What Are Employee Benefits
Anything that can be considered a non-wage form of compensation that employers offer to their employees in addition to regular wages and salaries can be considered an employee benefit.
Generally speaking, there are three types of employee benefits that a company can offer legally required benefits, benefits that might not be required but are considered standard, and non-standard but desirable benefits that represent perks that a smaller percentage of businesses offer.
In this blog post, we are going to focus on those that are required by law and explain exactly what they are and why your business is obligated to provide them.
Family And Medical Leave Act Protections
The Family and Medical Leave Act entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons. A covered employer is a private-sector employer with 50 or more employees, and all public employers. The FMLA provides eligible employees with up to 12 weeks of job-protected, unpaid leave during a 12-month period for qualifying family and medical reasons, and to handle qualifying exigencies, as well as up to 26 workweeks of unpaid, job-protected leave in a single 12-month period under the Military Caregiver Leave. Qualifying reasons would include the birth of a child, dealing with a serious or chronic personal illness, or caring for an immediate family member with a serious or chronic illness.
Note: In addition to benefits under the FMLA, some states and local jurisdictions require paid/unpaid family leave and/or paid/unpaid sick and safe leave. Employers must review their obligations under applicable state and local laws.
What Are Required Employee Benefits
When starting a business, most entrepreneurs want to attract employees by offering them a robust benefits package. Then, reality sets in, and they realize that this will have to wait until they establish positive cash flow. Well regardless of if an employer is just starting out or if theyre already well established, employers need to realize that there are certain required employee benefits they MUST offer in order to maintain compliance with the law failure to do so can trigger large penalties. Here are required employee benefits employers cannot skip and some that are only applicable as a business grows.
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Regardless Of Employee Definition What Are The Particular Rights Of Employees When It Comes To Getting Retirement Plans From Employers
Any employee who is an active retirement plan participant must be aware of their rights. These rights are part of the Employee Retirement Income Security Act .
Part of these rights is the employers responsibility to disclose all crucial information of the plan, including a fair and timely process of claims when the need arises.
Equally crucial is the knowledge of employees on how to make these benefits work for them and their families.
Benefits Not Required By Law
There are a number of employee benefits that are not required by law, but that you may still want to consider adding to your benefits package. The right benefits can be useful in attracting new talented professionals and maintaining your existing staff.
Some non-required benefits include certain forms of supplemental insurance, life insurance, retirement savings plans, dental and vision care, wellness programs, and some salary perks. If you are looking for ways to make your business more competitive and build a team of highly-qualified workers, offering some of these non-required benefits may help.
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Benefits For Smarter Working
Employers, including small business owners, offer benefits to ensure employees’ workday is pleasant and productive. The list can include:
- Flexible working: one of the most effective non-monetary ways to retain employees
- Skills development: a win-win since employees further their skills and career while becoming better employees
- Free meals and drinks: a simple way to keep employees energized and show that you genuinely care about them
- Work-from-home stipend: a perk to help your remote employees set up a home office and ensure seamless workflow
Family And Medical Leave Act
The Family and Medical Leave Act requires some employers to provide 12 weeks of maternity, paternity, and adoption leave, but it isn’t required to be paid leave.
Most states have their own labor laws pertaining to family additions or medical issues that include paid leave.
Beyond federal and state laws, some employers choose to be generous with paid leave for new parents.
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You May Not Be Eligible For Ei Benefits
- if you voluntarily left your job without just cause
- if you were dismissed for misconduct
- if you’re unemployed because you’re directly participating in a labour dispute
- during a period of leave that compensates for a period in which you worked under an agreement with your employer, more hours than are normally worked in full-time employment
Paid Time Off And Other Leave Benefits
Outside of the FMLA leave, employers are actually not required by federal laws to provide paid or unpaid leave to employees. However, it is a standard practice of most employers to offer at least a few paid and unpaid leave day benefits for employees. Most of the time, paid time off is limited to holiday and vacation time, sick time, personal leave, funeral or bereavement leave, and jury duty leave.
Many companies offer employees the chance to earn paid time off based on how many hours theyve worked over a certain period of time, and these hours accrue. Other companies may choose to offer a limited amount of time off per year, with subsequent days off being unpaid. A standard paid time off policy will include 5 vacation days, 3 sick days, and 1 personal day.
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Commute Travel And Location
Location is an extremely important factor when job seekers are searching and deciding where to work.
Offering flexibility in the time and location employees can work, as well as offering financial aids and incentives, can offer employers enormous advantages when trying to win todays top talent.
