LeadingAge Magazine · September-October 2019 • Volume 09 • Number 05

Beyond Pay and Benefits

September 17, 2019 | by Gene Mitchell

Workers’ personal stressors, related to housing, childcare, transportation, or other challenges, can have a negative impact on their careers and the workplace. What can employers do to help?

Workers who are burdened by a lack of affordable housing, a lack of childcare options, intractable family issues, or any number of other challenges away from the workplace will probably see those burdens interfere with their work life, possibly threatening their ability to keep a job.

A growing number of employers, including many older adult services organizations, are recognizing that they must offer help for such employees—help beyond the usual pay and typical benefits.

One proxy for this trend is the growth of employee assistance programs (EAPs), typically provided by third-party companies that can offer confidential help, often by referral, for a variety of personal, financial, substance abuse, or emotional issues.

The U.S. Office of Personnel Management traces the beginning of employee assistance programs (EAPs) to the 1940s, when they were first designed to address misuse of alcohol by workers. By the 1950s, programs addressing mental health were added, and in the 1970s EAPs were mandated for federal agencies. At the same time, larger employers were beginning to put EAPs into place, and an industry of employee assistance firms began to develop.

According to data from the Families and Work Institute, the number of employers offering EAPs has been rising steadily in recent years. The Institute’s data show that 74% of all employers were providing EAPs in 2012, up from 46% in 2005. (That figure was skewed by large employers, those with 1,000 or more employees; 93% of them were offering such programs.) A 2016 report by SHRM (the Society for Human Resource Management) showed the overall number of firms offering EAPs to be 77%.

We talked to several organizations involved in helping workers solve challenges in their personal lives, for insight into what they offer and how they work.

An EAP Helping to Reduce Barriers

“The core of our work is resource navigation,” says Milinda Ysasi, executive director of The Source, an EAP based in Grand Rapids, MI. “We frame [the problem] as something in a person’s life creating anxiety or uncertainty. It can be around housing, transport, childcare, financial instabilities, [meeting] goals like purchasing a home, or going to school.”

The Source was formed in 2003, and originally worked with manufacturing companies in the Grand Rapids area. It now has 21 members in a variety of fields, including long-term care and acute care providers.

“The people we work with don’t make a ton of money, and we want to eliminate their barriers to work, and also help them to move up [in their careers],” says Ysasi. “We have standing monthly site visits with all employers. We think of ourselves as kind of an urgent care employee benefit.”

When contacted by a client worker, The Source begins with an assessment, asking personal questions to get a picture of the individual’s issues. The worker can visit The Source offices, or a meeting can be held at the workplace.

“The people we work with don’t make a ton of money, and we want to eliminate their barriers to work, and also help them to move up [in their careers]. We think of ourselves as kind of an urgent care employee benefit.”

“We can look across the entire community,” says Ysasi, “and we work with the workforce development board, government agencies, and others.” She says her organization looks for employers who have a strong commitment to improving the employment experience. “We have turned away members who don’t have a strong culture,” she adds.

The Source partners with more than 45 other nonprofits in western Michigan to offer a variety of services. Its staff also does presentations at workplaces, and offers classes in financial management.

“The people we work with aren’t bad at [handling] money, they are very good,” Ysasi says. “They make ends meet every month. We look at good practices like focusing on savings, and planning home ownership. In some cases, we’ll help them open a checking account, or get reduced interest on a used vehicle purchase.” The Source works with a local credit union to help clients improve their credit.

Ysasi said her organization had about 1,200 unique clients in 2018, and estimates that 12-15% of her clients’ employees use the services. Funding for The Source comes mostly from the member employers (80%), but it does receive philanthropic support, including grants from the W.K. Kellogg Foundation.

“I think this model can be applied to most employers,” Ysasi says. “We look for leader buy-in, and a cultural dynamic where an employer wants to be a partner.”

Making Home Ownership Possible

While homeownership is a goal for many low-income workers, it isn’t always within reach. Organizations like the Lancaster Housing Opportunity Partnership (LHOP), in Lancaster, PA, are designed to help make it possible.

“What gave rise to us in [1994] was a group of officials from the county and city and other municipalities, along with some other organizations, that got together to develop a housing market study,” says LHOP CEO Ray D’Agostino. “At the time, we were the #1 or #2 fastest-growing county in the state. A subset of that group got together to decide what to do about [housing affordability], and it gave rise to LHOP.”

