Employer child care benefits 

How employer child care benefits can give a competitive advantage in the search for talent.

In today’s economy, competition for top talent has never been fiercer. Personnel costs often account for over half of an organization’s operating costs, and for good reason. A skilled and experienced workforce can mean the difference between a company remaining competitive and being outmaneuvered. Employer child care benefits give leading organizations a crucial leg up in the war for talent. 

Explore child care benefits
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Advantages of offering child care benefits to employees

Employer child care benefits signal that a company is a committed partner in helping their employees find a strong work-life balance. Becoming a parent is often overwhelming, with a flurry of new decisions and challenges. Conscientious working parents can be caught in a bind deciding whether to spend more time at work in hopes of earning more to pay for child care, or spending more time at home to care for their child.   

This challenge can result in a split in career outcomes between male and female working parents. Three years after having their first child, only one in ten men leave the workforce to focus on raising children. For women, the numbers are around two in five. 
 
Employer child care benefits can reduce the pressure of finding full-time child care. Given that overwhelmingly more women leave the workforce in response to becoming a parent, offering child care benefits to employees can help bridge the gender gap in employment. 

Types of employer child care benefits

An employer may offer child care benefits to employees in many ways. Some employers choose to provide child care with on-site child care facilities. With this arrangement, a working parent is able to bring their young child with them to their place of work, and a daycare center is operated within the organization’s building or campus. This makes drop-off and pick-up easy for the parent and allows them to be nearby should an issue arise that requires a parent’s attention.  

An on-site child care center may be operated entirely by the employer, or may be outsourced to a company that specializes in child care. The latter may be the more efficient business decision, as your organization can draw upon the experience and operational know-how of a trusted child care service provider.  

Employer child care benefits also come in the form of daycare tuition reimbursement. A working parent should coordinate with their human resources department in order to receive reimbursement for their child care expenses.  

An employer may also offer care through a child care provider to offer reservations at daycare centers. Some daycares have waitlists that can be months or even years long, so an employer that reserves spots for their employees provides a significant advantage to its workforce. 

Employer child care benefits coverage

Employer child care benefits may cover a wide range of ages. The most complete coverage begins when a parent returns to work following family leave and continues through elementary school. Typically, employer child care benefits will cover the first five years of a child’s life through daycare, preschool, and pre-K. This gives working parents critical support prior to the beginning of elementary school. 

An employer offering child care benefits to employees may also offer to cover the cost of after school child care. This is invaluable for a working parent that may not be able to be home when their children finish their school day or after school activities. In addition, some child care service providers, such as Bright Horizons, offer back-up care when regular child care arrangements fall through. 

Back-up care services keep a list of qualified, available caregivers that can make sure a school-aged child’s routine isn’t disrupted due to forces outside of a parent’s control. If the normal caregiver calls in sick or is otherwise unavailable, back-up care services can fill the resulting gap. 

Reducing turnover by offering employer child care benefits

In industries such as healthcare, replacing an employee can cost almost one third as much as the annual compensation of the new hire. Healthcare employee retention is especially important, as there are real-world consequences for patients when a member of a healthcare team leaves their role. Higher nurse turnover is associated with more negative patient outcomes. Anything that can increase employee retention in healthcare is a win for healthcare employers and patients alike. 

What types of child care benefits are an employee entitled to receive?

What types of child care benefits is an employee entitled to receive?

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In the United States, there is no federal law mandating employer child care benefits. There may be state or local mandates requiring an employer to provide coverage, but otherwise employer child care benefits are entirely determined by the individual contract between the employer and employee.

Is paid maternity leave or paid adoption leave an employer child care benefit?

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Paid maternity and adoption leave are considered a separate benefit from child care. Many employers in the United States are required to provide paid maternity or adoption leave for their employees.

Are employer child care benefits considered taxable income?

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In the United States, the first $5,000 of employer child care benefits are not considered taxable income. Benefits over $5,000 are reported as taxable income.

Will an employer pay for a family member to care for my children?

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Individual employers may offer some type of assistance for employees that use an informal caretaker for child care. It is important for a working parent that expects this benefit to check with their human resources department about whether this is available.

Do employer child care benefits include school tuition?

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Employer child care benefits often include preschool and pre-K tuition, but may not include private elementary school tuition.

Explore solutions for your employees

Family care benefits have never been more important. See how Bright Horizons can support your team.

Bright Horizons is a United States–based child-care provider and is the largest provider of employer-sponsored child care. Employees looking to become a child care teacher are offered the opportunity to earn an early education degree for free as part of their corporate benefits. Search by zip to find a child care center near you. Bright Horizons Global Headquarters are in Newton, Massachusetts, USA.