The Society for Human Resource Management (SHRM) has written to congressional sponsors of legislation that would exclude the value of employer-provided child and dependent care benefits from an employee’s regular pay for calculating overtime compensation. SHRM expressed its support for moving the measure through Congress.
The chief House sponsors of the bipartisan legislation introduced on July 14, the Empowering Employer Child and Elder Care Solutions Act, are Rep. Elise Stefanik, R-N.Y.; Rep. Josh Harder, D-Calif.; and Rep. Ben Cline, R-Va.
In 2019, the Department of Labor (DOL) updated its regulations to expand the list of employee benefits that could be excluded from regular rate calculations of overtime pay under the Fair Labor Standards Act (FLSA), including onsite gym access, wellness programs and tuition assistance. However, the updated rule did not provide a clear-cut exemption for onsite child care and other child or dependent care payments, instead asserting that routinely provided child care must be included in an employee’s regular pay rate.
According to the SHRM 2022 Employee Benefits Survey, there has been a 50 percent reduction of subsidized child care by employers since the regular rate of pay regulations went into effect.
Caregiving Challenges for Workers
“SHRM is acutely aware of the challenges today’s workers face and our members are uniquely positioned to support workers with caregiving responsibilities,” wrote Emily M. Dickens, SHRM’s chief of staff, head of government affairs and corporate secretary, in a July 14 letter to Stefanik and Harder. “At a time when the lack of access to reliable, high-quality, and affordable dependent and child care negatively affects working families and their employers, this legislation would better enable employers to support workers with caregiving responsibilities.”
The letter also noted that “the pressing need for reliable care affects the daily decisions of workers and inhibits the ability of employers to recruit and retain talent. … The inclusion of dependent and child care benefits, outside of emergency care, in regular rate calculations has discouraged many employers from offering these benefits.”
SHRM’s letter points out that the Board of Governors of the Federal Reserve System has said that caregiving responsibilities continue to inhibit labor force participation. “While the Federal Reserve found that labor force participation for parent caregivers improved with the reopening of schools, they explicitly cited elder care as a continuing barrier to full labor force participation,” Dickens noted. In addition, the Administration for Community Living found that workers with caregiving responsibilities were likely to “reduce work hours, switch to part-time work, or temporarily leave the workforce,” SHRM’s letter said.
The letter concluded, “This legislation would provide our members the flexibility needed to provide workers the necessary support to succeed on the job while fulfilling their caregiving responsibilities.”
Bill Provisions
The Empowering Employer Child and Elder Care Solutions Act would make it easier for employers to offer onsite child care or dependent care benefits by treating them like other employer-provided benefits under the FLSA. Specifically, the bill updates the current list of statutory exemptions to FLSA “regular rate” calculations to add the value of onsite child care or any payments made by an employer for child and dependent care services that do not vary based on hours of work.
The result would be to provide employers that want to support the child and dependent care needs of their workforce the certainty they won’t be liable for 1.5 times the value of the benefits they offer when it comes time to calculate overtime compensation.
Specifically, the bill:
- Reduces the cost and regulatory burden for employers seeking to offer child and dependent care benefits.
- Aligns the treatment of employer-provided child and dependent care with other employer-provided benefits.
- Expands access to child and dependent care without mandates or new federal spending.
“Whether it’s through onsite day cares or stipends to finance the costs of caring for an aging loved one, our bipartisan bill will pave the way for more employers to support the caregiving needs of their workforce,” Stefanik said.
Harder said the measure would “make sure workers … have access to affordable, accessible care for their kids and any other dependents they have at home. Taking care of our loved ones should never have to play second fiddle to making a living.”
Cline added that “ensuring employee access to child care and elder assistance helps provide peace of mind to those facing this challenge. Current regulations make it nearly impossible for an employer to offer child or dependent care assistance to their workers. This bipartisan bill eases this regulatory burden to the benefit of employers, employees and dependents.”
The bill will likely be referred to the House Committee on Education and Labor and, when a Senate companion bill is introduced, to the Senate Committee on Health, Education, Labor and Pensions.
