Alumni Benefits: What Employees Expect When Rehired

Dawn Boyer

As companies continue to search for ways to cut costs, there is still a need to acquire talent to leverage organizational success. And in doing so, many companies are now rehiring former, or "alumni," employees because it is beneficial in reducing new-hire costs.

Organizations have seen overhead cost savings in recruiting, training and technology by hiring alumni employees. There are reduced hours spent on orientation programs, training and recruiting because the alumni employee has already gone through these processes. And most times, technology such as e-mail and server/portal access can be reinstated because the permissions have already been granted during their first employment.

However, when rehiring an alumni employee, the most common question companies receive is: Will the employee’s benefits be reinstated and the same as when they originally departed the organization?

The rehire may be entitled to seamless benefits reinstatement—depending upon how long her or she was gone.

When alumni employees return, whether for their old job or a different position (new department or new geographic area), their initial expectations may be that everything will be returned to the same state. If the rehire has been gone more than a month, changes to benefits may have occurred as part of a company’s cost-cutting and streamlining, of which the alumni need to be aware before they sign the re-hire offer of employment. It is vital that human resources or the rehiring manager communicate changes, expectations and any variation of benefits to the rehire, either during the final interview or discussion for the rehire, or within the rehire offer letter.

Offer letters have an annual salary noted, but many companies don’t detail benefits, except to note entitlements to benefits provided to all full-time (and/or designated benefits for part-time) employees. If there has been a benefits open enrollment period, then co-payments, premium costs, co-payments or provided benefits may have changed and need to be communicated. The onus is on the alumnus to ask if there have been any changes. Rehired employees usually slip through the communication cracks in the human resources departments, so rehires need to ask for themselves.

If the employee has been absent for less than 30 days, the employer might be able to re-instate the alumnus or "make whole" without a lot of paperwork. The insurance vendor might not even have been notified that the employee has left by the employer yet. If the employee has been gone for over 30 days and enrolled for COBRA, they should have received information about changes in the benefits coverage. Since there is no break in insurance, there should be no issue in coverage when they re-convert the employee back to the same plan. If the rehire did not elect COBRA benefits and there is a gap of coverage over 30 days, he or she will be considered a new employee and will most likely have to make elections as a new hire.

Rehired alumni who are able to negotiate a higher baseline salary are lucky; but in some cases the company could offer the same salary because the company may still be struggling. If a rehire is offered a lower salary, he or she should remind the employer the cost of a rehire will be drastically reduced compared to a new hire, based on less orientation, retraining, and background checks needed by the full-cycle recruiter. This provides a modicum of power to negotiate a higher salary.

Stock options and vesting stock may be offered by an employer whose finances are on the verge of recovery, and may not be able to offer a higher salary now, but have the ability to offer vesting stock or options to take advantage of in the future. The stock may eventually exceed the "lost" value of the higher salary. The rehire takes the gamble the company’s worth will increase when the economy gets better, there is a gain in sales for a new product or service, or even a back-burner R&D project starts to produce. The gamble may even revolve around the alumnus’ ability to produce sales for the company.

Employees expect vacation (or Paid Time Off—PTO) and possibly sick leave (if separate from PTO accrual) as part of their benefits rehire package. Employees who are absent for a short-term period will most likely want their accrual rate reinstated. Employees who were earning accrual of three, four or five weeks of vacation annually will want that reinstated (or grandfathered). This should be discussed in the final interview and written into the offer of rehire so there is no misinterpretation. If the company is struggling financially, or the alumnus has been gone for several years, the employer may insist the rehire restart the PTO accrual clock from the baseline as if a new hire.

Employees love extra benefits offered by employers such as tuition reimbursement or training cost reimbursement. The company may have tenure restrictions for these benefits, so the alumnus needs to ask for any restrictions to be lifted as part of the rehire offer. This will "make whole" benefits attained before the employee left.

Many rehired employees have the capacity to negotiate from a point of strength with employers who wish to rehire them. Smart job seekers can regain benefits, higher salaries, and other tenured perks, if the company has the financial capacity.

But the company is not morally or legally obligated to provide the grandfathering of benefits, privileges, or perks. Alumnus should get everything negotiated in the final interview for an offer of (rehire) employment letter so there will be no misunderstanding once onboard.