{"id":4748,"date":"2016-04-04T10:47:41","date_gmt":"2016-04-04T15:47:41","guid":{"rendered":"https:\/\/ability-fl-prod.internetbrands.com\/ability-law\/smallbusiness\/employment-law-and-human-resources\/pro-and-cons-offering-employee-benefits.html"},"modified":"2026-08-31T10:43:14","modified_gmt":"2026-08-31T15:43:14","slug":"pro-and-cons-offering-employee-benefits","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/employment-law-and-human-resources\/pro-and-cons-offering-employee-benefits.html","title":{"rendered":"Required Employee Benefits: A Guide for Employers"},"content":{"rendered":"\n
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Required Employee Benefits: A Guide for Employers<\/h1>\n\n
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\n By Catherine Hodder, Esq.<\/a> | Legally reviewed by Laura Temme, Esq.<\/a>\n | Last updated\n
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Editorial Note: We earn a commission from affiliate partner links on FindLaw. Commissions do not affect the editorial integrity of our legal content.<\/p>\n\n <\/div>\n \n

\n \n <\/i>\n Legally Reviewed\n <\/summary>\n\n
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This article has been written and reviewed for legal accuracy, clarity, and style by FindLaw\u2019s team of legal writers and attorneys<\/a> and in accordance with our editorial standards<\/a>.<\/em><\/p>\n\n <\/div>\n <\/details>\n\n

\n \n <\/i>\n Fact-Checked\n <\/summary>\n\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\n\n

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Key Takeaways<\/h2>\n

An employer must provide mandatory employee benefits<\/span> as required by federal, state, and local laws, with obligations often determined by the number of employees. All U.S. employers must contribute to Social Security<\/span> and Medicare and have workers’ compensation<\/span> and unemployment insurance<\/span>. Specific laws like the ACA and FMLA<\/span> add requirements for businesses with 50 or more employees, while state laws may mandate additional benefits like paid leave or disability insurance<\/span>.<\/p>\n\n <\/div>\n <\/div>\n<\/div>\n\n

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When deciding which employee <\/span>benefits<\/span> programs<\/span> to offer, it\u2019s a good idea to understand the relevant state and federal laws. Meeting with an employment law attorney<\/a>\u200b can provide peace of mind<\/span> about legal compliance. This article discusses the different benefits and benefit requirements for small businesses<\/span>.<\/p>\n

See FindLaw’s Wages and Benefits<\/a> section for additional articles and resources.<\/p>\n

What Benefits Must Employers Provide Under Federal Law?<\/h2>\n

When determining required employee benefits<\/span>, it\u2019s important to understand what the federal government considers a “small business<\/span>.” Although the Small Business<\/span> Administration (SBA) considers any business with fewer than 500 employees small, some federal laws apply to businesses with as few as 50 workers.<\/p>\n

Benefits Required for All Employers<\/b><\/h3>\n\n\n\n\n\n\n
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Benefit<\/span><\/p>\n<\/td>\n

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Type<\/span><\/p>\n<\/td>\n

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Employees Required<\/span><\/p>\n<\/td>\n<\/tr>\n

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Social Security & Medicare<\/span><\/p>\n<\/td>\n

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Retirement & Retirement Health Insurance<\/span><\/p>\n<\/td>\n

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Any<\/span><\/p>\n<\/td>\n<\/tr>\n

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Workers’ Compensation<\/span><\/a><\/p>\n<\/td>\n

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Job-Related Injuries<\/span><\/p>\n<\/td>\n

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One or more<\/span><\/p>\n<\/td>\n<\/tr>\n

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Unemployment Insurance<\/span><\/a><\/p>\n<\/td>\n

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Involuntary Unemployment<\/span><\/p>\n<\/td>\n

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One or more<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Benefits Required for Mid-Sized and Larger Employers<\/b><\/h3>\n\n\n\n\n\n
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Benefit<\/span><\/p>\n<\/td>\n

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Law<\/span><\/p>\n<\/td>\n

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Requirement<\/span><\/p>\n<\/td>\n<\/tr>\n

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Health Insurance<\/span><\/a><\/p>\n<\/td>\n

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Affordable Care Act<\/span><\/a> (ACA)<\/span><\/p>\n<\/td>\n

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Generally 50 or more full-time employees. Must provide affordable health coverage.<\/span><\/p>\n<\/td>\n<\/tr>\n

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Unpaid Medical Leave<\/span><\/p>\n<\/td>\n

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Family and Medical Leave Act<\/span><\/a> (FMLA)<\/span><\/p>\n<\/td>\n

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50 or more employees. Applies to employees working at least 1,250 hours during the 12 months prior to leave.<\/span><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

If you\u2019re a qualified employer, you\u2019re required to provide these benefits to all full-time employees<\/span>. Independent contractors<\/a>, part-time workers, and volunteers are generally not covered by any benefit plans<\/span>. However, long-term part-time employees may be able to participate in employer retirement plans<\/span>.<\/p>\n

What Benefits Must Employers Provide Under State Law?<\/h2>\n

Five states (California, Hawaii, Rhode Island, New Jersey, and New York) and Puerto Rico require employers to provide short-term <\/span>disability<\/span> insurance<\/span> for their workers. Disability insurance<\/span> provides partial wages to workers who cannot work because of a non-work-related injury.<\/p>\n

About half of the states have passed state-mandated retirement plans<\/span><\/a>. Employers must offer workers the option to join a state-sponsored Roth IRA or similar retirement savings<\/span>. Six states have penalties for failing to offer or enroll employees in these retirement <\/span>benefit<\/span> plans<\/span>.<\/p>\n

Sixteen states and the District of Columbia have mandated paid family leave<\/a>. Eight states allow employers to use private insurance to cover family leave and maternity care. The size of the businesses affected by these laws varies in each state.<\/p>\n

Offering Optional Employee Benefits<\/span>: The Pros and Cons<\/h2>\n

Beyond what employers are legally required to offer, they may want to provide competitive benefits<\/span> to attract and retain talented employees. Small business<\/span> employee benefits<\/span> are a balancing act. They help you attract and retain top workers, but they cost money that a smaller company may not have. Let\u2019s take a closer look at potential positive and negative aspects.<\/p>\n

The Pros of Offering <\/span>Employee<\/span> Benefits<\/span><\/h3>\n