is so important to younger employees, companies that offer relief in this area will have a big leg up on the competition and will likely be able to bolster dwindling retention rates.

A growing number of employers, including Estée Lauder, Pure Insurance and Carhartt, have added student loan assistance to their benefits packages this year.

Still, only 4% of employers currently offer some form of student loan assistance, according to a SHRM survey. But a student loan benefit is the “hottest employee benefit of 2018,” according to Forbes.

A 401(k) twist on student loan aid

Now, with a new IRS ruling, there’s a way for employees to repay their student loans and share in your company’s 401(k) plan. The IRS approved one company’s plan that allows employees to set aside 2% of their salaries toward student loan repayment.

This IRS ruling only applies to the Illinois-based health company Abbott, but it opens the door for other employers to make the same request.

Here’s how it works: Employees make a student loan payment of at least 2% of their pay and the employer makes a matching contribution equal to 5% of employee pay into their 401(k) plan.

3 ways employers are stepping up

Employers may want to consider applying for their own IRS letter, or take guidance from what’s working for other employers now:

1. Offer to make a monthly student loan payment. Many employers pay a specified monthly amount – usually $50-$100 a month (with a cap of roughly $10,000) – to help pay employees’ loans.

There’s now an emerging group of third-party administrators offering student loan programs, such as Fidelity’s Student Debt Employer Contribution program.

One employer, 3Q Digital, has recently begun offering a $50 per month student loan benefit, and the results so far have exceeded its expectations. “Around 25% of our employees signed up for the benefit and we’ve seen our retention rate increase from 57% to 78%,” said Laura Rodnitzky, 3Q’s VP of people.

2. Provide student debt assistance. Student Loan Genius teams up with companies to offer employees one-on-one advice to help them navigate a myriad of repayment scenarios.

Los Angeles-based VCA Inc. began offering this benefit in 2016 because “debt prohibits [employees] from home ownership and saving for the future,” said Don Cervantes, VCA’s director of benefits. So far, 583 of its 4,000 employees have enrolled.

Other companies that offer this type of assistance program include Tuition.io and Gradifi.

3. Use the benefit to attract top talent. Since 2017, Prudential Financial has given new employees hired through its campus recruiting program up to $5,000 to help pay off student debt, after one year of employment.

Industry experts expect that by 2019, there will be a 24% increase in the number of companies offering student loan assistance as a benefit.


Oregon Workplace Labor and Employment Law Posters

Oregon workplace labor and employment law poster chart.


Top 7 Benefits Articles for 2018

As the year winds down, here’s a look back at some of SHRM Online’s most-read articles about employee benefits this year, describing developments and trends that will have continuing impact in 2019.

IRS Offers Relief for 2018 Taxes on Parking Benefits

The IRS clarified how employers can calculate the tax on qualified parking benefits that took effect this year. The guidance also provides some relief for tax-exempt organizations, which now must pay unrelated business income tax for parking benefits.

Apple Latest Tech Company to Expand U.S. Operations, Add Jobs

​Apple is the latest tech giant to announce plans for a major expansion of its operations. It took a less hyped approach than Amazon in its search.

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Why the Cleveland Clinic’s $15 Minimum Wage Matters to You

Earlier this week, the Cleveland Clinic committed to raising the minimum wage for its employees to $15 an hour by January 2020.

According to its CEO, Dr. Tom Mihaljevic, its all about making sure employees feel respected and valued … and attracting and retaining the best employees.

As the largest employer in Northeast Ohio and the second largest employer in the state of Ohio, Cleveland Clinic has a responsibility to lead the way and help shape the future of health care and the health care workforce.…

Every caregiver’s role is important. Increasing our minimum wage demonstrates our commitment to our employees and their families, as well as the community and our patients. It is a reflection of who we want to be as an organization.…

Ultimately, we want to continue attracting the best and brightest caregivers in all roles. We want to remain an employer of choice and give back to the caregivers who do so much for the patients we serve at Cleveland Clinic. Our goal at Cleveland Clinic is to be the best place for health care and the best place to work in health care. To reach that goal, we will continue to align caregiver pay with other top employers in the markets where Cleveland Clinic operates … .

