HomeWhat Employee Benefits Are...

What Employee Benefits Are Required By Law

Learn More About Employee Benefits

Working at USCIS: Legal Assistance – An Employee Assistance Program Benefit

While employers are not required to provide employees with certain benefits, they are required to meet certain regulations if they do decide to offer these perks. For example, a business owner is not required to offer retirement planning benefits to their workers. However, if they decide to offer retirement planning, they must meet certain rules and regulations set forth by the Employee Retirement Income Security Act .

For more information about what employee benefits are required by law or to acquire employee benefits for your company, contact the employee benefits brokers at BBG Broker today.

Sign Up for Our Newsletter

California Paid Sick Leave

California law requires that employers provide paid leave to workers who fall ill or who must take care of a sick family member. California employees who work at least 30 days within a year from beginning their employment earn at least one hour of paid leave for every 30 hours worked, beginning on the first day of employment. The law applies to virtually all California employees, even part-time or temporary employees. Unused sick leave can be forfeited after a designated period of time and does not have to be paid to employees when they leave their job.

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.

Recommended Reading: What Benefits Does Medicare Provide

Who Gets Employee Benefits

According to the Bureau of Labor Statistics , 34% of private-sector workers received 10 to 14 paid vacation days after one year of service. Typically, vacation time increases with tenuremeaning the longer the employee stays with their employer, the more paid vacation days they have.

Employers provided health care benefits to 71% of private-sector employees, according to the BLS. Among private-industry workers, 68% had access to a pension or retirement plan.

Watch Now: 9 Benefits Employees Really Want

Uniformed Services Employment And Reemployment Rights Act


Certain persons who serve in the armed forces have a right to reemployment with the employer they were with when they entered service. This includes those called up from the reserves or National Guard. These rights are administered by the Veterans’ Employment and Training Service.

This law bars most employers from using lie detectors on employees, but permits polygraph tests only in limited circumstances. It is administered by the Wage and Hour Division.

Recommended Reading: What Age Can I Get Medicare Benefits

How Much Do Benefits Cost A Company

According to a 2019 report by the Bureau of Labor Statistics, employee benefits in the U.S. make up 30% of total compensation costs. Insurance benefits accounted for 8% of compensation costs and legally required benefits were at 7.7%.

Health benefits especially might average $15,000 per employee in 2019, prompting employers to make changes in order to lower the cost of employee benefits .

Benefits do cost money, and their importance is such that these costs will not be reduced too much. But, not every benefit has to create heavy financial burdens for companies. You can try your hand by introducing cost-effective benefits and perks, such as:

  • Free lunches and/or snacks

Life And Disability Insurance

Only 37% of employees at smaller companies receive life insurance benefits. Short- and long-term disability benefits are rarer yet, with access rates of 30% and 23%, respectively.

That might be a missed opportunity, as the hourly costs for these employee benefits are just $0.04 for life insurance, $0.07 for short-term disability, and $0.04 for long-term disability.

Also Check: Benefits Of Llc Taxed As S Corp

Highlight Your Organizations Values

Todays successful companies know that to attract and retain employees, they must define and instill great company values. Your employee benefits package can be a reflection of your company values and entice top talent who share the same core values as you.

For example, you may launch a corporate responsibility initiative offering PTO to your employees so they can volunteer in their community.

Ultimately, the benefits you offer send a message about your organizations beliefs. A good benefits package shows that you recognize your employees needs outside the workplace and want to support their overall well-being.

Federal And State Compliance

A business owner’s guide to employee benefits | Morgan Law @FinePoints

As mentioned above, many states and cities have enacted benefit laws that significantly expand requirements for your business. To ensure you’re meeting all requirements, you need to check benefit laws at the federal, state, and local levels.

Your state labor department and local small business district office are good resources.

Recommended Reading: Federal Government Employee Retirement Benefits

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.

Benefits That Are Required By Law

When putting together a package, the first thing youll want to make sure to include is the plans youre required to offer by law.

Bear in mind that employment laws differ by country and state. Here, were going to outline the specific federal requirements in the US.

All companies operating in the US are required to offer these benefits:

  • Workers’ compensation insurance. This covers the costs of medical care, rehabilitation costs, replacement income, etc., for those who become ill or injured as a result of their job
  • Social Security and Medicare contributions
  • Minimum wage requirements and overtime pay
  • Unemployment insurance. This provides partial replacement of income for a short period of time if your employee involuntarily loses their job with you
  • Disability insurance

In addition, employers with 50 or more full-time employees must provide:

  • Family and medical leave

You May Like: Age For Maximum Social Security Benefit

How To Manage Your Employee Benefits Effectively

Depending on the type of organization youre in, employee benefits can vary. But regardless of the different types of benefits, employers must understand how benefits are structured.

