The New Benefit Plan

Continuing Case
Carter Cleaning Company
The New Benefit Plan
Carter Cleaning Centers has traditionally provided only legislatively required benefits for its employees. These include unemployment compensation, Social Security, and workers’ compensation (which is provided through the same insurance carrier that insures the stores for such hazards as theft and fire). The principals of the firm—Jack, Jennifer, and their families—have individual, family-supplied health and life insurance.
Jennifer can see several potential problems with the company’s policies regarding benefits and services. One is turnover. She wants to study whether similar companies’ experiences with providing health and life insurance benefits enable these firms to reduce employee turnover and perhaps pay lower wages. Jennifer is also concerned that her company has no formal vacation or paid days off or sick leave policies. Informally, at least, it is understood that employees get 1 week’s vacation after 1 year’s work, but in the past the policy regarding paid vacations for days such as New Year’s Day and Thanksgiving Day has been very inconsistent. Sometimes employees who had been on the job only 2 or 3 weeks were paid fully for one of these holidays, while at other times employees who had been with the firm for 6 months or more had been paid for only half a day.
She also wonders whether it would be advisable to establish some type of day care center for the employees’ children. Many of them have no place to go during the day (they are preschoolers) or have no place to go after school; she wonders whether a day care benefit would be in the best interests of the company.

  1. Draw up a policy statement regarding vacations, sick leave, and paid days off for Carter Cleaning Centers.
  2. What would you tell Jennifer are the advantages and disadvantages to Carter Cleaning Centers of providing its employees with health, hospitalization, and life insurance programs?
  3. Would you advise establishing some type of day care center for the Carter Cleaning employees? Why or why not?

Sample Solution

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