Should hourly employees get full benefits? This CEO thinks so

Under a typical corporate hierarchy in America, workers get sorted into a caste system. There are the full-time salaried employees at the top of the pyramid who benefit from the privileges of being an employee. They get the cushion of family and bereavement leave and sick benefits to help them. They get the relief of knowing that a safety net of benefits are available to catch them when life strikes.

Then there are the hourly workers scrounging at the bottom of the pyramid. They are the contractors and part-time employees who are working at the company without perks and benefits, knowing that one health crisis could sink them. At worst, they can become second-class citizens.

At Rent The Runway, salaried and hourly employees get same benefits

One CEO wants to change this. In an opinion editorial for The New York Times, Rent the Runway CEO Jennifer Hyman noticed that her company, like many others, had “two tiers of workers” where salaried, corporate employees got paid sick leave, bereavement benefits, and the flexibility to work remotely while hourly employees in warehouses and retail stores did not. But Hyman said this tiered system was perpetuating “America’s inequality problem.”

“Employees who work at hourly rates are an afterthought,” Hyman writes. “But over the years, I began to reflect on how the system that I and others had constructed may have been perpetuating deep-seated social problems. The people with the most means have the most flexibility in their lives, not only because they have the ability to throw money at their problems but also because their companies grant them this flexibility to keep them happy.”

So Hyman decided to change this at her company, announcing that salaried and hourly employees would get access to the same bereavement, parental leave, family sick leave and sabbatical packages.

Her employees welcomed the change. “I received more positive feedback about these changes from my corporate team than about any other leadership decision I have ever made,” Hyman, who hopes that the policy will lead to higher retention rates, said.

Now, she wants others to follow in her company’s footsteps. “It’s time for business leaders to step up and fulfill not only their fiduciary duty to shareholders, but also their moral duty to society to treat every worker equally,” she concludes. More companies are beginning to do so. In January, following backlash over unequal parental leave, Starbucks announced that all part-time workers would receive the same paternal leave and paid sick time that corporate employees got.

But for this system to make a long-lasting impact on the lives of employees, these policies would need to expand beyond a few companies. As researchers Ellen Ernst Kossek and Brenda A. Lautsch warn in Harvard Business Review, too many hourly workers do not have access to work-life flexibility and this hurts their ability to rise up the career ladder. Lacking the ability to take time off when needed, these hourly workers become trapped in a cycle of inequality.

“These workers can’t take a sick day, but they’re also not getting enough hours to support themselves or their families,” they write. “Employers play a critical role in redesigning workplaces to provide all employees with greater control over how their work is reconciled with their personal lives. If done thoughtfully and fairly, it can lead to positive payoffs for organizations, people, and society.”