Employer Student Loan Tax Benefit in the CARES Act

As part of the Coronavirus Aid, Relief and Economic Security (CARES) Act, payments made between March 27 and December 31, 2020, toward employee’s student loan debt may be eligible for a tax benefit. Employees can exclude up to $5,250 from their gross income, so long as the payments are for the retirement of student debt. This section (Section 2206) of the CARES Act amends IRC Section 127 (IRC 127) by adding a special rule in the form of Section 127(c) (1) (B).

Prior to CARES, IRC 127 allowed for tuition paid for an employee’s current education (up to $5,250) to be excluded from gross income.  Under IRC 127, because the benefit is not income to the employee, the employer is not paying payroll taxes while assisting their employees in paying off their debt. The CARES Act provides a temporary window through the end of 2020 to apply the tax benefit for prior education student loan principal and interest. Payments may be made to employees or directly to the employee’s lender.

Employer Student Loan Tax Benefit in the CARES Act

Employees with student loans have been able to claim a deduction for interest paid up to $2,500. The CARES Act prevents employees from claiming this deduction and the $5,250 exclusion from their gross income. In a sense, they cannot “double dip”.

Employers who offer an educational assistance program as prescribed through IRC 127 must have the following elements:

  • Be set forth in writing
  • Not be discriminatory in terms of eligibility
  • Adhere to restrictions on the eligibility of principals who own at least 5% of the company
  • Not be offered as a replacement to other remuneration (i.e. allocation of salary), and
  • Be communicated to employees sufficiently

Why Add the Student Loan Benefit Now?

Many Americans struggle with student debt and this entices employers to create an educational assistance program or revise an existing program to include student loan repayments. It is a benefit that can set companies apart from competitors. This benefit would be especially valuable to employers who are highly competitive in hiring recent college graduates. Surveys from 2019, including a Society of Human Resources Institute survey, indicate that less than 10% of employers are offering the student loan repayment benefit.

What Next?

There is some thought that this temporary exclusion from gross income may become permanent. It would make sense, the IRS provides the benefit for students to stay out of (or reduce) debt through excluding tuition reimbursement from gross income, it seems it could do the same in allowing employees to get out of debt quicker.

It is not difficult to set up and administer an educational assistance program and right now they can provide employees and employers with a substantial tax-free benefit. The one challenge to the benefit is that is one that is not available for all employees to enjoy, as opposed to health insurance, short-term disability, etc. However, offering this as a benefit could prove valuable to employers in attracting talented employees.

To learn more about the student loan tax benefit and how it affects employers, please contact Brad Smith in the form below.

Published June 29, 2020

Print this article

Copyright © 2020 by Findley, Inc. All rights reserved.

When Duty Calls Your Employees: USERRA and COVID-19

As companies across the country continue to adapt their operations to respond to the COVID-19 pandemic, nearly one million employees may be pulled from their employers to serve the federal government in its efforts to battle the disease. The recent “call up” authorization for up to one million reserve members to active duty is a good reason for businesses to review obligations of the Uniformed Services Employment and Reemployment Rights Act (USERRA).

In late March, President Donald Trump authorized a call up of “elected reserve and certain members of the individual ready reserve of the armed forces.” The call for service of reservists may be for a period of up to two years.

In 1994, USERRA was established to provide certain job protections for uniformed service members and impose employment-related obligations on their civilian employers. All private and public sector employers (including foreign employers doing business in the United States) are subject to USERRA — regardless of the employer’s size. Along with full-time employees, part-time and former employees are covered under USERRA. However, employees who are in positions not reasonably expected to continue indefinitely fall outside USERRA’s protections.

While the employer obligations and employee protections under USERRA have not changed, it’s important for employers to understand the compliance requirements and confirm that the necessary compliance documents and forms are in place. Organizations should also communicate with reserve employees in a responsive manner.

COVID-19 and USERRA

1. An employer cannot delay a service member’s reemployment solely out of concern that the service member’s service in a COVID-19 affected area may have exposed him or her to COVID-19.

In accordance with USERRA, an employer must reemploy Service members returning from service in the Uniformed Service ‘promptly’.  Title 20, Code of Federal Regulations (C.F.R.) 1002.181 states that ‘prompt’ typically means within two weeks of the employee’s application to return to work, unless unusual circumstances exist. In some cases, a reinstatement beyond the typical two-week period may be warranted due to the company’s policy regarding the COVID-19 health emergency as applicable to all employees.