These types of benefits can include:
Create A List Of Benefits You’d Offer
Once you know what will motivate your employees and make their life easier, create a list of benefits, including non-negotiable and optional perks.
You can create different packages for different employees , but you must ensure to do it according to the law. All benefits-related decisions must align with employment-based classifications.
Consider hiring a benefits broker, a professional specializing in employee benefits brokerage services. An experienced broker will be familiar with available packages and reliable vendors and create a plan according to your business’s size and budget.
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Social Security And Medicare Taxes
Regardless of the size of the business, every employer in the U.S. is required to match their employees social security and Medicare tax contributions. The cost of these contributions can range based on the age of the employee and their earned income. At the start of employment, each employee should complete certain tax forms.
The employer then uses this information to create a W-2 form which is used to report wages. To verify identities, employers typically use a Social Security verification system which helps minimize the risk of identification errors. This system also ensures each employee is rightfully credited for their Social Security and Medicare tax contributions.
Health Insurance Coverage As A Voluntary Benefit
Many smaller companies offer health insurance as a benefit, even if they aren’t required to by law. In fact, the majority of Americans have health insurance coverage through an employer. A study by the Urban Institute reported that 83.1% of all workers were offered health insurance through an employer in the first quarter of 2016.
In other words, you are likely to receive health insurance through your company, but it’s perfectly legal for employers of any size to refuse to provide it.
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In The Us Labor Context Who Are Small Employers And Who Are Applicable Large Employers
Those with at least fifty full-time employees or full-time employee equivalents are considered an ALE, while those with smaller numbers are classified as SE.
Note that this classification helps set varying employer obligations.
For one, ALEs are required to give minimum essential coverage for their employees.
Specific informational returns, including Form 1095-C, are also part of what they must file with the IRS.
Maternity And Parental Leave
Canada guarantees a minimum of 15 weeks maternity leave to all employees who give birth. Some provinces mandate more maternity leave, but 15 weeks is the minimum across the country.
Parents in Canada are also entitled to a minimum of 27 weeks of shared parental leave, regardless of gender. Some provinces increase parental leave to 35 weeks.
New parents can use this leave whenever they like, consecutively or separately, as long as they use it within one year of the birth of the child.
Employers do not have to pay employees for maternity and parental leave. Employees receive pay on their leave from government programs funded by taxes and social contributions. Parents who take leave receive either CAD $547 per week or 55% of their regular income, whichever is lower. In Quebec, payments are substantially higher at $900 per week.
Employers may choose to pay employees during leave if they desire.
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Laws And Regulations: What You Need To Know
Regulations are pretty loose when it comes to defining the limiting hours of part-time and full-time employment. Still, employers need to obey certain laws and acts that determine their obligations towards their employees.
The Affordable Care Act dictates that employers who employ more than 50 full-time employees or equivalents must provide the option of having essential health insurance benefits to all their employees. Those employers are classified as Applicable Large Employers. They also need to file Form 1095-C to the IRS, reporting about the healthcare benefits offered to all their employees during the calendar year.
If you are unsure about what it means to have 50 full-time employees or equivalents, heres a brief explanation. The easiest way to calculate how many full-time employees you have is to divide the total number of hours all your employees worked during one calendar year by the average full-time annual work hours for one employee.
The formula for calculating full-time equivalents is slightly different. You need to add up the number of hours all your part-time employees put in during one month and divide that number by 120. That will give you the number of your full-time equivalent employees.
Another applicable law is the Fair Labor Standards Act. The FLSA determines the minimum wages, overtime pay, and recordkeeping for all private-sector and government employees. It doesnt differentiate between part-time and full-time employees, and its rules apply to all.
Number Of Hours Of Insurable Employment Required To Qualify For Ei
The qualifying period is the shorter of:
Exception: In some cases, the qualifying period may be extended to a maximum of 104 weeks if you werent employed in insurable employment or if you werent receiving EI benefits.
Until September 24, 2022 Temporary
You only need to have accumulated 420 hours of insurable employment during your qualifying period to qualify for EI benefits.
If you were assessed a violation, you may need more insurable hours to qualify for benefits. The required amount rises based on the number and seriousness of misrepresentations that have been recorded in the 5-year period before the start of your claim.
After September 24, 2022
Based on the unemployment rate in your area, you’ll need between 420 and 700 hours of insurable employment during the qualifying period to qualify for regular benefits.
The unemployment rate in your area determines how many hours you need to qualify
Once you have determined the unemployment rate in your area, see the table below for the number of hours required.
Look up EI Economic Region by Postal Code to find out the unemployment rate in your region and the number of hours to qualify for regular benefits.
