BY: RITA SORONEN
(Originally posted by the National Council For Adoption (NCFA) on July 1, 2018)
From simple education activities to implementing a robust adoption benefits program, workplace support of adoption not only increases awareness about the issues confronting our most vulnerable children, but also provides critical support for families formed through adoption. Employers have the power to make a crucial difference in the lives of waiting children.
Dave Thomas, who was adopted as a child and is the founder of The Wendy’s Company and the Dave Thomas Foundation for Adoption, started an initiative for adoption benefits in the workplace more than 25 years ago. For him, it was simply a matter of equity — if an employer provides benefits for families because of the birth of a child, why wouldn’t they also acknowledge adoption? As a result, he reached out to other large employer CEOs, and suggested they add adoption benefits to their human resource packages because, as he shared with everyone, “It’s the right thing to do.”
Twenty-five years later, the Foundation continues this legacy effort of Dave Thomas and encourages companies to support foster care adoption by providing education and information for employers — large or small, for profit or non-profit — to implement adoption benefits. Additionally, the Foundation annually recognizes the nation’s 100 Best Adoption-Friendly Workplaces, honoring employers who excel at supporting their employees who adopt, through financial reimbursement and paid leave.
Providing Adoption Benefits is a Growing Trend Among Employers
Adoption benefits are voluntary, employer-funded policies for employees who adopt, whether from foster care, internationally, or through domestic private agencies. Companies are increasingly offering adoption benefits to their employees, including financial reimbursement for expenses, paid and unpaid leave, in addition to the Family and Medical Leave Act (FMLA).
The Foundation’s Adoption-Friendly Workplace program has seen yearly increases in the number of employers offering adoption benefits, which is mirrored by an annual survey of 1,000 major U.S. employers conducted by Aon Hewitt. The Hewitt survey has shown a marked rise in companies offering financial adoption benefits, from only 12 percent of the surveyed businesses offering benefits in 1990 to a majority of them, or 56 percent, offering benefits in 2015.
The Benefit to the Employer
Businesses that offer workplace recognition of adoption keenly understand the value to both the employee and the company. For the adoptive parent, financial support can be an important assist for the family. Additionally, having time off to bond with their child is equally critical. For the employer, adoption benefits are an affordable way to enhance employee recruitment, retention, and goodwill. Employers have shared that their reasons for providing adoption benefits include:
- supporting employees building families through adoption;
- increasing employee loyalty and retention;
- adding a competitive edge in recruiting new employees;
- providing a low-cost benefit (generally used by less than 1% of eligible employees);
- giving the adoptive employee time to bond with their child, as they would for the birth of a child;
- helping make adoption more affordable;
- helping move children in need of a family to loving, permanent adoptive homes; and
- recognizing that it is the right thing to do.
In fact, 39 percent of the employers surveyed cited multiple factors that influenced their decision to offer adoption benefits such as employee requests for adoption benefits (40 percent), equity for adoptive parents (52 percent), a family-friendly image (61 percent), and a competitive work/life benefits package (62 percent).
An adoption assistance program is a formal written plan not mandated by law, which, if implemented, must conform to Internal Revenue Service regulations and benefit all eligible employees, and reimbursements must be for qualifying expenses. Financial adoption assistance is not subject to federal tax withholding, but is subject to other withholdings, and employees should consult their personal tax advisor for details. Most employers use the IRS definition of “reasonable and necessary expenses directly related to the adoption of a child” in determining what may be reimbursed to an employee. These include agency and application fees, home study costs, attorney fees, court costs, transportation, lodging, immigration and naturalization fees and other expenses specific to the legal adoption of an eligible child.
Of the Adoption-Friendly employers participating in an annual survey through the Dave Thomas Foundation for Adoption, 90 percent offer financial assistance with amounts varying widely, from $5,000 to more than $20,000. Some specify the dollar amount per adoption process, some per adopted child. Many employers also set an annual or lifetime limit to the amount each employee can receive. In many cases, adoption reimbursements are not subject to federal income tax.
Twelve percent of the employers surveyed offer additional financial assistance for employees who adopt children with special needs. The additional amount ranges from $500 to $5,000 with an average of $1,700. In addition to medical or behavioral needs, some employers use the Federal Title IV-E definition of a special needs child as one whose ethnic background, age or membership in a sibling group would make placement difficult. This includes the majority of children waiting for adoption in America’s foster care system.
Child development experts universally agree it is vital that families be given time for children to bond with parents, and parents to bond with children. For the adoptive parent and child, the need for time to adjust to each other, regardless of the age of the child at adoption, is critical.
An employer may choose to offer paid leave as part of their adoption benefits policy; the IRS does not offer any specific guidelines. Paid leave for adoption is offered by 51 percent of companies surveyed, ranging from one to 20 weeks with an average paid leave policy of five weeks. While financial adoption benefits generally apply equally to all employees who are eligible, employers sometimes graduate paid leave based on years of service and stipulate that if both parents are employees, they must share the leave.
Employers with 50 or more employees and public agencies must grant 12 weeks of unpaid family leave for the placement of a child for adoption or foster care and to care for the newly placed child, in accordance with the Family and Medical Leave Act of 1993. Half of the employers surveyed also offer unpaid leave for adoption in addition to that mandated by the Family and Medical Leave Act.
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