Lunch and Learns, Holiday Parties, and Monthly Stipends

Do I have to pay for time spent in lunch and learns?

Question: Every once in a while we have reps come present a product and buy the staff lunch. Attendance is completely optional. Do I have to compensate employees who choose to attend even though it’s during their lunch break?

This question came through CEDR’s private Facebook group, HR Basecamp, and Paul provided the answer below. If you aren’t a member of the group yet, click here to join and make sure you don’t miss any more of Paul’s video answers! 

Listen: Episode 604: You Can’t Pay Employees With a Free Lunch During Lunch & Learns

Bonus Episode: Episode 109: You Can’t Pay People in Chicken

Can I have my holiday party during work hours?

The Legal Side: Plenty of practices blend a small celebration into the workday, and there’s nothing in the law that says you can’t. The main rule is simple: if employees are doing any work-related activity, they must stay on the clock. That includes quick tasks like answering phones, helping a patient, or covering the front desk.

If you want to carve out a defined break in the middle of the day for a holiday lunch, you can. You can either keep everyone clocked in for that time or you can have them clock out, as long as they are completely relieved of all work duties during the break. And, of course, if their time is unpaid you cannot require that they attend your event. What you cannot do is mix celebration with patient care and then treat any part of that time as unpaid.

If you’d prefer not to interrupt the flow of the day, another compliant option is to hold the party at the practice after you’re done seeing patients. For example, you could close at 3:30 or 4:00 and have everyone return for a low-key gathering.

You also have off-site options that keep things clean from a wage-and-hour standpoint. Hosting at your home or a modest restaurant keeps the event entirely separate from work and avoids any confusion about whether someone is still “working.” Finally, we’ve linked our complete holiday-party guidance for a deeper rundown of legal considerations and best practices.

The Human Side: We understand the goal here. Many employers want to do something meaningful without going over budget, and folding a celebration into the day can work. The key is to separate the celebration from patient time. A dedicated 60- to 90-minute lunch where everyone eats together, enjoys the food you’ve provided, and then gets back to work creates a shared moment without blurring roles.

If you choose to host something after patients are gone for the day, consider making it a bit more of a “holiday party” feel by inviting spouses or partners. Keeping expectations modest will still give the team a lift.

When the event is in the office, we strongly recommend skipping alcohol. Even a relaxed environment can quickly become complicated when drinking and workplace expectations overlap. If you do something after hours and decide to include alcohol, you’ll want a plan for portion control and safety. Refer to the additional resources below.

Whatever you choose, the human goal is the same: give your team a chance to relax, feel appreciated, and enjoy something special together. Use the time to reinforce that the celebration is a thank-you, not an obligation.

For more ideas, you’ll also find our annual holiday-party guidance linked here.

Regardless of where or when the party is, make it clear that office policies remain in effect and employees are still expected to act responsibly.  Listen to this episode of What the Hell Just Happened?! for more of CEDR’s holiday party guidance: Episode 207: Holiday Party Guidance

Extra Credit Reading: Office Holiday Party Guidance 

Can we give our employees a monthly stipend to purchase their own health insurance? 

Question: We’re a small practice and figured out we needed to offer health insurance to help keep and attract employees. I’ve started looking into it, but it feels complicated. I’m thinking, why not just give them a little extra each month for health insurance? Can’t they take that and get their own, or maybe just treat it as additional income?

The Legal Side: The short answer to your question is that giving stipends outside of a structured plan violates provisions that the IRS set when the ACA was passed. You need to change what you are doing. Read more for an explanation that also answers the question, what is a QSEHRA plan, and spoiler alerts, the cure for correcting the stipend. 

One of the things that makes our relationship with our members unique is the customization and education session that takes place early on during the creation of your employee handbook. 

During the customization and education process, we are also conducting a mini-audit of your current HR practices. That often includes reviewing how you handle health insurance, so we can refer to it correctly in your handbook and discuss related policies, such as waiting periods. It is during those conversations that questions like yours often come up.

While we are not experts on health insurance itself, as HR support, we need to point out some HR-related issues and provide you with the necessary information to make informed decisions about how to address them in your policy manual. 

The short answer to your question is that giving stipends violates provisions that the IRS set when the ACA was passed. 

Your idea of giving employees a stipend for health insurance is understandable. It feels simple, flexible, and generous. The challenge is that under the Affordable Care Act, the IRS issued rules stating that stipends or reimbursements tied to individual health insurance are treated as “employer payment plans.” Because a stipend cannot meet the ACA’s requirements, such as covering preventive services and eliminating annual or lifetime limits, it is considered non-compliant. The penalties are steep: $100 per employee, per day.

Recognizing that many small employers were trying to do the right thing, Congress created a solution called the Qualified Small Employer Health Reimbursement Arrangement (QSEHRA). This is available to employers with fewer than 50 full-time employees who do not offer a group health plan. A QSEHRA enables you to reimburse employees for individual premiums and certain medical expenses in a compliant, tax-advantaged manner. It does require a formal plan, specific notices, and staying within annual limits, but it provides a safe way to accomplish what you were aiming for with a stipend.

With the advent of the QSEHRA also comes a business opportunity. Services have sprung up to make setting one up affordable and straightforward. The key is that these services take what you intended as a stipend and convert it into a compliant plan from the IRS’s perspective. That is the problem that needs to be solved when it comes to health care-related stipends. For example, you can check out Take Command Health. (Note that we do not receive any commissions from them.) There are other providers out there as well, but in general, this approach can be very cost-effective for small employers.

The Human Side: Health benefits are consistently among the top things candidates and employees look for in a job. There’s no one-size-fits-all package, so staying informed about the different options available is one of the best things you can do. 

FREE GUIDE: The CEDR Guide to Employer Health Benefit Options