{"id":4780,"date":"2016-04-04T10:47:45","date_gmt":"2016-04-04T15:47:45","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-law\/smallbusiness\/employment-law-and-human-resources\/wages-and-benefits.html"},"modified":"2024-06-06T05:38:10","modified_gmt":"2024-06-06T10:38:10","slug":"wages-and-benefits","status":"publish","type":"page","link":"https:\/\/www.findlaw.com\/smallbusiness\/employment-law-and-human-resources\/wages-and-benefits.html","title":{"rendered":"Wages and Benefits"},"content":{"rendered":"\n
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Wages and 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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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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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

Good wages and a good employee benefits package help attract and keep top talent for your business. Wages are an employee’s salary or hourly pay. Benefits include health insurance coverage, retirement plans, and other worker incentives.<\/p>\r\n

Some of these benefits are mandatory, such as Social Security, Medicare, and workers’ compensation insurance<\/a>. Others are voluntary benefits, like retirement savings plans. Some states require particular benefits. For instance, California requires employers to offer disability insurance to employees. But this is optional in other states.<\/p>\r\n

Small business employee benefits can be costly. At the same time, retention is always an issue for small business owners. Weighing the cost of benefit plans against the constant hiring and retraining of new workers is an important consideration when reviewing your compensation package.<\/p>\r\n

Get more information at FindLaw’s section on Wages and Benefits<\/a>.<\/b><\/p>\r\n

Federal and State Wage Laws<\/h2>\r\n

Wages and hours are set by the federal Fair Labor Standards Act<\/a> (FLSA). The FLSA sets the national minimum wage, maximum work hours per week for full-time employees, and overtime pay for hourly workers. Salaried ("exempt") employees aren’t entitled to overtime pay.<\/p>\r\n

Federal law also regulates pay for tipped employees. Employers may take a "tip credit." That is, they may pay their workers less than the federal minimum wage as long as the employee’s total tips plus wages equal the federal wage.<\/p>\r\n

Many states have abolished the tip credit. In these states, employers must pay employees a flat wage and allow them to keep 100% of their tips.<\/p>\r\n

State Wage Laws<\/h3>\r\n

Under the FLSA, states may set their own minimum wage<\/a> as long as it isn’t less than the federal wage. In many states, it’s now much higher. Some states require paid lunch and break periods. These are requirements, not perks or benefits.<\/p>\r\n

Workers’ Compensation Insurance<\/h3>\r\n

Every state except Texas requires employers to carry workers’ compensation coverage for their employees. In some states, there is no minimum number of employees for coverage. Workers’ compensation pays the medical expenses for workers injured on the job. It’s not considered a health insurance plan.<\/p>\r\n

Workers’ compensation is not considered part of an employee’s pay. It is part of the employer’s responsibility to their workers.<\/p>\r\n

Employee Benefits<\/h2>\r\n

Most people think of healthcare when thinking of employee benefits. Health benefits are probably the number one thing employees ask about when they’re hired. Because of the demand, states and some cities now require employers to offer health insurance. The Affordable Care Act<\/a> (ACA) has made small business compliance possible.<\/p>\r\n

Fringe benefits, like life insurance, retirement plans, and paid time off, help attract and keep employees. In a few states, benefits programs are becoming requirements.<\/p>\r\n

Health Insurance Plans<\/h3>\r\n

Under the ACA<\/a>, businesses with 50 or more employees must provide affordable health insurance for at least 95% of their full-time employees. Other provisions of the ACA include:<\/p>\r\n