Employers have two ways to structure employee benefits, including:

Managing employee benefits can significantly impact your human resources team, especially when compliance issues are involved. But there are ways to effectively manage a benefit plan to save you time and reduce the likelihood of errors.

Consider the following when managing your employee benefits package:

  • Hire a dedicated employee benefits specialist
  • Find the right benefit administration software, like PeopleKeep for HRA health benefits
  • Measure benefits and costs carefully
  • Include a description of all benefits and perks in your employee handbook
  • Consistently monitor your employees wishes and needs in regards to benefits

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.

Recommended Reading: When Can You Collect Medicare Benefits

Workplace Safety And Health

The Occupational Safety and Health Act is administered by the Occupational Safety and Health Administration . Safety and health conditions in most private industries are regulated by OSHA or OSHA-approved state programs, which also cover public sector employers. Employers covered by the OSH Act must comply with OSHA’s regulations and safety and health standards. Employers also have a general duty under the OSH Act to provide their employees with work and a workplace free from recognized, serious hazards. OSHA enforces the law through workplace inspections and investigations. Compliance assistance and other cooperative programs are also available.

Why Do Employers Offer Benefits To Employees

Benefit packages take a lot of time out of many HR professionals time. And with good reason: theyre one of the most basic employee engagement and retention strategies, and they support talent attraction as well.

The numbers speak for themselves about the importance of employee benefits. Extensive research by the Society of Human Resource Management indicates that 92% of employees consider employment benefits as important for their overall job satisfaction . Almost one third of employees also cited work benefits as the top reason of looking for a job outside their organization and for choosing to stay at their job, too.

Benefits are also among the top driving factors candidates look for in job ads 63% of job seekers surveyed say they pay attention to what benefits a company offers. This means that offering benefits, and mentioning them in your job ads and careers page, is a great part of your employer branding efforts.

Employee benefits also help you take care of high-performing employees without the need to keep investing in exceptionally high pay raises. All employees should get paid enough to pay the bills and live comfortably, but they might accept less pay if they have strong health insurance, flexible hours and other benefits important to them. The practice of employees giving up a part of their salary for benefits is called salary packaging, and may also result in tax deductions or other gains for either party.

Need to build your company brand?

Don’t Miss: Apply For Social Security Caregiver Benefits

Social Security Medicare And Fica

Social Security and Medicare are considered statutory benefits. The Federal Insurance Contributions Act is a federal payroll tax used to fund Social Security and Medicare programs, both of which provide benefits for retirees, disabled individuals, and children. The law states that both employees and employers are required to contribute to these funds. Employers are required to withhold Social Security tax at 6.2% of gross compensation, up to the Social Security wage base.

Employers must withhold Medicare tax at 1.45% of gross compensation, and an additional 0.9% of compensation in excess of a threshold amount based on the employee’s filing status if an employee’s compensation exceeds $200,000 . Employers must also match 6.2% for Social Security up to the wage base and 1.45% for Medicare. Employers do not have to match the additional 0.9%.

Disability Benefits Required In Certain States

6 Workers’ Comp Benefits You Can Get in California

There are five states in which employers are legally required to carry disability insurance for their employees California, Hawaii, Rhode Island, New Jersey, and New York plus Puerto Rico.

Again, there are many companies that offer disability benefits to their employees even if they are not required to do so because it is viewed as a highly desirable employee benefit by many workers.

Disability insurance protects employees who might have to miss work as a result of injuries or illnesses that are not work-related.

Disability benefits will usually cover partial or total disability and benefits for employees with disabilities range between 50-66% of their pre-disability income. Pay benefits typically begin three to six months after the beginning of disability.

If youd like to learn more about disability insurance, unemployment insurance, employee healthcare plans, or any other employee benefits programs in order to put together an attractive package for your staff, dont hesitate to reach out to one of our employee benefits specialists at any time.

You May Like: Tax Benefit On Personal Loan

State Family Leave Laws

While the small size of your business may exclude you from having to comply with federal family leave laws, several states have family leave laws that place requirements on private employers with fewer than 50 employees.

Some states require specific benefits for maternity, adoption, or parental leave situations. And there are some variances you’ll need to check on between state and federal laws as well as regulations. See the Department of Labor site for further current information.