Please also note that the company policy should be broad in scope and intended for all employees traveling to areas with a high risk for exposure to the Coronavirus. If an employer’s policy limiting return to work is focused only on service members, it could be viewed as discriminatory under USERRA. Please see 20 C.F.R. 1002.18 regarding discrimination.

The employer may want to consider “temporarily providing paid leave, remote work, or another position during a period of quarantine for an exposed reemployed service member or COVID-19 infected reemployed service member, before reemploying the individual into his or her proper reemployment position.”

2. An employee may still be laid off or furloughed upon return from their military (including National Guard) service if they would have been subject to that action unrelated to their service.

USERRA at a Glance

USERRA covers:

  • Pension plans covered by ERISA and certain pension plans not covered by ERISA, such as those sponsored by a State, government entity, or church for its employees. However, USERRA does not cover pension benefits under the Federal Thrift Savings Plan (which are covered under 5 U.S.C. 8432b).
  • Group health plans that are subject to ERISA and plans that are not subject to ERISA, such as those sponsored by State or local governments or religious organizations for their employees
  • Multiemployer plans maintained pursuant to one or more collective bargaining agreements between employers and employee organizations

The Protections and Obligations under USERRA are Extensive

Right to Timely Reemployment

When uniformed service members (with five years or less of cumulative uniformed service during the relevant employment period with the civilian employer) leave to perform uniformed service, they must be timely rehired upon their return, assuming “notice to employer” requirements had been met in advance (and no exceptions apply), and provided they were discharged under honorable conditions. It is important to note that notice is not required if “military necessity” prevents the giving of notice; or if the giving of notice is otherwise impossible or unreasonable. In addition, there are exceptions to the five-year requirement.

To qualify for USERRA’s protections, a service member must be available to return to work within certain time limits. These time limits for returning to work depend (with the exception of fitness-for-service examinations) on the duration of a person’s military service.

Right to be Restored

If uniformed service members are eligible to be reemployed, they must be restored to the job and benefits they would have attained had they not been absent due to military service or, in some cases, a comparable job.

Right to be Free from Discrimination and Retaliation

An employer may not discriminate (or retaliate) against a member of the uniformed services due to past, current, or future military obligations. The ban broadly extends to hiring, promotion, termination, and benefits. In addition, an employer may not retaliate against anyone assisting service members in asserting or seeking to enforce their USERRA rights, even if the person assisting them has no service connection.

Health Insurance Protections

If health plan coverage would terminate because of an absence due to military service, they must be allowed to continue their existing employer-based health plan coverage (including dependent coverage) for up to 24 months while in the military, and even if they elect not to continue coverage they must be allowed to reinstate their coverage upon return, and generally, without any waiting periods or exclusions (if one would not have been imposed had the person not been absent for military service) except for illnesses or injuries connected to their military service.

Note: If a service member is on active duty for more than 30 days, military health care is provided to the service member and their eligible dependents. In addition, service members cannot be required to pay more than 102 percent of the full premium for the coverage. If the military service was for 30 or fewer days, the person cannot be required to pay more than the normal employee share of any premium.

USERRA Notice/Poster

Employers, regardless of size, are required to provide to persons entitled to the rights and benefits under USERRA, a notice of their rights, benefits and obligations. Employers may provide the notice “Your Rights Under USERRA” by posting it where employee notices are customarily placed. Employers are also free to provide the notice to employees in other ways that will minimize costs while ensuring that the full text of the notice is provided (e.g., by handing or mailing out the notice, or distributing the notice by e-mail). The poster can be downloaded here from the Department of Labor website.

For a complete list of protections and obligations under USERRA, see A Guide to the Uniformed Services Employment and Reemployment Rights Act on the DOL website.

The DOL offers a USERRA checklist for employers.

To learn more, contact Scott Williamson at Scott.Williamson@findley.com or 615.665.5317 or John Lucas at  John.Lucas@findley.com or 615.429.3279

Published May 13, 2020

Print this article

Copyright © 2020 by Findley, Inc. All rights reserved.

AI Technology Transforming the Next Generation of HR

The right mix of technology, artificial intelligence and the human element is a differentiator.

With the coming of Artificial Intelligence (AI) and broader uses of technology, HR professionals will be challenged to manage and humanize HR systems to achieve their objectives. AI is the ability of a computer program or a machine to think and learn. Call it what you will, HR Technology (HRIS, HRMS, HCM) are here to stay.

