When you're running a business, there are a lot of benefits that you will need to provide to your...
Most companies offer a range of benefits to their employees as an incentive to keep them onboard. Paid leaves, medical insurance, and a retirement plan are just some of the many benefits you may have heard of. However, did you know some benefits are mandated by federal law?
Aside from federal laws, there are state laws that apply to businesses too. If you’re a business owner and want to learn more about employee benefits, you’re at the right place. Continue reading to learn more about the benefits you will need to provide to your employees to fulfill your obligations to the law.
What Employee Benefits Are Required By Law?
Running a business can be tricky due to the ever-changing regulatory requirements. However, employers must ensure that they’re always complying with the latest additions to the law. Here are some of the benefits that you may need to provide to your employees.
#1 Social Security and Medicare Contributions
According to the Federal Insurance Contributions Act (FICA), all employees pay for a federally mandated program that will benefit them in their golden years. This tax is paid by both employees and their employers through direct payroll deductions.
You will have to withhold 6.2% of your gross compensation for Social Security taxes and 1.45% for Medicare. While this may seem like a lot, employees can benefit from this program when they’re 65 or older.
#2 Unemployment Insurance
The next benefit required by the law is unemployment insurance. When an employee loses their job, they will have access to unemployment compensation until they're able to find a new occupation. Both employees and employers have to bear the tax by making monthly contributions. Lastly, different states have unemployment insurance requirements, so ensure you comply with local laws!
#3 Workers’ Compensation Insurance
The third federally mandated benefit is workers’ compensation insurance. When an employee isn’t able to work as a result of a workplace incident, they will receive financial support through this program. It covers medical fees, treatment, and rehabilitation while the employee recovers.
#4 Health Insurance
Any organization that employs over fifty workers has to provide health insurance to its employees. Furthermore, you’re going to have to report the value of the health insurance provided to your employees. If it isn’t sufficient, you could face hefty penalties from the government.
#5 Family and Medical Leaves
If your employee has to leave work for family or medical reasons, they’re entitled to receive 12 weeks of unpaid leave without affecting their job status. However, some states may require you to provide paid leave in certain situations; hence, you should ensure you’re complying with all local laws!
What Is A Characteristic Of Employee Benefits?
There are five main characteristics of employee benefits. We’ve summarized them in the points below:
- Not based on performance: Employee benefits are not linked to performance. Instead, they’re meant to motivate workers and value their interests.
- Indirect Compensation: Workers are compensated indirectly through their benefits. For instance, Medicare provides healthcare to workers later in their lives.
- Labor cost: For employers, the cost of benefits counts as labor cost.
- Inclusive: All employees are entitled to receive benefits.
Have you checked your Employee Benefits Policy recently? Are you and your employees satisfied with its current coverage? Come talk to a TPG & Payroll & HR specialist today; Just call 909.466.7876 and get the answers you're looking for!
Also, if you have a couple of minutes to spare learn about The Importance of Employee Benefits in Today's Modern Workforce