The number of hours is shown in the following table:
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What Are Fulltime Hours
Typically, employers consider 30 to 40 hours per week full-time. However, the exact number of work hours varies depending on your employer.
The Canada Labour Code contains a guideline of standard hours, which describes a period of eight hours a day to a total of 40 hours per week. However, an employer defines full-time hours in their employment contract or company policies. You should always read and understand the employment contract before signing it. If you need clarification about the work hours, it is advisable to discuss a clear expectation or schedule with your employer.
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Benefits Required By Law
Workers Compensation offers insurance benefits to employees who become ill or are injured at work.
This insurance is different in every state and is dictated at the state level.
In addition, some states require employers to purchase disability insurance.
To find out what your requirements are, you can go to this page.
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Are You Required To Offer Part
There is some federal labor legislation that outlines benefits requirements for part-time employees:
- Affordable Care Act : While most employers don’t consider an employee “full-time” for benefits qualification unless they work at least 40 hours per week, under the ACA, applicable large employers must offer affordable and adequate health insurance to any employees who average at least 30 hours per week, or at least 130 hours per month to avoid a potential assessment if at least one full-time employee receives a premium tax credit.
- Employee Retirement Income Security Act â “1,000 Hour Rule:” Even if part-time employees are not eligible for other benefits offerings, this provision of ERISA requires employers to allow any employees who complete 1,000 hours of service within a 12-month period to participate in any retirement plan offered to other employees.
- Executive Order 13706, Establishing Paid Sick Leave for Federal Contractors: If an employer accepts work as a federal contractor, that employer must provide paid sick leave to all employees, even those who are considered part-time.
When state and local laws enact higher minimum requirements than federal labor statutes, the higher state and local standards take precedence, so it is important to always check your state and local jurisdictions for any additional requirements that may apply to part-time employees.
Employee Benefits You Are Legally Required To Provide
Running a company is no easy task, especially in our ever-changing business landscape. The law is constantly evolving, and with the myriad of options for providing employee benefits, it can be difficult for business owners to keep up! Between health benefits, tuition reimbursement, paternity leave, and retirement savings plans, how are business owners supposed to keep track of what benefits are required by law?
According to the U.S. Bureau of Labor Statistics, “legally required benefits provide workers and their families with retirement income and medical care, mitigate economic hardship resulting from loss of work and disability, and cover liabilities resulting from workplace injuries and illnesses.”
Here is the list of benefits that businesses are required to provide by the federal government:
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Mandatory Benefits For Employees
According to the team at Nolo.com, The Affordable Care Act requires companies with 50 or more full-time employees to provide affordable and adequate health care coverage to those employees and their dependents. Failing to do so could result in IRS penalties. The non-coverage fine is $2,500, multiplied by the total number of full-time workers, minus the first 30 full-time workers.
Smaller employers can provide one health insurance option for their employees, and larger companies can offer several. A traditional choice is an indemnity plan, where employers pick the care provider and the insurance company reimburses employees or pays providers directly. In managed care programs like Health Maintenance Organizations and Preferred Provider Organizations , employees use providers that the organizations’ contract with for discounted rates. Other companies choose self-insurance they have an outside company handle all the paperwork and pay the claims.
Also mandatory are Social Security, Medicare and FICA . This mandates that employees and employers contribute to these funds employers withhold Social Security and Medicare taxes, and employees also pay for it through payroll taxes. The monies are later used to pay qualified individuals their Social Security and Medicare benefits.
Required For Businesses With 50+ Full
Once your company grows to an organization of 50 or more employees, there are additional employee benefits that become mandatory.
These two employee benefits are also ones that many smaller companies regularly offer their employees even if they are not mandated to do so. They are considered standard benefits offers for companies that want to attract top talent and retain their best employees.
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Exemptions From And Modifications To Hours Of Work Provisions Regulations
The Exemptions from and Modifications to Hours of Work Provisions Regulations exempt classes of employees from certain hours of work provisions or modify the provisions for the purpose of application to certain classes of employees. The Regulations are coming into force in 2 phases.
Phase 1 of the Regulations came into force on February 1, 2022 and they apply exclusively to the following sectors:
- road transportation
- grain
The Regulations list job titles, by sector, as per the National Occupational Classification, that were granted exemptions and/or modifications.
Note: For more information on which exemptions and/or modifications apply to you, please consult the Regulations.
Phase 2 of the Regulations will cover the following sectors:
- rail transportation
Refer to the Labour Program Forward Regulatory Plan: 2022 to 2024 on the Labour Programâs website for updates on the upcoming Regulations.