It’s been quite the roller coaster ride for the restaurant industry over the past few years. From a quick adjustment to drive-thru and delivery that accelerated business and profits at the start of the pandemic to the great resignation that leaves restaurants bleeding and constantly short-staffed, management has struggled to keep up. .
In addition to endless struggles, restaurants, especially fast food outlets, are now facing mounting cost increases for ingredients and supplies, combined with a slowdown in business as consumers become more frugal in the face of rising food prices. inflation. In addition, restaurants must deal with significant administrative tasks, including the need to offer insurance to their staff or face aggressive action from the IRS for non-compliance with the requirements of the Affordable Care Act ( TO THAT).
The health care conundrum
Although offering health insurance and other benefits is a requirement for most restaurants, many have traditionally viewed it as an expensive and time-consuming proposition that results in minimal returns. For many restaurant workers, hourly wage is their most important consideration when accepting or keeping their job. The extra costs they would incur for health insurance cut their weekly paychecks too deeply, so many simply don’t take advantage of them, even when offered. In fact, according to the Bureau of Labor Statistics, only about 32 percent of hospitality workers have medical coverage, compared to more than three-quarters of employees in other private sector jobs.
There are factors beyond cost that keep this percentage low. Many restaurant workers may already have insurance through Medicaid and state grants or receive other health care subsidies. And restaurant management often struggles to communicate the availability of these benefits to a widely dispersed workforce, who may not have access to the internet or email addresses, who may not be fluent in English. and is more likely to use prepaid phones.
Administrative challenges also impact restaurants’ ability to effectively offer insurance and benefits. Many restaurateurs still rely on outdated systems or need to implement new systems to track eligibility and registrations to maintain ACA compliance.
Get creative with benefits to hire and retain workers
The ACA requires most restaurant owners and operators to offer health insurance to their employees, whether or not they choose to use the benefit. In today’s post-COVID world, many restaurateurs have found that traditional health plans are a requirement, at a minimum, to entice managers to stay. But, in an effort to keep pace with hiring and minimize turnover, they are also becoming more creative in the types of benefits they offer to all employees.
In addition to basic health insurance offerings, more and more restaurants are expanding their offerings with less expensive options that appeal to all levels of employees. These options include vision and dental care which may not be part of their other healthcare coverage; and voluntary benefits, such as disability, catastrophic and life insurance. Other differentiation programs may include family or elder care leave, flexible pay schedules, flexible hours, assistance with financial planning, and assistance with paying for education.
Chipotle, for its part, takes this approach to minimize turnover in its ranks. The channel offers a debt-free education program, which has resulted in a 3.5 times higher retention rate for those enrolled in the program. Chipotle also offers a Health Concierge for all of its employees and their families to help them access mental health resources and telehealth appointments, and offers additional services for those enrolled in the company-sponsored health plan.
Make services affordable
While potentially less expensive than traditional healthcare, these creative perks designed to improve hiring and retention still come at a cost. So, with prices rising across the board and businesses collapsing amid the fallout from the pandemic, how can restaurants afford to implement these programs?
There are a number of tax credit programs that restaurants can miss out on. And the resulting savings could ultimately help fund new employee programs. If you don’t already have tax credits, here are some important programs you should consider:
Employee Retention Credit (ERC) – A refundable federal tax credit on the employer’s share of Social Security tax equal to 70% of qualified wages paid to employees from December 31, 2020 through June 30, 2021. Qualified are limited to $10,000 per employee per calendar quarter in 2021. To be eligible, restaurants would have had to experience full or partial suspension of operations during this time due to government orders restricting business, travel or meetings group membership due to COVID-19, or a decline in gross revenue in a calendar quarter in 2021 where the gross revenue in that calendar quarter is less than 80% of the gross revenue in the same calendar quarter in 2019.
Work Opportunity Tax Credit (WOTC) – A federal tax credit available to employers for hiring people from certain targeted groups, including those who receive state assistance or job vouchers. food, veterans and ex-criminals, who have consistently faced significant barriers to employment. The credit comes against the employer’s share of the Social Security tax.
FICA Tip Credit—A tax credit available to certain food service establishments allowing them to claim a credit for Social Security and Medicare taxes paid or incurred on tips for certain employees. This credit reduces the amount of federal income. Unused credits can be carried over for up to 20 years until fully used.
Disaster Area Credit—These federal tax credits are available to employers who have been affected by qualified disasters, such as wildfires, hurricanes, floods, and the COVID-19 pandemic. The amount of the credit is equal to 40% of the eligible salary paid to each eligible employee, up to $6,000, which means that the maximum credit available per eligible employee totals $2,400.
Restaurants may think they can’t afford to offer basic health insurance, let alone other benefits that may be exactly what potential and existing employees want. But with a little creativity and taking advantage of the tax credits to which they are entitled, restaurants can better position themselves to face the Great Resignation and have the advantages necessary to attract and retain their employees.
Derek Moore is Senior Vice President of Benefits at Venbrook Insurance Services.