The clinic joins other large employers — Amazon, Walmart, Target, Disney Parks, McDonald’s — in adopting a $15 minimum wage.

Which is great for them and their employees, but why should this matter to you and your business?

Because by raising their minimum wage, you will have to do the same. Or you will if you want to attract and retain quality employees. These employers have moved the needle on the issue of the minimum wage. To compete in the job market against those offering a $15 minimum wage, other companies will have to match, or risk losing quality employees to higher paying employers. Thus, over time, the $15 minimum wage will organically spread.

This is not to say that this increased minimum wage is not without problems of its own. For example, if you raise your minimum wage to $15 an hour, what happens to all of those employees already earning $15 an hour? To the employee, hired 10 years ago at $8 an hour, who worked his butt off for the past decade, and, through a series of promotion and raises, earned his way up to $15 an hour? Will you provide a proportional raise to keep pace? And, if not, a $15 minimum wage will convert those millions of workers into minimum-wage employees. And, for better or for worse, there is a certain stigma with being classified as minimum wage — especially if you’ve worked hard for years not to be minimum wage.

These are not easy issues with easy solutions. However, the $15 minimum wage train has most definitely left the station, and there is no going back. The question is not if you will adopt it, but when, and how.

The post Why the Cleveland Clinic’s $15 Minimum Wage Matters to You appeared first on Workforce.


Recruiting Scams Are on the Rise

Online recruiting scams have re-emerged to prey on job seekers and employers. The Better Business Bureau tracked more than 3,000 recruiting scams in the first 10 months of 2018.

Congress Passes Bill to Make Lawmakers Financially Liable for Harassment

The U.S. Senate and House of Representatives unanimously passed a bill Dec. 13 that would require members of Congress to pay for sexual-harassment settlements out of their own pockets. Some had feared such a requirement would discourage public service, but it got both chambers’ stamps of approval as needed to deter harassment.

Trust is the key to great company culture: 4 ways to build it

Every employer wants to have a strong company culture where workers feel happy and comfortable and are ready to work each day.

And the secret to achieving that? Trust. A recent study from Harvard Business Review found those who work in a high-trust environment have 74% less stress than those who don’t.

Some other benefits the study discovered include more energy, higher levels of engagement, fewer sick days and less burnout.

Openness and communication

Trust doesn’t just materialize overnight – it’s something that needs to be built purposefully. And Jeff Yurcisin, president of Zulily, shared steps he followed to achieve a trusting environment.

1. Be transparent. Always communicating openly with staff is a surefire way to gain their trust. An open-door policy lets employees know all thoughts and questions are welcome. Holding regular meetings to keep everyone in the loop helps to do this as well.

2. Be clear. A lot of workers are unsure of their companies’ goals. Make sure your employees know exactly where the company is heading and why, and how everyone helps achieve these goals.

3. Keep your promises. Nothing destroys trust more than not following through on something. If you tell an employee you’ll look into getting them help on a project, make sure you keep your word. This will emphasize reliability at work.

4. Get to know everyone. Getting familiar with people’s personal and professional goals will let your staff know you care about them on a human level. Being genuinely interested in your people will naturally foster trust.


App-roaching the Bench: Providing Legal Services Through Technology

In this day and age, virtually every service provider has adopted some form of technology to assist clients and customers. Why should the delivery of legal services be any different? Scott Rechtschaffen, Chief Knowledge Officer at Littler Mendelson, and Kevin Mulcahy, Vice President of Education and Community Programs at Neota Logic, recently served as adjunct professors at Cornell Law School to teach students how law firms and tech companies are bridging the law-technology gap.