7 Key Employee Benefits Trends in 2024
Jan 31, 2024
7 Key Employee Benefits Trends in 2024

Attracting and retaining employees has challenged employers since the onset of the COVID-19 pandemic. In 2024, the labor market is expected to cool slightly; however, competition for talent will remain. As such, employers must remain agile and adapt to developing labor and market trends that will shape the market in 2024. In particular, current labor challenges are forcing employers to find ways to balance rising health care costs and inflation while providing employees with benefits they value and need. Understanding this year’s key employee benefits trends can help employers attract and retain talented individuals in an evolving labor market.


This article discusses seven key employee benefits trends in 2024.


1. Managing Health Care Costs

High inflation, provider shortages, an increase in serious chronic conditions and deferred care due to the pandemic continue to drive health care costs. According to several industry surveys and reports, employers anticipate health care costs to grow between 6% and 8.5% in 2024, the largest increase in more than a decade. This year, employers may struggle to mitigate skyrocketing health care costs while keeping benefits affordable for employees. Thus, many employers will plan and implement multiple cost-saving strategies in 2024 to mitigate rising health care costs, such as:


  • Modifying health plan designs
  • Incorporating health care analytics
  • Using artificial intelligence to streamline administrative workflows, help employees make informed benefits decisions and decrease costs
  • Implementing pharmacy management strategies
  • Maintaining full coverage of recommended prevention and screening services
  • Tailoring benefits to meet employees’ specific needs
  • Expanding voluntary benefits offerings
  • Improving employee health care literacy
  • Investing in more virtual health opportunities
  • Incentivizing employees to seek cost-effective care options
  • Revisiting cost-sharing arrangements


2. Increasing Personalization and Flexibility

The modern workforce is comprised of four or five generations of workers from various backgrounds. In 2023, many employers struggled to find a benefits plan that satisfied their entire workforce. According to the Life Insurance Marketing and Research Association’s 2023 Workforce Benefits Study, nearly a third of all employers said that meeting the needs of their multigenerational workforce was a primary challenge. In 2024, employers will increasingly offer personalized and flexible benefits to address the unique needs and expectations of individual employees. The following are popular options for benefits customization:


  • Flexible spending accounts
  • Flexible work arrangements
  • Customized retirement plans
  • Convertible paid time off
  • Domestic partner benefits
  • Broader medical coverage
  • Expanded leave
  • Diverse wellness programs
  • Personalized learning and development opportunities


3. Prioritizing Employee Mental Health

Employee mental health is a priority for many employers in 2024. Countless employees are experiencing a combination of mental health concerns, including stress, lack of motivation and reduced focus. High inflation and widespread financial stress are exacerbating these issues, impacting workplace productivity, retention and morale. Given the impact employees’ mental health can have on an organization, employers are considering employees’ mental health while making important business decisions in 2024. To this end, savvy employers will continue prioritizing employee mental health in 2024 with the following methods:


  • Finding specialized mental health treatment from chosen vendors
  • Providing meditation and mindfulness resources
  • Expanding employee assistance programs to address burnout and other mental health challenges
  • Offering virtual therapy sessions
  • Providing managers with training to recognize employee behavioral issues
  • Expanding mental health service offerings
  • Investing in programs that build resiliency and improve coping strategies
  • Conducting anti-stigma behavioral campaigns


4. Focusing on Belonging

While more employers invested in diversity, equity and inclusion (DEI) initiatives in 2023, many employees—especially those from underrepresented and marginalized groups—continue to feel excluded. These emotions can undermine work performance, inhibiting creativity, participation and willingness to collaborate. They can also increase the risk of burnout and stress, leading to increased turnover and higher rates of absenteeism.


In 2024, employers are expected to address belonging to bridge the gap between existing DEI initiatives and the impact felt by employees. With that in mind, many employers are more often focusing on the factors that impact workplace belonging, such as organizational culture, leadership behaviors and personal relationships among employees. Others are introducing initiatives to foster belonging, such as:


  • Encouraging supervisors to check in with employees
  • Promoting social bonds within the organization
  • Encouraging open-door policies
  • Creating time for employees to connect socially
  • Facilitating trusting relationships (e.g., mentorships)
  • Celebrating employee achievements
  • Involving employees in critical business decisions
  • Creating fair and transparent compensation and promotion practices


5. Expanding Family-building and Reproductive Health Benefits

Reproductive health care benefits became a key issue for employers in 2023 after the U.S. Supreme Court’s Dobbs v. Jackson Women’s Health Organization decision ended federal protections for abortion rights and permitted states to implement their own regulations. Numerous employers will continue to expand reproductive health benefits in 2024 to meet employee needs and remain competitive.


