Distributed Ledger for Compliant Paid Sick Leave
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Solution Overview
Problem
Current systems face challenges in providing paid sick leave benefits to employees, as existing laws like ERISA restrict employers from withholding funds for employee benefit plans, and conventional methods are not feasible for small businesses, leading to potential health risks and economic burdens due to sick employees working while contagious.
Innovation Solution
A distributed ledger system, utilizing self-executing agreements and cryptocurrency, allows employees to pool resources by withholding wages in cryptocurrency, enabling secure, transparent, and compliant payment of sick leave benefits without central hubs, ensuring funds are managed by employees and enforced by rules within the system.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Ease of manufacture
If employers withhold funds for employee benefit plans under conventional systems, then paid sick leave benefits can be provided to employees, but existing laws like ERISA restrict this practice making it infeasible for small businesses
Solution Approach 1:
The patent introduces a distributed ledger system as an intermediary between employers and employees for benefit fund management. This intermediary layer enables wage withholding and benefit distribution while complying with ERISA restrictions by eliminating traditional third-party custody requirements. The distributed ledger acts as a neutral mediator that allows small businesses to implement paid sick leave programs without violating federal regulations.
Solution Approach 2:
The system enables employees to self-manage their benefit funds through the distributed ledger. Employees have direct control over their benefit accounts, can request payments, and manage their own benefit distributions without requiring employer intermediation for custody functions. This self-service approach eliminates the need for employer-sponsored benefit plans while still providing paid sick leave capabilities.
2Device complexity
If conventional third-party custody systems are used for benefit funds, then fund management is simplified, but third-party custody liabilities and regulatory restrictions increase
Solution Approach 1:
The patent extracts the custody function from traditional third-party intermediaries and places it directly into the distributed ledger system. By taking out the custody role from external third parties and embedding it in the blockchain infrastructure, the system eliminates third-party custody liabilities while maintaining simplified fund management. The distributed ledger inherently provides secure custody without requiring external trustees or custodians.
Solution Approach 2:
The system replaces the mechanical legal framework of ERISA-regulated benefit plans with a cryptographic distributed ledger system. Instead of relying on legal contracts and regulatory compliance mechanisms, the patent uses blockchain technology to enforce benefit fund management rules. This substitution eliminates the need for traditional third-party custody arrangements and their associated liabilities.
3Reliability
If distributed ledger technology is implemented for benefit management, then third-party custody liabilities are eliminated and regulatory compliance is achieved, but system complexity and implementation difficulty increase
Solution Approach 1:
The patent creates a universal distributed ledger platform that serves multiple functions: benefit fund custody, wage withholding, benefit distribution, and regulatory compliance enforcement. By making the system multi-functional, it reduces overall complexity compared to implementing separate systems for each function. The same blockchain infrastructure handles all benefit management operations, simplifying implementation despite the advanced technology involved.
Solution Approach 2:
The system changes the fundamental parameters of benefit fund management from legal-regulatory-based to cryptographic-technical-based. By shifting from ERISA compliance parameters to blockchain consensus parameters, the system achieves regulatory compliance through technological means rather than legal frameworks. This parameter change enables small businesses to implement compliant benefit programs without navigating complex regulatory requirements.
Data Source
AI summary
In certain embodiments, a system includes a processor and non-transitory computer-readable medium storing instructions that, when executed, cause the processor to perform operations including depositing, for each of multiple group members, a payment to a first cryptocurrency address for the member, the payment corresponding to an amount withheld from a wage payment to the member. Each member has a respective device, and each first cryptocurrency address has a corresponding private key stored on the member's device. The operations include receiving an approved benefit request for a requesting member, and communicating, in response to the approved request, an instruction to each device that causes use of the private key on the device to initiate a transfer of a partial benefit claim payment from the device's first cryptocurrency address to a computer-implemented hub for depositing to a second cryptocurrency address of the requesting member according to a ruleset enforced by the hub.