Small Business Tips
Small businesses attract top talent when they design employee benefits plans with standard options and creative new perks. Additionally, some federal, state and city laws require that employers provide some benefits.
Here’s what to know about employee benefits plans for your business.
What are employee benefits?
Employee benefits include a broad group of resources that have a positive impact on the financial, physical and emotional well-being of employees and their families. They are diverse and range from the somber to the frivolous. Life insurance and free tickets to baseball games are both employee benefits.
Benefits laws are complex and change with new applicable legislation. The information provided here represents a casual introduction to the topic. It should only serve as a guide to begin your employee-benefits research.
Private-sector employee benefits fall into two broad categories for employers: optional and those required by law.
Mandatory employee benefits
Federal laws require that US employers of all sizes provide these benefits:
- Compliance with the Federal Insurance Contributions Act (FICA). Under this act, employees and employers contribute to:
- Social security
- Medicare
- Unemployment insurance
- Worker’s compensation insurance
Federal laws require that US employers with 50 or more full-time employees provide these benefits:
- Compliance with the Affordable Care Act requires that employers offer:
- Health insurance for full-time employees and their dependents
- Compliance with the Family and Medical Leave Act requires that employers provide:
- Up to 12 weeks of unpaid family leave, during a 12-month period, for qualifying reasons
Employers with more than 15 employees are required to comply with the Americans with Disabilities Act (ADA). The ADA prohibits employers from discriminating against individuals with disabilities. The ADA includes regulations on employee compensation and privileges of employment.
The ADA may not outline any specific benefit requirements; however, employers should understand the spirit of the law. Benefits offered should include options of equal value and accessibility for those with disabilities.
State and local laws
State and local laws may also impact employers. Employers in some states and cities must provide paid sick leave for their employees. Some cities have sick pay laws that differ from state laws or have local laws where there are no state regulations.
Why should your business offer benefits?
Along with the legal requirements, offering benefits enables small businesses to attract and retain talent. Top candidates will often be able to choose from a variety of roles. Offering benefits could be the difference between landing your ideal employees and seeing them join a competitor.
Traditional benefits packages
The following benefits are part of many standard packages. Full-time employees expect some version of these benefits.
Benefits during the hiring process
Some employers offer benefits to encourage employees to join their companies. These may include trips to visit employer locations, relocation assistance and hiring bonuses.
Health-related benefits
Employers offer health-related benefits for employees, their spouses, and children. Some employers also provide these benefits to domestic partners. Employers pay for health benefits or require a contribution from employees.
To learn more about employer costs for health benefits, visit the non-profit Kaiser Family Foundation (KFF) website. The KFF surveys examine employer health care costs each year.
Traditional health benefits may include:
- Dental insurance
- Medical insurance
- Prescription drug coverage
- Vision insurance
- Critical illness insurance