Steven Hawking once said that “Unless we learn how to prepare for, and avoid, the potential risks, AI could be the worst event in the history of our civilization.”

HR is Already Using Artificial Intelligence and Leveraging Technology

Many experts predict that AI will replace jobs involving repetitive or basic problem-solving tasks, and even go beyond current human ability. AI systems will make HR decisions instead of professionals in industrial settings, customer service and other interactive roles. 

Likewise, Human Resources technology and AI are used increasingly in every facet of the organization’s employment lifecycle as listed below.

  • Employers use social media to brand their companies and attract candidates
  • Applicant Tracking Systems technology improves HR professional’s recruiting and hiring efficiency and productivity
  • Screening technologies, such as video interviews, assessments or automated scheduling/screening help to vet candidates
  • Technologies have automated several HR-related tasks such as employee onboard processing, employee benefit elections and processing retirements
  • Performance management systems track individual performance and link that performance to company results
  • Employee engagement surveys, and 360 feedback systems capture the employee perspective
  • Training modules are distributed to employees and their utilization tracked via learning management technology systems
  • Compensation data surveys and cloud-based technology tools are available to compensation professionals that subscribe to them

Today many employee or prospective employee interactions are not with a human being. Instead, leveraging AI in HR, candidates apply for a job to an automated HR system, have an initial online screening, interview via video and through conversational job matching, are assessed to determine if they are talent worthy of further consideration. The assumption is that these HR software solutions are faster, more accurate and cost-effective at selecting the best talent.

How has the Human Resources Professional’s Role Changed?

Businesses that are late adopters of technology will be left behind. In today’s competitive market your speed to attract, hire, manage, develop and reward your talent is a key success factor. As we have seen in the marketplace, organizations that are lacking in this space have higher employee turnover and lower productivity. They are not meeting the needs of today’s generation which require immediate capability to engage and transact certain activities. Organizations using traditional HR approaches and software solutions struggle to land and keep top talent.

Human Resources professionals will need to significantly adapt and add new skills beyond being people experts. HR teams will need to develop a stronger understanding of systems, process and data analytics). We see this movement in the world of professional sports where data analytics augments identifying top talent. Businesses are slowly following this AI trend and are beginning to reap the benefits.  

Building Your Next Generation HR Team

One of the best innovators in hiring today is a company called Catalyte. In fact, Catalyte’s mission states: “Catalyte advances human potential for the digital economy. We use artificial intelligence to identify individuals, regardless of background, who have the innate potential and cognitive ability to be great software developers.”

Catalyte uses AI to review candidates for pure ability – not experience – and then builds skills through a strong apprentice and training program. The organization looks for raw talent and molds that talent to develop the computer programming skills they need to succeed.

Is your HR team combining innovative technology with raw human skill to build your workforce for the future? What kind of HR talent do you need to create and lead this kind of approach?

In larger organizations, where resources may be more plentiful, the focus of systems, process and data analytics may be assigned to specific departments. In smaller organizations everyone shares the burden of addressing these AI areas. Irrespective of the size of the organization or the specific role, HR professionals will need to build their technical acumen and become the conduit to building a workforce for the future.

After all, even AI uses algorithms built off of desired outcomes, as identified and input by human experts. Therefore, HR teams today require a mix of both art and science.

Questions regarding how to develop an innovative HR strategy or assess your current HR function or talent, contact the Findley consultant you normally work with, or Dan Simovic at dan.simovic@findley.com, 216.875.1917.

Published August 14, 2019

© 2019 Findley. All Rights Reserved.

Print the article

On-Site Clinic Considerations — Best Practices

By Dave Barchet.

On-site clinics continue to gain momentum as more and more large employers focus on ways to improve health and well-being and lower costs. On-site clinics have evolved from providing basic occupational health to now providing services for preventive care, acute care, chronic condition management, specialty care and wellness initiatives, as well as providing prescription drug dispensing.

There are many different models that can be adopted, from having a registered nurse on site for a few hours a week to a full blown clinic (bricks and mortar) staffed with medical directors, PAs, RNs, services available during typical office hours.

Whether the reason for exploring a potential on-site clinic is to provide more robust access to your employees (especially in rural locations); to enhance and integrate your well-being program; or to focus on cost savings, there are some basic keys to success. We will review these success factors below, but keep in mind that on-site clinics are not for every employer.

