May 2018

Small businesses have fewer and more costly health benefit options than mid to large companies, which often puts them at a disadvantage not only in their P&L, but also in attracting and retaining needed talent. Yet, Small Business is the economic driver of the U.S. economy, and the Franchise world is a significant percentage of the small business community. Decisely specializes in delivering cost-effective small business benefits and HR solutions. All we do is deliver small business employee benefits and HR.

In this final part of our series – learn how Decisely worked with one brand to help their franchise members/owners increase employee retention and save over 20% on benefits.

Collective Benefits Sourcing Case Study

In part 2 of our 3 part series learn how franchises can avoid the legal ramification and potential missteps associated with an association health plan. If you missed Part 1 – What’s an AHP?, click here!

What is Joint Liability and How Can Franchisors Avoid It?

Joint Liability is a long-standing area of legal risk in the world of franchising. It occurs when a franchisor is perceived to be in direct control of the employees of its franchises. If this is judged to be the case, then the franchisor is considered a single, joint employer and can be exposed to lawsuits, collective bargaining, and fines for wrongs committed by franchise employees.

Joint Liability is a relevant concern for businesses considering collective benefits sourcing strategies under current DOL guidelines or taking advantage of proposed Association Health Plan (AHP) guidelines when promulgated. Under these new guidelines, more small businesses and franchise operations would be eligible to collectively join forces to pursue improved employee benefits plans available in an AHP.

But if you’re a franchisor, how do you balance the opportunity to take advantage of Association Health Plans that reduce the cost of benefits for your Franchise ecosystem with the risk of Joint Liability exposure?

To avoid Joint Liability missteps in setting up and managing this Trust, we generally recommend five things to clients:

Leverage an existing association or Trust. If there is no existing association, you can create a dedicated AHP Trust as long as you keep it at arm’s length.
The AHP/Trust must be sponsored by franchisees, not the franchisor. The franchisor can help initiate the exploration of collective benefits sourcing through an AHP, but should leave the decision and its establishment to the franchise members.
The AHP/Trust must be managed by franchise members participating in the AHP/Trust. All ongoing management and decisions of the Trust should fall to the Trust Leadership, not the franchisor. And franchisors can only sit on the Board of a Trust or AHP in an advisory and non-voting status.
The AHP/Trust should hire a program administrator– an outside firm that manages the AHP – at the Trust level that reports to the Trust Board, not the franchisor.
Finally, the AHP/Trust should select a multi-faceted program administrator that can offer services other than just benefits. Associations and Trusts can mitigate the issue of Joint Liability by offering other independent HR functions beyond just the AHP, such as payroll, recruiting, retirement plans, employee handbooks, and more.

Want even more information on Joint Liability? See our white paper: Keeping At Arms Length.

Five Reasons Why Employee Assistance Programs (EAP) Are Good For Business

By Geri Moore, VP Human Resources Decisely

May is Mental Health Awareness Month. And with approximately 1 in 5 adults in the U.S.—43.8 million, or 18.5%—experiencing mental illness in a given year, employers are recognizing that employees’ mental health is just as important as their physical health. Employee Assistance Programs (EAP) are designed to help small businesses and their employees with mental health services, as well as a variety of issues in and out of the workplace. As an employer who cares about your employees’ wellbeing and its impact on their capabilities while at work, you may want to consider offering access to an EAP. While EAPs certainly benefit the workers, there is clear research to suggest that it’s equally beneficial for employers. Here are five reasons why offering an employee assistance program makes good business sense:

Attract Top Talent – Like any employer health benefits package, offering an EAP shows a potential prospect that the company cares about its employees.
Improve Productivity – Research shows that employees who use EAPs often experience positive changes in their work performance, such higher levels of work productivity and improved work team relations. Why? Because EAPs address potential problems early on, they help prevent significant issues from impacting performance, productivity, and morale.
Reduce Absenteeism – A study of over 60,000 cases found that employee absenteeism was reduced from an average of 2.37 days of unscheduled absences or tardy days in the prior 30-day period before using the EAP to only 0.91 days after completing use of the EAP.
Reduce Costs Related to Poor Performance – One global study researching the value of Employee Assistance Programs found that 66 percent of its participants had performance issues prior to EAP-assistance, resulting in an average weekly loss of over $1,600. However, after EAP use, the study noted a 74% reduction in employer costs related to poor work performance.
Strengthen Workplace Mental Health – Individual mental health has an impact on workplace mental health, so it’s in the company’s best interest to ensure employees feel that they’re able to handle the difficulties life throws at them. An employee assistance program is intended to ensure that employees can manage their daily lives while remaining productive, even during challenging circumstances or experiences.

ABOUT THE AUTHOR: Geri Moore serves as VP of Human Resources for Decisely. She is responsible for the strategic development and management of our growing organization, leading recruitment, retention and expanding our culture as the company ramps up for significant anticipated growth. Geri believes people are the heart of any business and that great people will always bring the passion needed to make a positive difference in any organization.

In October 2017 the Department of Labor proposed a rule that will make it easier for small businesses to join together to purchase health insurance. This three-part series-The Association Health Plan Opportunity – examines why Franchisors and their small business franchisees should seek to capitalize on this expanding opportunity but do so carefully.

What is an AHP?

An Association Health Plan – or AHP– is the strategy for individual member companies of an association or Trust to secure collectively-sourced group health benefits. Individually, most franchises, unless big multi-unit operators, are usually too small to qualify for the most competitive benefit plans, but as an aggregated group single store and even multi-unit operators can drive real cost savings and improvements to benefits offerings to aid employee attraction and retention in a tight labor market. The benefits of aggregated sourcing are enormous, as health benefits group purchased can typically deliver as much as 10-30% savings compared to individual small employer purchasing, often with better, broader benefits.

Historically, not all Associations or Franchisees would qualify for collective sourcing, or “Trusts” under strict definition guidelines regarding common business ground necessary to form an association or Trust. Current Employee Retirement Income Security Act (ERISA) guidelines allow only groups of businesses with “common business interests,” such as an industry or a franchise group, to form collective benefits sourcing programs. Further, businesses are prohibited from grouping together for the sole purpose of buying medical benefits – in general, the collective sourcing “Trust” must add other value to its Members than just Medical insurance purchasing

However, an effort underway at the Labor Department would dramatically increase the number of small businesses and their employees that would qualify for an AHP. By changing the definition of “common business interests” in the current ERISA guidelines and broadening its applications, the government is loosening restrictions on who can pursue collective benefits sourcing programs. An amended rule would make it possible for more small businesses, franchises and small associations with less stringent industry, geographic or professional affiliations to form an AHP.

This change would mean that much wider groups of small businesses, franchises, smaller associations, and even sole proprietors could qualify for collective sourcing of benefits through an AHP. For example, groups of restaurants in the same or different states might qualify – something that would not have been possible prior to the modification.

Ultimately, broader requirements of existing regulations will expand the universe of employers that can offer company-sponsored benefits plans. This will widen the pool of available benefits to employers and employees and can reduce the administrative overhead of millions for small businesses. It will also help small businesses become more competitive in attracting and retaining talent because they can now offer benefits on par with larger companies.