A Benefits Resolution

After tackling the themes of employee empathy in 2016 and how to use benefits to attract and retain workers in 2017, I now want to focus on issues that go against the grain of how I’d like to see businesses address employee benefits for their workers.

I’ve never been a person who makes New Year’s resolutions. I take after my father in that and many other regards. I think both of us fall into the camp of wanting to place our energies around commitments we can successfully achieve, rather than renew, every year.

That said, I found myself being reflective in the days and hours that led up to the stroke of midnight on Dec. 31–and, yes, I waited for the ball to drop before going to bed.

During this year’s reflective period, I paid more attention to the framework I seem to follow. Much like an HR executive’s strategic-planning process, I found myself assessing what I want to continue to do, what I need to alter and what I’d like to start or stop doing. The only difference between this process and making actual resolutions is that I limit my attention to things I can get done during the next 12 months.

This column was one of my reflection points during the last week of the year. I enjoy the challenge of taking on a new topic or issue every four weeks. I want to keep doing that. The last two years I chose a theme to revolve my columns around. In 2016, I focused on employee empathy, and in 2017 I chose how to use benefits to attract and retain workers. It was a useful way to frame my writing, but I’m going to let go of that technique for now.

One idea, however, returned to my consciousness over and over again: I want to spend part of 2018 writing about topics that make me uncomfortable, issues that go against the grain of how I’d like to see most businesses address employee benefits. If I can objectively consider and share a topic that doesn’t necessarily line up with my point of view, maybe I can expand the way I think about the workplace and how we treat the people who work there. And, perhaps, that would be useful to readers.

Here’s an example of what I mean.

There was a New York Times op-ed piece written in the last days of 2017 that addressed moving from an at-will employment model to a just-cause system (the principle that an employee can be fired only for a legitimate, serious, work-performance reason). Just cause is a basic tenet in most union contracts, but since only 6 percent of private-sector employees are in unions, the majority of us participate in at-will work settings. This proposition resonated with me because when I first started to work in the for-profit sector, I was asked by my manager to find a way to get rid of an employee most people did not like. I learned many things during this uncomfortable process, including that you can basically find a way to get rid of even the best employee. Fortunately, this situation was resolved in the best way possible for all parties, including the subject of my focus. But you can see why my first column of 2018 might have been about the advantages and disadvantages of a just-cause workplace.

An article in the economy section of the Times appeared on New Year’s Eve that proposed that the new tax law could be a boon to contract workers, and could also open the door for employers that want to reduce their payroll costs. I decided this was an issue I should investigate because some HR leaders may be spending time right now exploring how to take greater advantage of the gig economy.

Let’s start with the tax law. Sole proprietors, S corporation shareholders and partners in a partnership are entitled to a deduction equal to 20 percent of their allocable share of business income. This deduction comes with a caveat. Generally, the deduction cannot exceed 50 percent of your W-2 wages paid by your business. (The benefits of this tax provision being to phase out at taxable incomes above $157,500 for single people, or $315,000 for couples.)

So, if you’re a gig worker whose income is above the national median, this is an option worth exploring.

Some labor experts, however, believe this new tax provision reinforces a current trend for some employers of turning employees into contractors. This trend can hurt lower-paid workers more than others since they lose their employee benefits and job-protection policies that come with employment, such as unemployment insurance, workers’ compensation, workplace anti-discrimination protection and coverage by state and federal minimum-wage and overtime laws.

There are complications to this approach when companies control critical features of the working relationship and hold most of the economic power. Indeed, businesses such as Uber and Lyft have long been criticized for misclassifying their drivers as contractors and spend a great deal of time in court defending their position.

As HR executives, I believe your recommendations to your company on how to effectively use contractors and gig workers come down to the type of worker you are focusing your efforts around and the kind of workplace environment you want to establish. Done correctly, moving more employees into contractor roles removes your employee-benefits obligations along with tracking a host of workplace-compliance requirements–and that could be a decision that is good for certain businesses.

Carol Harnett
Carol Harnett is HRE’s Benefits columnist. She is a widely respected consultant, speaker, writer and trendspotter in the fields of employee benefits, health and productivity management, health and performance innovation, and value-based health. Follow her on Twitter via @carolharnett and on her video blog, The Work.Love.Play.Daily. She can be emailed at hreletters@lrp.com.