What do I need to know to get my employer to offer daycare benefits?

January 26, 2020 8:25 PM

I'm pushing my employer to offer daycare subsidies for parents, and I've told HR that I'll do some research myself. What do I need to know?

I've been involved with a group of co-workers pushing my employer (a medium-sized Oregon company, a bit over a hundred employees and growing) to offer better family benefits. An issue I've particularly taken the lead on is daycare.

I'd like us to offer some kind of subsidy or other help for employees who are parents and need to put young kids in daycare during the work day. HR made vague noises about being receptive to this idea, but admitted they're swamped right now, so I said I'd do some research for them and they suggested that would be a big help. (Yes, I'm aware I might be getting the run-around here.)

What information do I need? Should I contact local daycares and ask them...what, exactly? Is there something else I should look into? Are there issues I need to be aware of?

posted by waffleriot to Work & Money (15 answers total)

Have you heard about dependent care FSAs? They allow you to put pretax dollars into an FSA that you can then use to reimburse yourself for daycare costs. Employers can also make contributions to the account. We just set up ours this year and while we don’t get en employer contribution, using pretax dollars saves us quite a bit.
posted by wilky at 8:29 PM on January 26, 2020 [7 favorites]

Are there issues I need to be aware of?

You should be aware of, and determine responses to, common objections to providing daycare benefits. When this has been proposed at two companies I've been at, the question raised has been, "why should the company provide additional compensation to a subset of workers (those with young children without stay-at-home parents) and not all workers broadly?". This is not meant to discourage you - I think that childcare should be provided by employers if not the government - but it is a question you will have to deal with.

Like wilky, I would encourage you to look into dependent care FSAs, which are quite inexpensive to administer and have significant tax benefits. In particular, if limited money is available, then the dependent care FSA provides tax shelter for up to $5,000 (single child) to $6,000 in expenses every year for effectively no cost to the employer. With a median US family 22% income tax bracket, that is $1100 to $1320 saved per year.
posted by saeculorum at 9:28 PM on January 26, 2020 [4 favorites]

I agree with the above that a dependent care FSA is probably the easiest way to go. Why not take a look at the U.S. federal government's Dependent Care FSA? It's huge, so you can be sure its policies/coverage/standards have been well tested by time, experience, and a ton of lawyers.
posted by whitewall at 9:39 PM on January 26, 2020 [2 favorites]

Helping with day care will tend to increase the diversity in your workforce. Find studies showing that diversity benefits your specific industry.
posted by Candleman at 12:27 AM on January 27, 2020 [3 favorites]

Echoing the others about a dependent care FSA. If you guys already have health bens that have an FSA or HSA option, the service that administers the FSA/HSA will also absolutely have a DCFSA available so it would be a relatively small buy up on a service your HR is already using.

They can be funded by a payroll deduction from you as well as subsidized by your employer.

On the 1-10 scale of how much of a pain in the ass this is to set up, I (HR Ops, I do payroll and bens) rate this a 4.
posted by phunniemee at 4:11 AM on January 27, 2020 [1 favorite]

I just glanced at the 2020 tax table and it looks like 22% applies to incomes over $100,000 for families filing jointly. It seems to me that FSA's, while useful for high earners, don't do as much for lower income workers. From the Tax Policy Center: "Because the federal income tax savings depend upon the employee’s income tax rate (which rises with income), the benefit of using an FSA is greater for higher-income workers." This is about medical FSA's but the same should apply to others.

This might be one benefit to request but I don't think you should be satisfied by it alone.
posted by Botanizer at 5:35 AM on January 27, 2020 [3 favorites]

Another piece is to provide space in a building for a daycare center. I don't know if you all own your building or what. But I have lower cost daycare because its rent is effectively paid by my employer (if I understand right), and because it is downstairs, it is very convenient. The downsides are that the benefit only applies to those who like the daycare provided there, and that space can fill up. Someone who already has a favorite place or can't get in wouldn't benefit from that approach.
posted by slidell at 6:35 AM on January 27, 2020

Response by poster: This is all super helpful so far.

