Absence and Wellbeing: Challenges and Opportunities for the Restaurant Sector

Our previous articles in MRM have centered on medical plan strategies for restaurants, how to build plans that are attractive to the workforce and manage those inherent costs. This article focuses on current trends in the time-away space and employee wellbeing. In addition to cost considerations, efforts to structure these types of benefits are complicated by compliance requirements and the challenge of communicating and promoting a positive employee experience.  As a result, many restaurants have not seen the value of adding such programs. Still, in the race for talent, could these types of benefit programs help differentiate your benefit package?

Time-Away Benefits 

Today’s employee-driven market, complicated by COVID and the Great Resignation, has led many restaurants to expand their time-away benefits.   Programs can range from expanded paid time off for the management groups down to parental leave for the crews.  Today, since the competition for an applicant isn’t just the restaurant down the street, but can be the fulfillment center across town or a non-local employer offering work-from-home positions, paid time-off is one way to differentiate your benefit offerings.  As these benefits become more prevalent, applicants are beginning to look for them.

Given the higher turnover rates in restaurants, coupled with health and safety concerns highlighted by the pandemic, one area of differentiation can be offering paid sick leave, or enhancing a mandated state or local sick/disability leave.  The advantage of this type of program is that it will have a smaller financial impact as compared to vacation and comprehensive paid time-off (PTO) plans because the latter create a balance sheet liability. 

Additionally, due to the spotlight COVID has shone on caregiving and the challenges confronting working caregivers, many employers have expanded allowable uses of sick leave to cover caregiving, recognizing the need to balance work with providing care for their families. This also helps organizations being viewed as “family-friendly” and an “employer of choice” when attempting to attract and retain talent. Finally, since sick leave is accrued based upon hours worked, there is less risk of the benefit being perceived as an inequitable offering.

Wellbeing 

I recently walked into a restaurant and heard a manager say to an employee coming on to their shift, “thanks for showing up for work!” Today’s workforce is burned out.  On the job pressure could be coming from COVID, being under-staffed or rude customers.  Outside of work, pressure could be due to caregiving concerns or school or financial pressures. All of these factors can negatively impact overall mental health. 

To holistically improve employee wellbeing, it’s important to focus on the individual components of wellbeing: emotional, social, physical and financial. While having a comprehensive wellbeing strategy is the most impactful, implementing or even leveraging an existing Employee Assistance Program (EAP) is a good first step.   Many EAP’s often have embedded programs to assist with the various pillars of wellbeing.  While not expensive on a PEPM basis, in the restaurant space, the challenge is to whom is it offered.  For example, employers may choose to offer EAP programs plans to only those in the medical plan, only full time employees, or all full time and part-timers who have been with the company for 90 days.  While expanding eligibility to these programs will impact cost, less expensive plans may have limited engagement.  A 2020 study in the Harvard Business Review estimated that depression costs U.S. businesses $44 billion annually in lost productivity1, so not addressing your employees’ mental health can be costly. 

In addition to wellbeing and EAP programs, in the vein of expanding covered reasons in Sick Leave policies, employers are allowing sick time to also be used for mental health needs versus only covering physical ailments.

Compliance 

While it’s easy to debate the value of time-away and wellbeing benefits, legislative and compliance considerations are forcing action for many restauranteurs. Mandated absence and leave programs have exploded over the last several years at both the state and local levels. As of January 2022, nine states and the District of Columbia have passed Paid Family Leave (PFL) programs and at the time of this writing, PFL legislation has been proposed in eleven more states. Additionally, many states and cities continue to amend existing Sick/Safe Leave laws due to COVID.  

Since the restaurant industry is often multi-state, this adds a significant burden to day to day administration.  While some employers continue to manage leave internally, many employers are leveraging vendors and third-party administrators (TPAs) in the leave administration space to assist with absence, which improves their ability to stay apprised of changing regulatory requirements and remain compliant. 

Employee Experience

The ROI of enhancing benefits is wasted if employees don’t understand what is being provided.  In regards to leave, vital to the employee experience is ensuring that the interplay of employer practices and applicable leave legislation is clearly communicated to employees when an employee will be out on a leave of absence.  This communication should include eligibility, qualifying leave events, covered relationships for leaves and benefit provisions, such as benefit amount, benefit durations, any elimination periods, as well as job protection and overall benefit continuation provisions. For Workers Compensation and Short Term disabilities, policies should also include return to work guidelines.  This is challenging for restaurants since benefits may differ for managers and crew and employees frequently change positions and locations.  Frequent regulatory changes and the challenge of providing an accurate and employee-centric message requires regular review of and refreshing of policies and procedures. 

What’s a restaurant to do?  

 We’ve identified four main themes in the absence and leave space for your consideration:    

1. Time-Away benefits – Employees are asking about (and expecting) these types of benefits. Consider being a leader in this space rather than a follower, it might just help with recruitment and retention too.
2. Wellbeing – While there is a cost to offer these programs, focusing on employees’ mental health and wellbeing can result in less absenteeism and presenteeism, all which favorably impacts your bottom line. 
3. Compliance – The absence rules are frequently changing; restauranteurs must stay abreast of the rules and develop administrative solutions
4. Employee experience – While managing leave uniformly is an aspect of compliance, it also increases the employee experience when a leave occurs.  Additionally, properly communicating and educating employees on their rights and benefits assists with a better leave experience, during what is generally a stressful time.