Child care programs can reduce employee sick time, increase productivity while at work, and attract potential new employees. It is estimated that one out of every three sick days taken on the job are as a result of a sick child, not an illness afflicting the parent. Good employees may also be forced to leave if child care becomes a problem, so it is usually in the company’s best interest to offer a quality child care program for its staff. Many child care programs are tax-deductible for companies, so it might not even cost that much to offer this benefit to their employees.
Of course, the most convenient child care program for employees is an on-site daycare center. Employees can visit their children on breaks and even eat or play together on their lunch breaks. On-site child care programs reduce commuting time and cut back on employee tardiness. The day care facilities can also be used by the company as a fringe benefit to attract top employees, especially if competitors do not have such a program. The drawback to on-site child care is that it is expensive to operate and usually requires the company to hire additional employees and purchase extra insurance. The initial construction costs of the facilities may also make this unrealistic for smaller companies.
A child care consortium is a way for several small businesses to pool their resources to provide child care programs for all of their employees. The companies get together and purchase a number of slots at a local off-site child care center. These slots are then made available to all employees of any of the consortium’s companies on a first-come, first-serve basis. The consortium can usually get a volume discount by purchasing a large number of slots upfront and they are not at risk of losing money on unused slots because another company’s staff will use them.
If the employer is unable or unwilling to provide a child care program in its facilities, there are also outside referral agencies that can be contracted by the company to assist employees. Sometimes an employee discount can be worked out with participating child care facilities. Even if there is no price break, it is still generally more convenient to have all of the research done for you when choosing a child care program for your child.
Another way a business can offer its employees a child care program without providing on-site services is to sponsor a salary reduction plan, sometimes called a flexible spending account. The employee is able to defer some of their income into this account without being taxed on it. The money is then used during throughout the year to reimburse them for any qualifying child care expenses they have incurred. This ends up saving the employee money because they are using pre-tax dollars to pay for their child care program. Most flexible spending accounts require that the employee forfeit any contributed money not used during the year, so be sure to accurately estimate your child care costs for the year.
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