Editor’s note: This is the first of two parts exploring how employers can modify their benefits strategies to attract and retain members of Generation Z, the youngest generation in the workforce. To read part two, click here.
Members of Generation Z, identified by the Pew Research Center as those born between 1997 and 2012, are a growing part of the U.S. workforce. Gen Z workers are projected to surpass the number of Baby Boomers in the full-time workforce for the first time this year, outnumbered only by Millennial and Generation X employees, according to a Glassdoor study. Some experts project that Gen Z will represent more than one-fourth of the workforce by 2025.
As the first truly global and fully online generation, Gen Z employees prioritize meaningful work and social responsibility, diversity and inclusion, and autonomous flexibility in their employment. The “I-just-work-here” mentality does not resonate in this cohort, who expect their employer’s values and ethics to reflect their own and are not afraid to leave an organization over mismatched values. They seek purpose-driven organizations that prioritize employee well-being and offer opportunities for growth and development.
Employers must rethink traditional approaches to benefits and workplace policies to attract, engage, and retain Gen Z talent. Much has been made of the workplace expectations of this generation – greater DEI efforts, better pay, more flexible work arrangements – and while all of these are important, a little-recognized area that can be leveraged to meet the needs of younger generations is the employee benefits package.
In this two-part series, we will explore key strategies for employers to adjust their benefits strategy to meet the evolving needs and expectations of Gen Z employees. This week, we focus on revisiting family definitions and expanding health care offerings. Next week: supporting financial wellness and providing new channels of access.
Revisit Family Definitions
The nuclear family model typically used in policies and benefits programs does not take into consideration the cultures and life circumstances of all employees. Multi-generational families, blended families, co-parenting households, and even four-legged family members are left out of traditional definitions of family. Gen Z workers are more likely than older generations to rely on an evolving social structure of relatives, romantic partners, and close friends. Such family models are commonly referred to as one’s “chosen family,” a phrase that emphasizes the strong emotional bonds in non-romantic and non-familial relationships.
Employers can recognize and accommodate these diverse family and household dynamics by expanding the internal definition of a family member for purposes of benefits. Note that this applies to voluntary benefits, as some benefits such as the Family and Medical Leave Act (FMLA) and group health plans, will still be limited by regulatory definitions of dependents. Employers can expand the definition of family in subtle, yet impactful ways.
A simple and entirely cost-free place to start is by incorporating more inclusive language in existing policies. If asked, many employers would affirm that their existing definitions implicitly include stepfamilies and family-in-law, even if it isn’t explicitly stated in policy language. Consider including the phrase “related to the employee by blood, adoption, or marriage” for an explicitly inclusive policy.
As housing prices increase, especially in major metropolitan areas, many adults choose cohabitation to reduce living expenses. As with any household, an illness or injury can lead to caregiving needs for an employee. However, traditional caregiver leave doesn’t cover an unwed romantic partner or unrelated roommate. To address this gap, employers can add the phrase “or member of the employee’s household” to their family definitions. This became increasingly common early in the COVID-19 pandemic, when the illness of an individual implicated quarantine status for the entire household, regardless of relation.
Phrases such as “husband or wife” and “son or daughter” can be a subtle act of exclusion for nonbinary individuals or those with nonbinary loved ones. Instead, try using “spouse” and “child.” These words communicate the same relationships while avoiding unintentional exclusion. It even improves word economy in policy language, which is a win-win when handbook update time comes around!
The broadest of family definitions that an employer might use is “a family relationship as defined by the employee.” This is so broad that it is often saved for compassion benefits, such as bereavement and funeral leave. Using this definition provides extra support when an employee is experiencing grief by avoiding the use of administrative definitions that devalue the relationship with their late loved one. Learn more about updating your organization’s bereavement policy in this Employers Council article.
For employees of all generations, family does not stop at the humans in their household. Offering medical insurance for pets as a group plan benefits employees by providing guaranteed-issue coverage at group rates, and employers can choose whether to contribute to premium payments. Benefits such as pet adoption leave (sometimes called “paw-rental” leave) and pet bereavement are voluntary options with minimal administrative cost, simple implementation, and exceptionally high returns on goodwill from employees.
As voluntary benefits, employers can determine most of the provisions of these leave benefits, including eligibility, qualifying reasons, and frequency of use (e.g., one benefit in a 12-month period), making them extremely customizable to an organization’s needs.
Expand Health Care Offerings
Mental health and health equity are areas of high importance for Gen Zers, who are the most diverse generation currently in the workforce. Addressing these specific health care concerns demonstrates a commitment to employee well-being and supports DEI initiatives in other areas, two important drivers of employee engagement for Gen Z.
Modern mental health parity laws require group health plans to provide coverage for mental health and substance abuse disorders that is “not more restrictive” than coverage for substantially similar medical and surgical benefits. This means that the employee cost-sharing per service should be equal. However, therapy, counseling, and medication management are often weekly, monthly, or quarterly services. This means that the total cost to an employee may still be far greater to seek ongoing mental health treatment, even though the plan meets parity minimum requirements.
Instead of stopping at those minimum requirements, employers may be able to work with their brokers or third-party administrators to seek lower copays for certain services. If an existing insurer does not have this option, standalone supplemental mental health care coverage options have become available in recent years, offering greater flexibility to fully insured group plans.
Many employers already offer an excellent benefit for mental health in the form of an employee assistance program (EAP). Among many other services, an EAP typically provides employees with a set number of counseling appointments at no cost each year. This provides a resource for employees who do not attend regular therapy but may need short-term care for acute mental health distress, such as grief, stress, or trauma.
Employers that already have an EAP in place should emphasize the availability of such services and encourage employees to make use of them when needed. The International Foundation of Employee Benefit Plans 2022 Benefits Survey found that, although 81% of U.S. employers already offer an EAP, 61% of workers were unaware they had access to the benefit.
Look for part two of this series next week. In the meantime, if you have any questions about benefits, please contact Employers Council.