Contractors currently make up 20% to 30% of their workforce and that number is rising. Most contractors work through large staffing companies who maintain their pool of contractors by offering health care benefits that rival or exceed smaller companies. The end result? A contractor could be receiving better benefits than an employee
Many businesses have found that staying competitive requires them to hit hard on flexibility – the adage of being “fast, flexible and agile” has many companies turning to contractors to staff areas that flex – like sales, legal, IT, and administration. A recent study by Randstat found that “non-traditional workers … currently make up 20% to 30% of their workforce.” And that number is rising. Most contractors work through an agency, not bill a company directly. Some large staffing companies, like Beacon Hill Staffing Group, maintain their pool of contractors by offering health care benefits that rival or exceed smaller companies. The end result? A contractor could be receiving better benefits than an employee.
A survey conducted by the Bureau of Labor Statistics in 2018 found that the average cost of employee benefits to employers is $11.60 per hour.
Most employees only think of benefits as health care and a 401(k) or similar kind of retirement account. They may not perceive optional benefits, like vacation time, meals, gym memberships and any employer contribution to a health plan, like an HSA or FSA as a benefit. Human Resource professionals cite health care benefits as the key perk that keeps employees from leaving.
So why would a contractor have better benefits than the employees? It may seem like one company is “better” with their benefits package to employees. Employers, on the other hand, know that employee benefits packages are influenced by a variety of factors, including: location, industry, size of the workforce, health plans offered, and the overall health of the workforce population. A company that relies on contractors to help with the flexible areas of their staff may have less employees than a staffing agency. So while a fast and flexible company may have 200 employees, 60 of which are contractors, the contractors may work for an agency that has 60,000 employees in the region. That fact might not be readily apparent to an employee.
How can plan sponsors and employers better explain their benefits packages? One way may be to work through benchmarking. Some sources for benchmarking include the Bureau of Labor Statistics, the Society for Human Resource Management and the International Foundation for Employee Benefits. Employees may not understand how much employers pay or contribute to offer benefits, such as retirement plans or health care, which may be mandatory. Benchmarking can show how your company compares to others in the industry in terms of how much you spend per employee. Comparing industry to industry is essential, say some experts, as benefits paid in the education industry differ widely from those in sales (nearing $5.00 per employee as an industry average in education as compared to $2.00 per employee as an industry average for sales).
Other experts, like Karl Ahlrichs, suggest making sure that your communications about health care fit your audience. He urges employers and sponsors to make sure you speak your employees language, figuratively and literally. He also suggests getting away from PowerPoint presentations and focusing on conversations instead. Some suggest using vidoes and YouTube like presentations to get at younger workers who may be more familiar with that platform.
Other experts suggest keeping your message short and blunt. Focus on the impact to the employee rather than the details of the policy changes (while also providing those in writing to employees). Some suggest adding impact to written words by making them visually appealing across platforms (smartphones and tablets). Other suggestions include imbedding links with detailed information into your email communications, rather than heaving details on employees.
Before leaping into the unknown, we recommend a thorough examination of your plan. Because we are experts in the field, we know the marketplace and know what your existing vendor is capable of offering. Through this examination, we can help you optimize the service you receive.
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