Companies increasingly establish relief funds to aid employees in crises
The programs provide support during disasters and personal hardships, improving productivity.
As climate change continues to bring forth more frequent and intense natural disasters, companies increasingly are setting up employee relief funds to assist employees affected by such events or personal hardships, and to gain a competitive edge in a tight labor market brimming with job hoppers.
Since the devastating hurricanes Maria and Irma in 2017, the earthquakes in 2019 and 2020 and other disasters, many Puerto Rico companies have established employee relief or assistance funds to provide financial support during times of need.
Some companies create their own funds, while others utilize third-party administrators such as the Emergency Assistance Foundation (EAF), E4E Relief, Employees 1st, and the Restaurant Employee Relief Fund.
These administrators manage all fund activities, including accepting donations, reviewing grant applications, and awarding and distributing grants, while ensuring legal and regulatory compliance. The funds are grown through both corporate and individual contributions.
EAF, for example, administered more than $30 million in financial assistance in 2023 through more than 350 employer-sponsored relief funds. Since its inception 13 years ago, EAF has received over $395 million in donations that have helped more than 340,000 individuals and families, according to a recent press release.
In Puerto Rico, EAF has awarded more than 6,000 grants worth about $2.5 million. Most of these grants were given to employees experiencing financial hardship stemming from the COVID-19 pandemic and Tropical Storm Fiona.
Employee relief funds
Employee relief funds (ERFs), also known as employee assistance funds, emergency assistance funds or disaster relief funds, are employer-sponsored programs that help employees in need with monetary support in the event of an emergency or unforeseen and uncontrollable circumstances.
ERFs typically help employees affected by natural disasters such as hurricanes, earthquakes, tornadoes, wildfires and floods, or personal hardships such as an illness or medical emergency, being furloughed, unaffordable child or elder care, domestic violence, military deployment and funeral expenses, among other causes.
The funds sometimes are set up as temporary disaster relief and later become permanent programs as disasters continue to hit certain areas, outpacing humanitarian aid provided by organizations like The American Red Cross and The Salvation Army.
A growing trend
ERFs are trending in the U.S., with companies such as AT&T, Amazon, CVS Health, The Coca-Cola Co., American Airlines and Starbucks using them as a tactic to attract and retain talent in a highly competitive labor market.
In its most recent employer preparedness survey, reported earlier this year, EAF cited climate change-related disasters, economic instability and global health crises as factors driving the popularity of ERFs.
ERF market growth further accelerated in recent years as COVID-19 began to affect companies and employees throughout the world. ERFs assisted employees who had been furloughed or experienced hardship because of the pandemic.
According to EAF’s survey, which polled managers and C-suite executives in a variety of industries in the U.S. and Canada, 59% of the respondents said that instances of employees being affected by disasters or personal hardships have increased.
The most common types of disasters are storms and flooding (58%), and hurricanes or typhoons (56%). The most common types of personal hardships are serious illness or injury (69%) and death of an employee or loved one (53%).
Disasters and personal hardships significantly affect job performance (63%) and mental health and well-being (61%), EAF reported.
The high cost of financial stress
Numerous studies have shown that employees who are financially stressed – because of personal hardship, natural disasters or other circumstances – find it more difficult to focus on the job and be productive.
Sixty percent of full-time employees are stressed about their finances, according to PwC’s 2023 Employee Financial Wellness Survey. Even among employees earning $100,000 or more per year, nearly half (47%) are stressed about their finances.
Financial distractions can cost employers productivity. One in three full-time employees stated that money worries negatively affect their work; 44% said that financial issues are a distraction at work, and 56% of these typically spend three hours or more per week at work dealing with or thinking about financial problems, PwC reported.
Financially stressed employees also are more likely to leave their jobs. Only 54% saw a promising future at their jobs versus 69% of employees who were not financially stressed, and 73% of financially stressed employees said they would be attracted to employers who care about their financial well-being, the survey showed.
