Employers have long provided basic employee benefits such as health insurance, retirement plans, paid leave, and life insurance. As the competition for talent becomes more intense, less traditional benefits have become a key differentiator for employers.
These innovative benefit offerings include genetic testing, breast-milk delivery services, pet insurance, student loan repayment, wedding reimbursement, home purchase loans, holistic medical coverage, and home-delivered meals, David McFarlane, a partner at Crowell & Moring LLP in Los Angeles, told Bloomberg Law in an email.
He discussed the pros and cons of offering genetic testing as an employee benefit and other trending fringe benefits.
This interview was edited for clarity and brevity.
Bloomberg Law: Why are employers offering genetic testing as an employee benefit?
David McFarlane: In an increasingly competitive work environment – and one that is focused on attracting younger generations of workers – employers are beginning to go beyond the typical array of benefits and perks as a means of saying “Hey, consider us. We’re cool. We get you. We want to keep you happy.” Among the array of cutting-edge benefits (like student loan repayment, home meal/grocery delivery, overnight breast milk shipping, egg-freezing, and surrogacy programs), genetic testing fits into the current consumer obsession with personal genetics. There’s another reason employers are interested in offering genetic testing as an employee benefit, which is to reduce employer health costs. Although the opposite may in fact be happening as a result.
Bloomberg Law: What advantages are there for employers that choose to offer genetic testing as an employee benefit?
McFarlane: The advantage for the employer is a reduction in health costs and absenteeism due to illness and conditions that might be revealed and prevented by genetic testing. This is particularly important for employers that have self-funded health plans and pay the cost of medical care out of general corporate assets.
Bloomberg Law: Are there any reasons employers should be wary of offering genetic testing as an employee benefit?
McFarlane: Yes, there are several. For example, early indications are that genetic testing actually may cause a rise in health costs. This is because the genetic test results can point to propensities for certain conditions like heart disease, cancer, diabetes, etc., which may lead to an array of unnecessary and costly medical tests. Employers need to be wary of regulatory limitations under state and federal laws like the Health Insurance Portability and Accountability Act and Genetic Information Nondiscrimination Act. Laws such as these mandate certain privacy protections regarding an employee’s health and genetic information. In addition, employees seem leery of partaking in employer-offered genetic testing for fear that such information may become known to their employer and be used against them for employment, health, insurance, or other reasons.
Bloomberg Law: Do you have any advice for employers considering offering genetic testing as an employee benefit?
McFarlane: With any addition to an employee benefit plan, you should talk to a lawyer to ensure that the plan and related documentation are compliant with applicable law, including the Employee Retirement Income Security Act, and that you are protecting your board, officers, directors, and other employees from fiduciary liability.
Bloomberg Law: Do you see this as a benefit with staying power?
McFarlane: Put it this way, I’m going to do it. So yes. The caution is that employers need to reflect on the reasons they are offering this benefit to their workforce, ensuring they are not targeting certain groups inadvertently, and they must correctly establish this particular benefit in accordance with applicable law.
Bloomberg Law: You’ve mentioned several employee benefit trends. Which benefits do you see becoming mainstream?
McFarlane: Top three, in this order: student loan repayment, pet insurance, and holistic medical coverage.
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