15 companies making big benefit changes due to tax reform
Since the passage of the Tax Cuts and Jobs Act of 2017, which slashed the corporate tax rate to 21% from 35%, a variety of companies are investing their tax savings back into the workplace by way of enhanced employee benefits.
From increased 401(k) matches to new training programs, employers see a plum benefits package as a necessity for attracting and recruiting employees. Likewise, these changes are more likely to impress workers than one-time bonuses, analysts say.
Here’s a closer look at 15 companies that have made changes to their benefits package as a result of tax reform.
Aflac’s benefits changes, which took effect at the beginning of the year, include an increased 401(k) match — from 50% of employees’ first 6% of compensation to 100% on the first 4% of employee contribution — and a one-time $500 contribution to about 5,400 eligible employees’ retirement plans.
The insurer also will offer employer-sponsored hospital and accident insurance plans in addition to its cancer insurance benefit. Previously, the company provided a 50% subsidy on hospital and accident insurance plans as a voluntary benefit.
The health insurance giant — which serves more than 73 million people through its affiliated companies — announced it will contribute $1,000 to the 401(k) accounts of more than 58,000 employees and recent retirees, for a total of $58 million.
The company says that full-time, part-time and temporary employees are eligible to receive the contributions. For those who weren’t already participating in the company’s workplace-sponsored plan, Anthem will automatically create 401(k) accounts for these individuals and make the $1,000 investment. Employees will receive the contribution on March 29 and will have the opportunity to choose how the money is invested in their retirement accounts from the 15-item investment menu available within the company’s 401(k) plan.
The automotive retailer doubled its matching contributions to employees’ 401(k) and increased its deferred compensation match to 100% of the first $5,500. Those benefits went into effect Jan. 1.
The company, which has 26,000 full and part-time employees, also introduced a cancer benefit for its workers and their families. AutoNation says it will pay fully for MetLife cancer insurance for employees, spouses and children up to age 26. The benefit, which also includes a cash payment up to $5,000 for cancer diagnosis, with no limitations on how the money is spent, will apply to AutoNation employees starting on their first day of employment. That benefit began Feb. 1.
The Denver-based fast food chain says it will reinvest more than 33% of its anticipated savings from tax law changes into its employee benefits, with the remainder being dedicated to improved restaurant facilities and operations.
More than 71,000 employees will now be eligible for accelerated training programs, cash and stock bonuses, paid parental leave, life insurance and short-term disability, according to Chipotle.
Comerica Bank, a financial services firm based in Dallas, says it will give about 4,500 employees a one-time $1,000 bonus as a result of tax reform savings. The one-time bonus will be applicable to non-officer employees, which the company describes as any worker below a vice president title.
Comerica says it will use the tax benefit to invest in other benefits, such as tuition reimbursement, training and development and retirement offerings.
CVS Health is expanding its benefits suite amid sweeping tax reform to include paid parental leave to full-time employees and maintaining employee premium rates.
The drugstore retailer, which has 240,000 employees across the country, will now offer four weeks of fully paid parental leave to hourly and salary full-time employees, regardless of gender. Previously, women received partially paid leave while men received unpaid parental leave, according to the company.
CVS Health also says it will not increase employee premiums for the 2018-19 plan year, and will absorb any additional costs for the 100,000 workers enrolled in the company-sponsored health plan.
Walt Disney Company says it will give employees a one-time cash bonus of $1,000 due to tax reform savings. About 125,000 U.S. employees will be eligible, the entertainment giant says, putting the cost at $125 million. Disney also plans to put $50 million into a fund to help hourly employees with tuition costs and plans to provide as much as $25 million annually for that purpose afterward.
Hostess Brands isn’t the first employer to dole out new employee benefits in wake of tax reform — but its offer may be the sweetest. The bakery company — known for its Twinkies and Ding Dongs — said recently it will offer employees bonuses in the form of cash and 401(k) contributions, as well as a year’s supply of Hostess products.
