Low cost, high reward: How employers can reduce child-care woes, boost retention

Cheryl Snyder felt an obligation to advocate for working women when she stepped into a leadership role at Park National Bank.

It was 1979 and she was the only the second female officer in the company’s history.

Park National Bank was growing, expanding from a regional bank chain to a multi-state corporation. Bank leaders were developing a strategic plan, which included focusing on women as an untapped resource in the labor market.

Snyder was keenly aware of the challenges women faced in the workforce — particularly regarding child care. She gave birth to her first son in 1983 and her second in 1987.

That’s why she pushed for policies that would benefit working mothers — including a Dependent Care Assistance Program.

The program, sometimes also called a dependent care flexible savings account, allows working parents to set aside pre-tax income for child care expenses.

Dependent care FSAs work similarly to a health savings account — contributions are withheld from a worker’s paycheck and are not taxed. Employers can choose whether or not to match employee contributions.

How do dependent care FSAs work?

The dependent care FSAs allows parents to set aside up to $7,500 per year for child care expenses.

Parents with accounts have the flexibility to choose the type of care that best suits their needs — whether that’s a licensed child care center, home-based provider, faith-based care or even a nanny, according to the First Five Years Fund.

Qualified dependent care expenses for children under the age of 13 include child care, pre-K, summer day camp, before and after school programs, and transportation to and from eligible care.

Employers can also choose to contribute to employees’ account, but the combined contributions cannot exceed $7,500, regardless of how many children an employee has. 

To use the program, employees are required to submit documentation showing the funds were used for child care, such as an itemized receipt from a child-care provider, in order to receive reimbursement.

Unlike other pre-tax accounts, funds can’t be rolled over at the end of the year.

How employers benefit from dependent care FSAs

One downside of dependent care FSAs is that not every working parent can access them. They’re only available through employers — workers can’t opt to set one up on their own.

In Snyder’s view, offering resources to help employees with child-care costs is a no brainer for boosting recruitment and retention.

“Employers are finding it hard now to find workers,” she said. “When employees are happy and feel like they can put their full attention on their job or their customer at hand, I think that absolutely resonates with the employer having a strong, sought-after brand.”

In addition to saving employees money, offering dependent care FSAs can also lower an employer’s payroll tax liability.

Flexible schedules and hybrid work can help ease child care burdens for working parents

Ohio is home to more than 813,600 children under ages 5 and younger. About 67 percent of those children live in a home where all available parents are in the workforce, according to the First Five Years Fund.

Dependent spending FSAs aren’t the only way employers can support workers who are also parents.

Having children means inevitable interruptions in care, whether that’s due to a child’s illness, school breaks or even snow days.

Offering flexible hours and allowing employees to work from home when needed can alleviate stress and boost productivity.

That was the culture Gail Laux sought to create when she founded her non-profit, the Ohio Bird Sanctuary.

Despite its small size, the organization offers six weeks of paid maternity leave for new mothers. Laux said the Ohio Bird Sanctuary has also allowed employees to flex their hours as needed while balancing the need for accountability.

“When you have a working mom, they’re going to be calling off work every time their kid gets sick, but the talent of those individuals far outweighs those challenges,” she said. “These are women who bring a lot of talent and the ability to multitask to the table.”