Additionally, more employers are offering family-building benefits, as they have proven to be highly valued among employees who are looking to start or build their families. The impact of these benefits also often extends beyond affected individuals to make employees feel welcomed and supported in the workplace, improving engagement, productivity and retention. In the next year, many employers are expanding benefits offerings to include the following:


  • Paid parental and adoption leave
  • Child care subsidies
  • Flexible scheduling and remote and hybrid work options
  • Surrogacy benefits
  • Family planning assistance
  • High-risk pregnancy care
  • Pregnancy, lactation, postpartum and menopause support
  • Testosterone deficiency treatments


Employers providing legal reproductive care benefits should assess the implications of these offerings as reproductive health care laws continue to evolve.


6. Balancing Flexibility With Return-to-Office Mandates

Many employers responded to 2023’s tight labor market by offering remote and flexible work opportunities. As some employers begin issuing return-to-office mandates in 2024, organizations that are rigid in their policies may risk losing talented individuals and DEI efforts. They may also struggle to attract new employees from a smaller talent pool. As such, in 2024, proactive employers will focus on balancing employee expectations and needs with the benefits of having employees in the office. For instance, they may offer hybrid work options as a compromise for employees who are happier and more productive with flexible work arrangements.


Additionally, employers are increasingly focusing on creating safe, empathetic and transparent workplace environments to promote employee well-being as they return to the office. Some employers are also offering incentives for in-person employees, such as:


  • Commuter benefits
  • Child care benefits
  • Catered meals


7. Prioritizing Preventive Care Services

In 2023, record-high inflation and skyrocketing medical care costs prevented numerous employees from seeking necessary preventive care for fear of incurring medical debt. However, avoiding medical care can worsen long-term health outcomes and increase costs for both employers and employees by preventing the early detection of serious illnesses. As employers struggle to mitigate rising health care costs in 2024, many will focus on keeping employees healthy and providing benefits education to help guide them on their journeys to be educated health care consumers, maximize their benefits and understand the importance of routine care.


Summary

Although every workplace is different, employers who understand current benefits trends will be better equipped to provide employees with the benefits they desire and need. In an evolving labor market, an attractive benefits plan is critical to maintaining a healthy, happy and productive workforce, which can ultimately impact organizational productivity, engagement and revenue.


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DOL Announces Final Overtime Rule Increasing Salary Levels for White-collar Employees

30 Apr, 2024
On April 23, 2024, the U.S. Department of Labor (DOL) announced a final rule to amend current requirements employees in white-collar occupations must satisfy to qualify for an overtime exemption under the Fair Labor Standards Act (FLSA). The final rule will take effect on July 1, 2024. Increased Salary Level The FLSA white-collar exemptions apply to individuals in executive, administrative, professional, and some outside sales and computer-related occupations. Some highly compensated employees may also qualify for the FLSA white-collar overtime exemption. To qualify for this exemption, white-collar employees must satisfy the standard salary level test, among other criteria. This salary level is a wage threshold that white-collar employees must receive to qualify for the exemption. Starting July 1, 2024, the DOL’s final rule increases the standard salary level from: $684 to $844 per week ($35,568 to $43,888 per year); and $107,432 to $132,964 per year for highly compensated employees. On Jan. 1, 2025, the standard salary level will then increase from: $844 to $1,128 per week ($43,888 to $58,656 per year); and $132,964 to $151,164 per year for highly compensated employees. Automatic Updates The DOL’s final rule also includes mechanisms allowing the agency to automatically update the white-collar salary level thresholds without having to rely on the rulemaking process. Effective July 1, 2027, and every three years thereafter, the DOL will increase the standard salary level. The agency will apply up-to-date wage data to determine new salary levels. Impact on Employers The first salary level increase in July is expected to impact nearly 1 million workers, while the second increase in January is expected to affect approximately 3 million workers. Employers should become familiar with the final rule and evaluate what changes they may need to adopt to comply with the rule’s requirements. Legal challenges to the rule are anticipated, which may delay the final rule’s implementation.

