25 Feb 2017
When a business is created, the owner has to get everything started. With a considerable level of success, the employer is forced to manage the small business, and determine how the human resource aspects should play out.
This process can be quite exciting, but at the same time painful, as the owner tries to face all the legalities of hiring employees. The employer is required by law to provide the employees, with some optional benefits that the employer can choose to provide.
One of the main reasons why employers provide benefits to the employees is to make them feel appreciated. Moreover, some employers use the benefits as recruitment and retention tools for the overall compensation package.
Employers should therefore know the laws governing employee benefits when putting together the benefits package, and understand the compliance details of the laws. Next comes the process of negotiating deals with different vendors, when finding the most cost-effective product.
The differences of employee benefits required by law and those that are part of the company’s compensation package can be quite confusing. Let’s look at the benefits required by law.
1. Worker Compensation
This provides insurance benefits to the employees that become injured or ill at the workplace. The insurance requirements are different in different states, and are usually dictated at the state level. Additionally, some states require employees to have disability insurance.
2. Unemployment Insurance
This offers compensation for employees that lose their job due to faults outside their control. It’s also different in every state, and is usually mandated at the state level. Registering the business with the state’s workforce agency is the first step, which should provide you with all the requirements for your state.
3. Family and Medical Leave
This benefit requires the employer to provide 12-weeks unpaid time off to the employees annually. The purpose of the Family and Medical Leave Act (FMLA) is protecting the employee from losing their job due to having to care for themselves of immediate family members. The leave is usually unpaid, unless the employer has offered to pay as an optional employee benefits package.
4. Social Security Taxes
These taxes are required to be paid on employees. The currents rates for social security tax are at 6.2%, and are supposed to be paid by both the employer and the employee. The tax is exclusive of a 1.45% Medicare tax.
5. Consolidated Omnibus Budget Reconciliation Act (COBRA) Benefits
The COBRA Act of 1985 is requires that all employers with over 20 employees subject to the act receive certain benefits. COBRA lets employees maintain insurance coverage for a period of 18 months at the employer’s group rates.