I like the FSA idea but one disadvantage I can think of is there's long wait lists for every daycare in town as I understand it, and this wouldn't help parents with finding placement. Is there any way to do that? Would it involve partnering with specific daycares?
posted by waffleriot at 7:00 AM on January 27, 2020

Response by poster: On slidell's suggestion, we actually do own the building, and are currently starting on renovations, but when I brought up this idea people expressed skepticism that onsite daycare could be feasible for a company of our size. If anyone has evidence I could marshall to suggest that this works for companies in the 100-200 employee range and has benefits the board would appreciate, I'm all ears.
posted by waffleriot at 7:05 AM on January 27, 2020

I'm at a super enormous institution and discussions of this sort* tend to center on benefits as an enticement to get people to come work here and stay working here. It's an issue of diversity and inclusion (my unit agonizes a lot over lack of diversity in hiring and we've undertaken a lot of initiatives that we have control over--rewriting job descriptions with more inclusive language, broadening the locations we advertise, etc...., but big things like benefits that enable people to work for us when they otherwise would not be able to due to life circumstances are out of our hands).

For a small employer, though (I'd consider 100-200 to be pretty small), a full service in-house childcare center might be a big ask. Daycares are expensive to run (insurance, training, facilities that have to meet very precise standards--for a good reason), and you have to have people employed to be there whether there are any daycare aged kids or not, and the caregivers have to be kept around at the correct legal ratio for the age of the children.

I wonder if there's a way that your employer can make a deal with a local childcare center to reserve a certain number of slots for employees of your company. That gets around the waiting list issue without having to spin up a whole entire new daycare.



*We do have a child care center here, but the waiting list is 800 miles long because it's a small center and this is a massive employer, and it's expensive, so it's not really a benefit so much as a convenience that your otherwise totally normal high-end expensive day care is located close by your office, if you can afford that sort of thing, which most employees can't.
posted by soren_lorensen at 8:17 AM on January 27, 2020 [1 favorite]

In addition to the dependent care FSA benefit noted above (which is definitely low-hanging fruit!), one other benefit I've seen among companies is a certain number of days (like 10 per year) of free back-up care, which is administered through a company like Care.com or Bright Horizons.

I think this can sometimes be an easier benefit to get agreement (or maybe reduce resentment) from non-parents, because the business case is that this is a way to make sure that workers aren't out unexpectedly when their kids get sick or school is closed for a professional development day or whatever. I think the perception is that this type of benefit isn't just defraying the cost of "choosing to be a parent" (don't love this phrasing but it's common), but rather something that is helping employees show up at work when unexpected things happen, which seems more palatable.

As a parent, this sort of benefit is also really helpful - when my husband had it, we primarily used it to cover known daycare closures as opposed to sick days, but it was helpful to not pay an extra $150 for a sitter when we were already paying for full-time daycare that sometimes wasn't open.
posted by iminurmefi at 9:22 AM on January 27, 2020 [6 favorites]

Patagonia.

Also Bright Horizons does this.
posted by oceano at 12:28 PM on January 27, 2020

Given the other daycares' wait lists, you could admit people from outside the company at "full" price while giving employees a discount and preference for being admitted. That's how it works here. Memail me if you want the names of some daycares that work this way to get more info on how exactly they've structured the rent subsidy, ower cost to staff, etc.
posted by slidell at 12:42 PM on January 27, 2020

Starting what's effectively an unrelated business that they have no expertise in is an unrealistic ask for a 100 person company. And would very likely be unpopular with employees without children.
posted by Candleman at 5:05 PM on January 27, 2020

With the help of some working mothers at my office with higher rank/more pull, I was able to successfully lobby for employee subsidized back-up care. We ended up going with Bright Horizons as the provider. We now get a set number of days we can use for very discounted care via one of the daycares in the Bright Horizon network or in-home care. It’s not the subsidized full-time daycare working parents deserve, but it’s not nothing and a real lifesaver for sick days, school vacation days, etc. Its also dependent care, so employees without children can use the same benefit to cover, for example, care for an elderly parent.
posted by thewrongparty at 10:47 AM on January 28, 2020 [1 favorite]