Employee Benefits for Bigger Businesses
Probably the top two things that a prospective employee takes into consideration when applying for and accepting a job are wages and benefits. Wages refer to the hourly rate or salary that an employee will receive. Benefits refers to anything an employee receives other than cash wages. There are certain benefits that are required by federal and state laws, but some benefits are optional at the discretion of the business owner.
An employer can use these optional benefits to encourage people to apply for and accept jobs at his or her business, in addition to keeping employees happy and productive. This article covers the basics of both required and optional employee benefits.
Required Employee Benefits
There are certain employee benefits that employers are required to provide by federal law: Social Security and workers’ compensation. However, states and some local jurisdictions usually have their own required benefits as well, so it’s important to check with your state’s laws to make sure that you are providing all required benefits to your employees. Please note that required benefits must only be provided to employees, not independent contractors.
There are also certain benefits that are required of employers that fit particular criteria. For example, private businesses with at least 50 employees must comply with the Family Medical Leave Act (FMLA). This Act entitles employees to have up to 12 weeks of job-protected, unpaid leave during a 12-month period for certain purposes. The FMLA applies to leave related to the birth or adoption of a child, the care of an immediate family member who has a serious health condition, or the employee’s own serious health condition. States may also have similar laws, sometimes expanding coverage to smaller employers, but employers are required to adhere to the law that is most beneficial to the employee.
Certain employers are also required to provide health insurance for their employees. Health insurance used to be an optional benefit, but with the passage of the Patient Protection and Affordable Care Act (ACA) — also referred to as “Obamacare” — employers with 50 or more employees are required to offer health insurance or pay a penalty. Employer-sponsored health coverage for employees is still optional and not required for businesses with less than 50 employees.
Optional Employee Benefits
There are other, non-mandatory benefits that the employer may choose to provide to his or her employees. As previously stated above, if the ACA doesn’t apply to your company, health insurance is an optional benefit. Other examples include life insurance, retirement plans, corporate memberships, workplace wellnes programs, and paid time off.
As with virtually all business decisions, there are pros and cons for offering employee benefits. For example, health insurance is not only an attractive benefit to prospective employees, it can also help retain good employees and decrease absenteeism. In addition, employees will often accept a lower salary if good employee benefits are available to them. However, offering employee benefits can also lead to concerns regarding legal compliance and mistakes in benefit plans can lead to expensive lawsuits.
In the end, it’s important to determine which benefits make sense for your business. Only you, the business owner, can know and compare the cost to your business versus the benefits your business will receive by offering such benefits to your employees.
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