A recent study by Mercer illustrated that in 2016, 32% of employers with 5,000 or more employees offered on- site clinics for primary care services, and another 10% were considering adding their own health clinics in the next two years. More than half of the employers in the survey said that their clinic was integrated with their population health efforts.

The Ante — 1,000 or More Employees at a Single Work Site

Success of a clinic is dependent upon volume, so consideration of an on-site clinic should start with your population size and, more importantly, your population location. Do you have 1,000 employees (some would even say 2,000) working at a single work site or campus? If so, this is a good start for further considerations. This cuts out any barrier of access and also greatly reduces the amount of time off the employees need to take to get to the clinic for care.

Let’s face it, one of the key drivers of utilization is the convenience and ease at which the clinic can be reached.

Hours of Operation — 40 Hours a Week, at Minimum

Not only is geographical access important, but so are the hours of operation. Consider the clinic a true doctor’s office. Your employees are on-site generally five days a week and 40 hours a week, so the clinic should be available to them during that same time as well. While the cost of operating a clinic on a 40 hour per week basis increases, so does the utilization, which is key to the success of the clinic. If operating time is limited, employees may resort to using the emergency room or urgent care as their primary care provider. Employers with multiple shifts may want to consider extending the hours of operation to accommodate shift workers.

No Cost or Copay to the Employees Who Use the Clinic

A $0 obligation for the employee will help drive utilization, which is the main factor in operating a cost-effective clinic. Findley recently conducted a study of the impact of an on-site clinic and found the plan savings per visit at an on-site clinic versus visits through the health plan network were $62 per visit. Actual plan savings will vary between different groups due to geography, the Preferred Provider Network being used, and the level of services the clinic provides.

It is important to note the exception of offering a $0 cost to the employees is with Qualified High Deductible Health plans with Health Savings Accounts. The IRS requirements of member cost sharing would remain with the QHDHP.

Trust/Ability to be Liked

This is one of the most important factors. The staff at the clinic has to be likable and trusted. How do you accomplish this? Consider an interview process with key stakeholders or a health care committee up front.

If that is not doable, consider a video message from the clinic staff to the employees. This would serve as both advertising and a way for the employees to get to know the staff personally.

Promoted and Supported by the Top Level of the Organization

Like any endeavor a company wishes to take on, it is more believable and acceptable when it is promoted and supported from the C-Suite of your organization. Moving down the path of an on-site clinic is not inexpensive, so additional investment in the messaging and where the message comes from is worth the time and cost.

Visit Other Companies On-Site Clinics

We encourage prospective groups to visit other companies’ on-site clinics to take a tour. We have found that employers with on-site clinics are more than happy, and are frankly proud, to show off their facilities. This allows you to experience clinic operations first hand, explore different options, and determine what is right for your company . . . a full blown clinic (bricks and mortar) or an RN staffing the clinic a few hours a week.


For more information about on-site clinics, contact Dave Barchet at 216.875.1914 or Dave.Barchet@findley.com.


What’s in a Name?

As you have read throughout this article, I have used the term on-site clinic, which is the most commonly used or accepted term to describe this service model. A lot goes into a name, however, and we have seen the term on-site health center being frequently used as well.

The dictionary defines a “Clinic” as: an establishment or hospital department where outpatients are given medical treatment or advice, especially of a specialist nature.

The dictionary defines a “Health Center” as: a building or establishment housing local medical services or the practice of a group of doctors.

Essentially they are defined the same way, but which sounds more appealing to you? The name can be especially meaningful if you are focusing on preventive services and wellness, which according to the Mercer Survey, over half of the responding employers was the reason for integrating the clinic into their health efforts.

An alternative for smaller employers are near-site clinics. This is primarily a financial play. as smaller employers join together to contract with a clinic to help avoid the direct overhead costs of operating an on-site clinic. Employers sharing a near-site clinic should be careful about the fees they are charged.

Some pricing arrangements allocate the percentage of the clinic’s fees to the number of employees or members in each group. If one or more employers pulls out, each remaining employer’s portion of the cost could suddenly rise to accommodate the clinic’s full operating costs. When contracting with an off-site clinic, put the onus to find employer replacements on the clinic’s operator; thus, keeping the employer’s share of the costs unchanged for the balance of the contract.