{"id":4686,"date":"2016-04-04T10:47:40","date_gmt":"2016-04-04T15:47:40","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/employment-law-and-human-resources\/employee-benefits-basics.html"},"modified":"2024-06-06T04:53:07","modified_gmt":"2024-06-06T09:53:07","slug":"employee-benefits-basics","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/employment-law-and-human-resources\/employee-benefits-basics.html","title":{"rendered":"Employer Guide to Employee Benefits"},"content":{"rendered":"\n
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Employer Guide to Employee Benefits<\/h1>\n
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\n By Susan Buckner, J.D.<\/a> | Legally reviewed by Melissa Bender, Esq.<\/a>\n | Last updated\n
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The last updated date refers to the last time this article was reviewed by FindLaw or one of our contributing authors<\/a>. We make every effort to keep our articles updated. For information regarding a specific legal issue affecting you, please contact an attorney in your area<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n<\/section>\n

Employee benefits are essential for attracting and retaining top talent. Job-seekers ask about wages and health benefits when applying for a new job. Large companies can afford to offer employee benefits like fitness club memberships and comprehensive insurance plans. These perks may be out of reach of smaller companies.<\/p>\r\n

Federal and state laws require some benefits. Small-business owners should know what benefits they must provide. Some benefits are not cost-effective for small companies despite being desirable for workers.<\/p>\r\n

For more related articles and resources, visit FindLaw’s Wages and Benefits<\/a> section.<\/p>\r\n

Types of Employee Benefits<\/h2>\r\n

Regardless of size, all employers must provide their employees with workers’ compensation<\/a>, Social Security, and unemployment insurance. Most people don’t consider these benefits, but they are payments into an insurance pool for the benefit of employees. Failing to provide these benefits can result in fines and penalties for the employer.<\/p>\r\n

Employers with more than 50 employees must provide some benefits to qualified workers. State laws affect some businesses with fewer than 50 employees.<\/p>\r\n

Independent contractors<\/a>, part-time workers, and volunteers are generally not covered by any benefit plans.<\/p>\r\n

Health Care Benefits<\/h3>\r\n

The Affordable Care Act<\/a>, also known as "Obamacare," requires employers with over 50 employees to offer health insurance coverage to at least 95% of their eligible employees.<\/p>\r\n

The ACA Small Business Health Options Program (SHOP) helps small-business owners find affordable health insurance plans. SHOP provides tax credits for paying insurance premiums. Businesses with fewer than 25 employees qualify for these tax credits.<\/p>\r\n

The Family and Medical Leave Act<\/a> (FMLA) also applies to employers with more than 50 employees. The FMLA gives eligible workers up to 12 weeks of unpaid leave to care for injured or ill family members, to recover from a personal medical emergency, or for maternity leave. The employee can add FMLA time to any paid sick days they already have.<\/p>\r\n

Employers who do not have to provide insurance but want to offer benefits for their workers may consider a health savings account (HSA). These plans let workers deduct pre-tax sums from their paychecks and bank them against medical expenses. Business owners can ask their insurance companies about these programs.<\/p>\r\n

Retirement Benefits<\/h3>\r\n

Federal law does not require retirement benefits<\/a> and pension plans. However, about half the states have some form of mandated state-sponsored retirement plan. Employers must offer a 401(k) or similar retirement savings plan. Six states have penalties for employers who fail to provide employees with a retirement plan option.<\/p>\r\n

The Employment Retirement Income Security Act<\/a> (ERISA) "1,000-hour rule" allows all employees to participate in retirement plans. Part-time and seasonal workers who work 1,000 hours within 12 months must have the option to participate in the retirement plan.<\/p>\r\n

Financial Benefits<\/h3>\r\n

Few things make a loyal employee happier than regular pay raises. A guaranteed pay increase of a certain percentage annually improves employee retention and morale. Workers appreciate annual bonuses, especially during the holidays. Paid time off (PTO) that accrues during the year may be part of a worker’s benefits package.<\/p>\r\n

Some states, like California, require disability insurance. Short-term disability insurance provides partial wages for employees unable to work due to non-work-related injuries. Long-term disability insurance takes over when workers’ compensation benefits expire. It also covers extended care for injuries or illnesses.<\/p>\r\n

Tuition reimbursement can be mutually beneficial to employers and workers. Employees can take courses that improve their work skills. Employers can assist them by offsetting some of the cost of college fees. The result is a worker with better job skills and less stress.<\/p>\r\n

Mental Health Benefits<\/h3>\r\n

Employers and employees have acknowledged the need for work-life balance. Employees want to know they can spend time caring for their well-being. Employers realize that employee burnout is a major cause of turnover among workers. Some things you can offer workers as mental health incentives include:<\/p>\r\n