A few years ago, LHOP, a U.S. Treasury-certified Community Development Financial Institution (CDFI) serving 8 counties in southeast Pennsylvania, created a revolving loan fund to assist the community in creating affordable housing opportunities. However, it has been providing down payment and closing cost financial assistance since its inception.

Banks, D’Agostino says, are chartered in a variety of ways and answer to regulators at different federal and state agencies.

“The regs can have a stymieing effect on capital going into stressed neighborhoods or into projects that seem too risky—that banks might not want to get involved in,” he says. “It may be that banks can’t do the lending in ways that the project needs without falling out of regulatory compliance.”

CDFIs aren’t regulated in the same ways that banks are. “We can do things banks can’t do or don’t want to do,” says D’Agostino. “Banks are able to provide capital and get some credit for it. We’re able to provide low-cost, low-interest flexible capital to get projects done for home ownership or rentals.”

According to Miriam Soto, director of lending, LHOP’s loan fund stands at almost $6 million. The organization offers a variety of programs aimed at helping first-time home buyers, investors in distressed properties, and employers who want to help their staff become homeowners.

Under LHOP’s Employer Assisted Housing (EAH) program, an employer will offer a benefit, typically of about $5,000 per participant, in the form of a no-interest loan that can be used for a down payment or help with closing costs. The loan is forgivable over a period, which the employer chooses, but which is typically 5 years, as long as the worker remains with the employer. If the employment ends, or if the property is sold, before the end of the 5 years, any remaining balance must be paid by the homeowner. The IRS requires that any portion of the loan that is forgiven must be treated as taxable income to the worker.

LHOP staff will go to the workplace to make a presentation to employees. To be eligible, workers must take a first-time homebuyers’ class. Those who are not “bank ready” will learn about what lenders look for in approving mortgages. Then, eligible workers will attend an 8-hour class in which bankers, realtors, and insurance agents will help prepare participants for what to expect.

Employers who participate in the EAH program, which operates primarily in Lancaster County, agree to have the necessary funds set aside, to give LHOP the opportunity to present to their employees, and to manage the cutting of the checks. LHOP prepares all materials and documents. D’Agostino says it is meant to be a turnkey program, and though it is only a few years old, it hasn’t had any participants who ended their employment and had to pay back the loan so far.

Financial Help in a Crisis and Earned Wage Access

Otterbein SeniorLife, a health and human services ministry based in Lebanon, OH, has a long-standing program to help staff deal with financial emergencies, and has recently set up an earned wage access program that gives employees a way to receive a portion of their wages in-between pay periods.

Otterbein’s PIC (Partners in Caring) fund offers grants to employees needing funds to deal with catastrophic or emergency situations. Lois Mills, vice president and chief people officer for Otterbein, says the PIC is funded by employees.

Staff can “deduct a buck” from every paycheck, and some locations also set up fundraisers as well. A worker in distress can contact Otterbein’s EAP, fill out the application form for the PIC fund, and then it goes to a committee that includes other staff members. Any grant given is paid directly to the landlord, funeral home, or whatever other vendor must be paid by the employee. The whole process is confidential, and Mills says Otterbein typically gives out about $25,000 per year.

The earned wage access program, provided by PayActiv, has been offered at Otterbein for about 1 year. Mills says 20% of the staff has signed up for the program, and about 75% of them have used it so far.

The earned wage access benefit operates at no cost to the employer, and employees may enroll for free. They pay nothing unless they use the service. The program allows workers paid on 2-week pay schedules to access unpaid wages up to 3 times per pay period for a flat $5 fee. Workers on 1-week pay periods may do so up to 2 times for a flat $3 fee.

According to Sabina Bhatia, chief customer officer for PayActiv, an employee can have access to up to 50% of her earned but unpaid wages, not to exceed $500 per pay period. The service also allows workers to pay bills with the system. PayActiv funds the transactions, and is reimbursed via a payroll deduction.

“These funds are used to avoid predatory payday loans, and 31% [of our clients] are using it for that purpose,” says Bhatia. “Another 31% use it to avoid overdraft fees, or late fees due to bills they can’t pay on time.” PayActiv also offers financial counseling, financial literacy resources, and savings tools on its website.

Editor’s note: See future issues of LeadingAge magazine for more about how employers can help staff navigate life challenges that impact their ability to work and build careers. If you have adopted creative programs to do so, we want to hear about it. Contact Gene Mitchell at gmitchell@leadingage.org or 202-508-9424.

Gene Mitchell is editor of LeadingAge magazine.