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Should Your Business Have an On-Site Daycare?

By George Khoury, Esq. on April 05, 2017 | Last updated on March 21, 2019

Businesses small and large are always engaged in the struggle of attracting top talent. While health insurance, foosball tables, and fancy automated coffee machines may please some of the employees some of the time, to attract and keep top talent, offering more fringe benefits is often key.

For employers seeking a more mature workforce, one of the most lucrative fringe benefits that can be provided is subsidized, or even on-site, daycare. Despite how much working parents like on-site daycare, there are a few significant drawbacks to providing the service to employees, outside of the high costs. Fortunately, there are alternatives that small businesses can pursue to enlarge the carrot at the end of a parent-employee's stick.

Liability Liability Liability

Simply put, children are a liability. They are going to get injured, probably because they do something child-like, and then your business is going to be liable. Generally, while you can purchase insurance, there is little else that can be done besides vetting and monitoring daycare employees carefully.

Liability waivers are unlikely to be enforceable by daycare providers, which your business will have to become in order to provide daycare services on-site. In addition to insurance, hiring, monitoring, and legal regulatory costs, there will likely be a legal requirement regarding the number of daycare employees required depending on the size of the enrollment, which can drive up the costs considerably.

Daycare Drama

If there's more than one child in the daycare, there's potential for daycare drama, which can have all kinds of unintended consequences. After all, the children are the employees' children, and if there's a conflict between children, it could result in productivity issues for the involved parent employees, and even other employees. Additionally, a parent may have an issue with the way the daycare is run, and if it operated by an employer, this can lead to a damaged employee/employer relationship.

On and Off Site Alternatives

Despite the risks and costs, employees with children highly value benefits geared towards making their family life happier and easier. Childcare benefits, though costly, can provide long-term employees with the incentive to stay loyal, even for those with highly sought after qualifications.

An alternative to setting up an on-site daycare is to subsidize the cost of a nearby daycare for employees. Or, you could lease space to a new daycare center to operate on-site at, or adjacent to, your office or business (with lease terms that provide your employees priority).

If neither of those are viable options, simply creating a formal or informal partnership with a local daycare can provide a mutually beneficial arrangement for your employees, your business, and the local daycare. Also, partnering with neighboring businesses that want to provide the same benefit could help bring the costs down for those involved. The key is to ensure that any option you pursue will actually be a benefit for your employees, while not being overly costly.

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