While you may not be required to provide family leave under a state or federal law, you may choose to give employees some type of leave for these situations. You may choose to offer employees vacation time or personal time.

If you decide to offer some sort of parental leave even if you aren’t required to do so, to avoid trouble with the federal or state anti-discrimination laws you should establish parental leave that allows both male and female employees the same leave benefits upon the birth of a child.

Social Security And Medicare Benefits

Every employer, regardless of size, is subject to the required employee benefit of matching their employees social security and Medicare contributions. The current rate for social security is 6.2 percent of the employees wage from each party, equalling 12.4 percent in total, up to the first $127,200 in earnings. This amount is also known as the wage base limit.

The current rate for Medicare is 1.45 percent of the employees wage from each party, equalling 2.9 percent in total. In addition, employers are responsible for paying an additional 0.9 percent Medicare tax for employees earning more than $200,000 per year, starting in the pay period in which wages cross the $200,000 threshold and continue to do so for the remainder of the calendar year.

The consequences of not withholding social security or Medicare taxes are no laughing matter. Employers who fail to withhold proper taxes open themselves up to both criminal and civil charges in court. Employees can also be impacted they may not be able to qualify for social security, Medicare, or unemployment benefits.

Don’t Miss: Commonwealth Senior Living Employee 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.

While An Employee Is On A Leave Of Absence: Certain Benefit Plans


An employee who is on pregnancy, parental, sick, family responsibility, bereavement, declared emergency, family caregiver, family medical, critical illness, organ donor, domestic or sexual violence, child death or crime-related child disappearance leave has the right to continue to participate in pension plans, life insurance plans, accidental death plans, extended health plans and dental plans during their leave.

An employee who is on a reservist leave does not have the right to continue to participate in these plans during their leave. However, if the employer postpones the employee’s reinstatement, the employer is required to pay the employer’s share of premiums for certain benefit plans related to their employment and allow the employee to participate in such plans for the period during which the return date is postponed.

A female employee may be entitled to disability benefits during that part of the leave during which she would not have been able to work for health reasons related to her pregnancy or childbirth.

You May Like: Tax Free Benefits For 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:

Most Popular

More from Author

Read Now

Social Security Benefits Sign Up

Next Steps For Apply For Ssdi Or Ssi Benefits How To Sign Up For My Social Security Account Online Evidence required by DDS for case documentation ...

How To Get Social Security Death Benefit

How To Apply For The Social Security Death Benefit After A Family Member Passes Away Social Security Lump Sum Death Benefit You can apply for the $255 lump-sum payment...

My Social Security Benefits Calculator

Primary Insurance Amount Calculation How to Calculate Your Social Security Benefits For 2022, the SSA established the first bend point as $1,024 and the second bend point as $6,172....

What Age Can You Collect Medicare Benefits

Beware The Blackout Period Why retire and collect social security at 62? As noted earlier, a widow or widower generally doesnt qualify for their benefits until age 60. However,...

What Is Considered Income For Social Security Benefits

Is Social Security Taxable Is Social Security Considered Income? Social Security income is generally taxable at the federal level, though whether or not you have to pay taxes on...

Social Security Apply Online Retirement Benefits

Summary Of Agreement Rules Applying Online for Social Security Retirement Benefits The following table shows whether your work is covered under the U.S. or Canadian Social Security system. If...

Is Social Security Benefits Going Up

Offer From The Motley Fool ARE SOCIAL SECURITY BENEFITS GOING UP $200 THIS MONTH? The $18,984 Social Security bonus most retirees completely overlook: If you're like most Americans, you're...

Southwest Foodservice Excellence Employee Benefits

Productive And Great Workplace Hiring fair held for Southwest Foodservice Excellence As long as your fine with kids your good at this job. You would be working at...

Tax Benefits Of Charitable Donations

Donating Money But Not In The Form Of Cash Charitable Donations -- Tax Advantages of Charitable Giving Investments: If you donate stocks, mutual funds, exchange traded funds or other...

What Is Maximum Social Security Benefit For 2021

A Little Bit On Social Security How much your Social Security benefits will be if you make $30,000, $35,000 or $40,000 Unfortunately, most people wont be able to get...

How To Apply Social Security Retirement Benefits

Social Security Cola 202: When Will My Benefits Increase Begin Applying Online for Social Security Retirement Benefits This week, the Social Security Administration announced the biggest payment increase for...

Dental Vision And Hearing Benefits For Medicare

What Treatments Does Medicare Part B Cover Hearing, Dental And Vision Care Are Health Care While Medicare Part A is known for covering hospital and emergency room visits, Medicare...