New York Passes Prenatal Leave, Sets End Date for COVID-19 Leave

29 Apr, 2024
The recently enacted New York budget for fiscal year 2024-25 includes provisions mandating paid prenatal leave for the state’s workers, beginning Jan. 1, 2025, and repealing the New York COVID-19 sick leave law, effective July 31, 2025. Paid Prenatal Personal Leave The budget amends the state sick leave law by adding what is being touted as a first-in-the-nation requirement that all employers provide their employees with 20 hours of paid prenatal personal leave per 52-week period, starting Jan. 1, 2025. The amendment does not require employees to accrue the new leave, nor does it impose a waiting period before employees may use the leave; the full 20 hours must be made available on Jan. 1, 2025. Employees on leave must be paid their regular rate of pay or minimum wage if the applicable minimum wage is higher; however, employers are not required to pay out unused prenatal personal leave when an employee separates from employment. Permitted Uses of Prenatal Personal Leave Prenatal personal leave may be taken for health care services received by an employee during their pregnancy or related to the pregnancy, including physical examinations, medical procedures, monitoring and testing, and discussions with a health care provider related to the pregnancy. The new provisions do not require advance notification or documentation after the fact for using leave. Interaction With Paid Sick Leave and FMLA Leave The new requirement is in addition to the annual sick leave the law already mandates, which ranges from 40-56 hours and may be paid or unpaid, depending on the employer’s size and income. The amendment does not indicate that the leave runs concurrently with any federal Family and Medical Leave Act (FMLA) leave taken for prenatal care, meaning the state prenatal personal leave would be in addition to any FMLA leave taken for this purpose. Sunset Date for COVID-19 Leave The budget also establishes July 31, 2025, as the expiration date for New York’s COVID-19 employee sick leave law . The law took effect at the beginning of the COVID-19 pandemic, on March 18, 2020, and requires leave of up to 14 days, depending on the size and income of the employer. As with the regular sick leave law, whether leave must be paid also depends on the size and income of the employer. The sunsetting of the law comes in the wake of expired states of emergency and changed recommendations for isolation and quarantine. Steps for Employers New York employers should prepare for the start of paid prenatal personal leave in January 2025 and watch for any agency regulations and guidance implementing the new leave entitlement. Employers should also train managers and supervisors about the new requirements and make sure employee policies and handbooks are up to date. Employers should continue to allow COVID-19 sick leave when it applies and keep in mind that other leave requirements, such as paid sick leave, may allow employees to take time off from work for illness, including COVID-19.

FTC Announces Rule Banning Noncompetes

25 Apr, 2024
On April 23, 2024, the Federal Trade Commission (FTC) voted to issue a final rule that would ban noncompete agreements in virtually all employment relationships. The final rule has not yet been filed in the Federal Register, but is scheduled to take effect 120 days after such filing. Final Rule The final rule defines a noncompete clause as a term or condition of employment that prohibits a worker from, penalizes a worker for or functions to prevent a worker from: (i) Seeking or accepting work in the United States with a different person where such work would begin after the conclusion of the employment that includes the term or condition; or (ii) Operating a business in the United States after the conclusion of the employment that includes the term or condition. Such terms or conditions include employee contracts or workplace policies, whether written or oral. Subject to very limited exceptions, the final rule provides that: The use of noncompete clauses will be banned as of the effective date; Any existing noncompete clauses (other than those entered into with senior executives) will be invalidated; Employers must notify all employees (other than senior executives whose existing noncompete agreements will remain enforceable) that their existing noncompete agreements will not be enforced. Currently, the enforceability of noncompete clauses is determined by state and local legislatures and courts. The FTC rule would instead govern the enforceability of noncompete clauses at the federal level and supersede any less restrictive state laws or judicial interpretations. Legal Challenges On April 24, 2024, the U.S. Chamber of Commerce sued the FTC, seeking to block the final rule. The complaint was filed in the U.S. District Court for the Eastern District of Texas and argues that the FTC lacks the authority to issue rules that define unfair methods of competition. Additional legal challenges are likely, so employers should monitor for updates and anticipate potential uncertainty in the coming months. Next Steps for Employers Employers may consider reviewing existing employee agreements or form agreements (such as new hire paperwork) to determine whether any contain noncompete clauses that would be invalidated under the rule. Employers may also begin preparing revisions to such agreements and consider whether to use alternatives to noncompete clauses (e.g., nondisclosure clauses) to protect competitive business information.

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