- Community Home
- :
- Expert Insight and News
- :
- Small Business Matters
- :
- Employee Benefit Plans: What’s Law and What’s Opti...
Employee Benefit Plans: What’s Law and What’s Optional
Whether you are looking to hire employees for the
first time or are already an established employer, you must face the
reality that your business is now a collective effort and only as good,
or successful, as the team that staffs it.
Employee benefit
programs are the cornerstone of the American work place. If you can’t
offer your employees the basics, you may as well hang up your
recruitment and retention hat and continue as a one-man band.
Yet,
knowing where to start compiling a comprehensive benefits program for
your small business can be overwhelming. You must be able to
understand and comply with the laws that govern employee benefits. You
also have to be able to choose healthcare insurance providers, select
retirement benefit plans, and institute softer benefits such as
employee incentive programs.
As way of an introduction, here is
an overview of the basic employee benefits that the law requires you to
provide, as well as guidance on setting up a more comprehensive plan.
Required Benefits vs. Optional Benefits
You
may be surprised to know that what are often perceived as required
employee benefits, such as vacation leave benefits, are not actually
mandated by federal law.
Here is a breakdown of what you are required to include in your employee benefit program and what you are not:
1. Required Employee Benefits
All employers must pay in whole or in part for certain legally mandated benefits and insurance coverage including the following:
- Social Security
As an employer, you must pay social security taxes at the same rate paid by employees (the current rate for social security is 6.2% for employer and employee, plus an additional 1.45% each for Medicare). eHow offers a great step-by-step explanation on How to Calculate Weekly Payroll Taxes; How to Calculate Employer Payroll Contributions; and How to Deduct Social Security Payments.
You can also get information here from Business.gov on how to file an employer W-2 form, how to hire employees not covered by social security, and more employee benefit information.
- Unemployment Insurance
Unemployment insurance is mandated at the state level, so the law is going to be different wherever your business is located. You can find out what law applies in your state on Business.gov here. If you are required to pay this tax in your state you’ll need to register your business with your state’s workforce agency.
- Workers Compensation
Commonly known as "disability benefits", workers compensation provides benefits to workers disabled by occupational illness or injury. Again, this insurance is mandated differently by each state. Currently, you are required to purchase disability insurance if your employees are located in any of the following locations: California, Hawaii, New Jersey, New York, Puerto Rico and Rhode Island. If you employ workers in states other than these, you have the option of providing private insurance to your employees.
- Family and Medical Leave
While regular vacation leave is not a required benefit, employers with 50 or more employees are required to provide leave under the Family and Medical Leave Act (FMLA). This provides 12 weeks of job-protected, unpaid leave during any 12-month period to eligible, covered employees for reasons including birth and childcare, immediate family care, or care for the employee’s own health condition.
These resources provide employers with information on how to comply with FMLA.
- COBRA Benefits
Companies who had 20 or more employees on more than 50 percent of its typical business days in the previous calendar year are subject to COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985). COBRA provides continuation of health coverage at group rates for former employees, retirees, spouses, former spouses and dependent children. Read more about Handling Employee Layoffs as a Small Business Owner and COBRA.2. Optional Employee Benefits
You’ll notice that the list of required benefits does not include much of what the average employee today would expect from a competitive benefits program. Benefits such as healthcare insurance, life insurance, retirement plans, diverse leave policies, etc. combine to make a comprehensive benefit plan that is often considered an integral part of a total compensation package for many employees.
Now that you know what you are required to provide by law, take the time to understand what optional employee benefits makes sense for your business economics as well as your current and future employee needs.
There are a range of resources in Business.gov’s Small Business Employee Benefits Guide that help explain the types of health and retirement plans that your business might consider and provide tips on setting up an employee benefits plan.
Other Resources
- 10 Regulatory Steps You Must Follow When Hiring Your First Employee - Part 1 and Part 2
- Small Business Guide to Hiring and Managing Employees from Business.gov
- Small Business Guide to Employment and Labor Law from Business.gov
Technorati Profile
-
JenniferD
- I help to promote the Business.gov Community and always try to keep my finger on the pulse of the market, using fun new tools like Twitter, blogging and social media to help get the word out. Looking forward to hearing and learning from you!
