Paid vacation time, health insurance, tuition reimbursement, retirement savings... when it comes to recruiting and retaining employees, the benefits a business offers can have a significant impact. But employee benefits can be a complicated subject to navigate.
Some employee benefits are mandatory and required by law, while other benefits are voluntary and up to the discretion of the employer. An employee's status — i.e. the number of hours they work — further complicates who receives which benefits and when.
Ensuring employees receive the benefits they're entitled to can be challenging—but it’s important to adhere to myriad laws and regulations.
Mandatory Employee Benefits
The federal government requires that all employees receive certain benefits, regardless of employment status. Think of these benefits as a safety net for employees that protects them in times of economic hardship.
Mandatory employee benefits include:
Federal unemployment insurance: Employers must contribute through payroll taxes
Medicare: Employers must withhold a certain percentage of Medicare tax
Social Security: Employers must withhold a certain percentage of Social Security tax, depending on the employee's compensation
State unemployment insurance: Employers must contribute through payroll taxes
Worker's compensation: Employers must cover worker's comp costs though purchasing an insurance policy or by paying costs directly
Depending on the size of the business, other mandatory benefits may apply. Under the Affordable Care Act (ACA) all businesses with 50 or more employees must offer affordable, adequate health coverage to employees and dependents. Failure to comply with the ACA results in fines.
The Family Medical and Leave Act (FMLA) also requires businesses with 50 or more employees to offer up to 12 weeks of unpaid leave without fear of losing their job.
Some states, including California, also require employers to offer disability insurance.
Voluntary Employee Benefits
Benefits that are not mandated by federal or state law are up to an employer's discretion. Voluntary employee benefits include:
Education and tuition assistance
Health savings accounts
Long-term care insurance
Paid vacation time
Retirement savings plan contributions
While these benefits may not be mandated by law, many workers seek these benefits when making employment decisions. Offering competitive and attractive voluntary benefits is an effective way to recruit and retain quality employees.
Exemptions to Paying Benefits
When it comes to paying employee benefits, some exemptions exist. These exemptions may be based on the number of hours an employee works, the number of employees a business has, and how long a worker has been employed.
Often, worker status boils down to full-time or part-time. The IRS defines full-time as working, on average, at least 30 hours per week or 130 hours per month.
Some mandatory benefits must be offered to all employees of every size of business, regardless of how much they work and how long they've been employed.
However, if a business has under 50 employees, there are exceptions to the requirements of the ACA and FMLA. Often, part-time workers are eligible for some benefits, depending on state and local laws, as well as the employer's policies.
Given the complexity, ambiguity, and changing nature of employment laws, it's best to
Ensuring that you're following the law and providing employees with the required benefits can be complicated. That's why we recommend business owners Leap Carpenter Kemps Insurance Agencyor call us at 209-384-0727 to learn more.
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As the Employee Benefit’s Department Manager at Leap | Carpenter | Kemps Insurance Agency, I use my 20 years of insurance expertise and background in Human Resources Management to find the best policies for both business owners and their employees.
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Leap | Carpenter | Kemps Insurance Agency provides Commercial Business Insurance, Employee Benefits, Life and Health Insurance, and Personal Insurance to all of California, including Merced, Atwater, Los Banos, Mariposa, Madera, Fresno, Modesto, Turlock, and Stockton.
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