The bonus — to be paid to Hostess’ 1,036 hourly employees — will consist of $750 in cash and $500 toward 401(k) contributions. Meanwhile, the free snacks will vary; Hostess says it will select a “product of the week” that it will give to each employee in a multi-pack.
After making an investment in benefits support with healthcare concierge service Accolade at the start of 2018, Lowe’s is continuing to expand its employee benefit offerings.
The home improvement retailer expanded its maternity leave program for full-time workers to include 10 weeks of paid leave and added a new benefit of two weeks of paid parental leave for all new parents, both hourly and salaried workers. Lowe’s also added an adoption assistance benefit to its family-friendly benefits package; it covers up to $5,000 of expenses related to agency, legal and other fees. The company did not share what the maternity leave program was previously.
Peoples Bank, a Washington bank chain with $1.6 billion in assets under management, increased its 401(k) match by 1% and raised its minimum wage in wake of the Tax Cuts and Jobs Act of 2017.
The bank, which has 430 salaried and hourly workers at 25 locations within a few counties in Washington, announced this month it increased its 401(k) employee match to 8% of annual pay from 7% for all eligible employees. All employees over the age of 21 have access to the company’s 401(k) and its match, the company says.
The 401(k) account is on a vesting schedule that increases by 20% over a five-year period, and employees are eligible for the match 90 calendar days after their start date.
Starbucks says it plans to spend $250 million on new employee benefits, including expanded leave benefits, in the wake of the federal tax overhaul.
Starbucks announced that it would add six weeks of paid parental leave for its hourly employees who become new dads, a benefit that had only previously been offered to new mothers and adoptive or foster parents. Employees of the coffee giant also will now be able to accrue one hour of paid sick leave for every 30 hours worked, extending a benefit that had previously only been offered to employees where state law required it.
SunTrust Bank, a bank that operates 1,400 branches across the southeastern region, is upgrading its benefits package and wages in response to the tax reform bill. More than 19,000 full-time employees will receive a one-time 1% increase to their 6% 401(k) match, as well as be eligible for a $1,000 financial incentive after completing the company’s financial fitness program.
New moms and dads employed at Unum will soon be eligible for six weeks of paid time off to care for a newborn, or a child placed through adoption or foster care, at any time during the 12 months following birth, adoption or fostering, the insurance company recently announced.
Currently, the firm has no formal paid parental leave policy; parents use a combination of paid time off, FMLA and/or state leave, depending on residency, says Diane Garofalo, the firm’s senior vice president of corporate human resources. Birth mothers also use short-term disability.
The policy for Unum’s 10,000 employees will be implemented later this year, but Unum says it doesn’t have a specific date.
The credit card giant told employees in early January that it would start matching 200% of an employee’s contributions to the company 401(k) plan up to 5% of the individual’s salary. The benefit applies to all U.S. employees except those on the executive committee. The new benefit will start in February.
Currently, Visa employees receive a match on 3% of their salary.
Walmart in January announced a slew of changes to its employee benefits package, including expanded parental and maternity leave, a new adoption benefit and one-time employee bonuses.
The retailer will expand its U.S. leave policy to 10 weeks of paid maternity leave and six weeks of paid parental leave. Salaried associates also will receive six weeks of paid parental leave. Previously, full-time hourly workers were eligible for up to eight weeks of paid maternity leave and two weeks of paid parental leave, while hourly workers received half pay during family leave. The benefit also applies to parents who adopt, Walmart says.
The retailer is creating a new benefit to assist employees who are adopting a child. The adoption benefit, available to both full-time hourly and salaried associates, will total $5,000 per child and may be used for expenses such as adoption agency fees, translation fees and legal or court costs.
Walmart’s new perks also include a one-time bonus — ranging from $200 to $1,000 — for eligible hourly associates. Bonuses will be determined by an employee’s length of service; workers with more than 20 years of experience will qualify to receive the full $1,000.
Bosses should do more to make the work-from-home experiment palatable and safe for all involved by subsidizing utility bills and workspace equipment, and changing managerial habits, with more trust given to employees.