Paying For Employee Perks

In an economy in which many companies are trimming salaries, cutting staff, and asking employees to share more of their health-care costs, employers look for any way to offer something good.

Free dog-walking services and tea-time massages may be out, but low-cost ways of helping employees balance work and life a little better by saving time on mundane chores remain. "Many companies are keeping life/work strategies that were put into place while the economy was booming, because now at some companies there are fewer people doing more work," says Jon Van Cleve, a consultant at Hewitt Associates, a human-resources consulting firm.

They tend to focus on "convenience benefits" that help workers better manage time without costing employers much to implement, such as dry-cleaning pickup and drop-off. "You don't see a lot of new, large day-care centers being built because those are expensive," Van Cleve says, "but you do see flexible work arrangements being offered."

One technology-enabled convenience perk offered by some employers is designed to help workers eliminate some of the cost, time, and paperwork involved with monthly bill payment by taking money directly out of people's paychecks.

Software vendor E-Duction Inc. gives employers payroll-deduction software that lets workers--using an E-Duction "Clear" account or card--make purchases online or in person from any retailer or company at the 24 million locations worldwide that accept MasterCard. E-Duction makes money on transaction fees from retailers.

It's not a brand-new idea--E-Duction launched the Clear card last summer. But the company is trying to increase its appeal by partnering with a discount online shopping network. Workstream Inc.'s Xylo network offers discounts for products and services bought on its network. Anyone with a Clear account can access the network, then pay for purchases via payroll deductions.

Payments for purchases via E-Duction's Clear account are automatically deducted from an employee's pay over a two-month period, interest free. Higher-ticket items, such as cruise tickets or a PC, are deducted from paychecks interest-free over six months. "All companies are looking for ways to rebuild or improve relationships with employees in a cost-efficient manner," says Tom McCormick, chief legal officer at E-Duction.

To protect privacy, the employer doesn't receive information about individual purchases and only receives the payroll-deduction information electronically from E-Duction. Employees receive monthly statements from E-Duction detailing their purchases, as well as returns. Employees can't spend more than 2.5% of their annual pay through E-Duction, and since it comes right out of pay, there's no chance to miss a payment and get hit with interest charges.

E-Duction interfaces with corporate payroll systems including J.D. Edwards, Oracle, Peoplesoft, and SAP. It will probably make some CIOs nervous to tack something onto their payroll system, but the company says IT departments can implement it within six hours using a CD from E-Duction.

Van Cleve at Hewitt Associates says he's not aware of another tool like E-Duction.

Reliance Standard Life Insurance Co. has made E-Duction payroll deductions available to its 1,000 workers in recent months, and the program has been well received, says Helen Dubil, Reliance Standard's manager of human-resources IS administration. They use it for emergency purchases and recurring bills, she says, and the upkeep hasn't caused any problems. Says Dubil, "This is one of the few voluntary benefits that works for me as well as my employees."