An alarming number of U.S. employees spend valuable time during their work days dealing with more than just regular job duties, according to a recent survey of 1,000 full-time employees. For many workers, their family, financial, home or automobile legal woes compete for time and attention—resulting in lower job performance, productivity and morale.
"Workplace effectiveness often drops when employees are preoccupied with legal and financial concerns," says Cameron Sutton, president and chief executive officer of ARAG, a legal insurance provider that covers 15 million individuals worldwide. "The impact, the frequency and the complexity of legal woes can adversely affect employees and the organizations for which they work." A recent ARAG-commissioned study measured the impact of employee legal woes, the use of legal services and employee attitude toward legal services. The study, entitled "Measuring the Effects of Employee Financial & Legal Woes," was conducted by Russell Research, which interviewed more than 1,000 full-time employees, representing a nationwide, demographically-dispersed base.
Among the study's key results:
- Seven out of 10 surveyed employees experienced one or more legal woes during a 12-month period.
- They spent, on average, 57 hours while at work, dealing with legal woes.
- Four of 10 employees said legal woes had a negative impact on work performance (focus, stress, efficiency or effectiveness on the job).
- The most common legal woes involved issues of family care, credit trouble, child custody, consumer fraud, home or automobile purchase or repair and estate planning.
The Legal Woes Study indicated that one out of eight employees worked for an employer that offers legal plans at work while seven out of 10 said they believe legal plans would be useful in resolving personal legal needs.
Legal services plans, or group legal insurance plans, typically come in two forms: access plans or comprehensive plans. Employees (and in some cases, employers) pay premiums for legal insurance and legal assistance is provided by a network of preselected providers. Access plans provide a bit more than referral plans but much less than comprehensive plans. Under access plans, employees typically can speak to a network attorney regarding non-complex, general legal issues. Comprehensive plans, by nature, are more expensive since they cover attorney representation in more complex matters. However, these plans provide great savings through the power of group purchasing.
Legal services plans provide access to a network of attorneys, similar to the way HMOs provide access to network physicians. Typically, the networks are either closed, open or modified. Under closed networks, members must seek services from a preselected list of attorneys. Open networks, however, provide employees with access to any attorney who is then reimbursed from the plan. A modified panel provides access only to a network attorney, except in the case there an employee has already established an attorney relationship with an out-of-network provider.
Because legal woes take a heavy toll on workplace productivity and can affect business profitability, Sutton stated that concerned employers are looking for effective ways to address this issue and many are considering the addition of legal plans to their benefit packages.
As is true with many other types of benefits, legal insurance or group legal services plans allow employers to help their employees resolve their personal legal problems before the problems become serious and require absence from, or inattention to, work.
Providing employees with access to legal representation has several advantages for employers. First, legal services benefits can help attract and retain qualified employees. In addition, it can help alleviate the productivity issues that may arise. The fact that the employee has access to legal assistance eases that burden and helps the employee focus on his/her job. In addition, many employers consider legal service programs as adjuncts to their work/life programs in that they help employees juggle work with life events.
For employees, access to legal services levels the playing field when they are embroiled in disputes over, for example, car repairs or leases. Providing employees with a network of attorneys eliminates the need for searching for attorneys to handle specific matters. In many instances, premium payments can be handled through payroll deduction. For both employers and employees, legal services plans and prepaid legal plans are relatively low-cost benefits.
Legal service plans may be offered under a flexible benefit program, but the premiums must be paid with after-tax dollars. Any contribution, payment, or service under a group legal services plan is includible in a participant's gross income and is also includible in wages for purposes of income tax withholding and taxes due under FICA and FUTA. However, despite the fact that the exclusion for group legal services has expired, legal services benefits may still be nontaxable to employees if they come within the rules for de minimis benefits or working condition fringe benefits. If an employee receives a small amount of legal services from the in-house legal staff, this may come within the de minimis fringe rule. If the legal services are employment-related, they may come within the working condition fringe benefit rule.
Reprinted with permission. © CCH
<p>An alarming number of U.S. employees spend valuable time during their work days dealing with more than just regular job duties, according to a recent survey.</p>
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