-
CaronBee
- Small business and microbusiness blogger.
- Employee Benefit Plans: What’s Law and What’s Opti...
- The CAN-SPAM Act and Beyond: Improving Email Compl...
- Protect your Invention or Product – Patents, Trade...
-
ARRA and a Green America: Understand
ing The Small... - Operating a Restaurant Within the Law: A 101 in Co...
- Operating a Restaurant within the Law: A 101 in Co...
- Doing Business in Your Town: Navigating the State ...
- Handling Employee Layoffs as a Small Business Owne...
- What is a Small Business? – What You Need to Know ...
-
Customer Retention and Acquisitio
n: Tips for Reces...
- (1)
- 2008 tax law changes (1)
- 2008 tax return (1)
- 2009 tax law changes (1)
- ARRA (1)
- bankruptcy (1)
- bankruptcy options (1)
- bankruptcy resources for small business (1)
- business partnerships as a business structure (1)
- buying a policy (1)
- buying government surplus (1)
- CAN SPAM Act compliance (1)
- choosing a business location (1)
- complying with business laws in your state or city (1)
- complying with restaurant industry laws (1)
- employee benefit plans (1)
- employer insurance (1)
- energy efficiency (2)
- energy efficiency programs (1)
- energy tax credits (1)
- essential government forms (1)
- export financing (1)
- exporting basics (1)
- filing a complaint (1)
- finding the right policy (1)
- free small business advice (1)
- getting started (1)
- going green (1)
- government auctions (1)
- government forms for small business (1)
- green (1)
- green business (2)
- green home office (1)
- green office (1)
- green technologies (1)
- greening your business (1)
- grow customer relationships. use market data and demographics (1)
- handling employee layoffs (1)
- home based business (1)
- how do i contact the government (1)
- how to start a non-profit (1)
- import and export trade (1)
- incorporating a small business (1)
- is business partnership right for you (1)
- labor laws (1)
- liability insurance (1)
- microbusiness (1)
- operating a restaurant (2)
- optional employee benefits (1)
- patents (1)
- recovery act (1)
- required employee benefits (1)
- restaurant compliance (1)
- running a restaurant (1)
- SBA loan eligibility (1)
- sba loans and small business (1)
- smal business (1)
- small business (1)
- small business and the recovery act (1)
- small business assets (1)
- small business exporting (1)
- small business guide (1)
- small business insurance (2)
- small business intellectual property (1)
- small business location (1)
- small business questions (1)
- small business size standards (1)
- small business sizing (1)
- small business tax changes 2008 (1)
- starting a green business (1)
- starting a restaurant (1)
- starting a small business (1)
- tax season (1)
- tools for the veteran-owned business (1)
- trademarks (1)
- types of bankruptcy (1)
- veteran-owned business (1)
- JayE on: Operating a Restaurant Within the Law: A 101 in Co...
- luckycharmz336 on: Doing Business in Your Town: Navigating the State ...
-
Designempire
on:
Customer Retention and Acquisitio
n: Tips for Reces... - ABrooks on: All the Government Forms Your Small Business Needs...
- ngordon on: The Recovery Act: SBA Loans and Your Small Busines...
- Horang007 on: Need to Contact the Government About Small Busines...
-
Andrew
on:
From Military Service to Entreprene
ur – Tools for ... -
DJoyce
on:
Is Your Small Business a Microbusin
ess? If So, You... - luckycharmz336 on: A Small Business Guide to Exporting: Part 2 - Gett...
- Horang007 on: A Small Business Guide to Exporting: Part 1 - Gett...
- 03/05/2009 - 09/05/2009
- 26/04/2009 - 02/05/2009
- 19/04/2009 - 25/04/2009
- 12/04/2009 - 18/04/2009
- 05/04/2009 - 11/04/2009
- 29/03/2009 - 04/04/2009
- 22/03/2009 - 28/03/2009
- 15/03/2009 - 21/03/2009
- 08/03/2009 - 14/03/2009
- 01/03/2009 - 07/03/2009
- 22/02/2009 - 28/02/2009
- 15/02/2009 - 21/02/2009
- 08/02/2009 - 14/02/2009
- View Complete Archives