Here’s where you realize that an expanded staff means expanded responsibility. The benefits you offer your people impact their lives and their families’ lives. By law, there are two types of employee benefits: required and optional. Both carry legal and tax implications for you. Required employee benefits include:
- Social Security Taxes. These taxes fund federal programs not only for retirees, but for disabled workers and the surviving minor children of deceased employees. Every employer must pay Social Security taxes at the same rate paid by their employees.
- Unemployment Insurance. You may be required to pay unemployment insurance taxes, which fund state and federal programs that pay employees who lose their jobs through no fault of their own. If so, be sure to register with your state's workforce agency.
- Workers Compensation Insurance. This coverage provides medical benefits and wage replacement for employees who are injured while on the job. You must carry this insurance coverage, via a commercial carrier, through your state’s Workers' Comp Insurance program, or self-insurance (you pay it yourself).
- Disability Insurance. Some states require businesses to partially replace wages for eligible employees’ non-work related sickness or injury.
- Family and Medical Leave. If your business has 50 or more employees or is a public company, the Family and Medical Leave Act (FMLA) entitles your employees up to 12 weeks of unpaid leave during any 12-month period for the birth or adoption of a child, or for care of an employee's or family member’s serious health condition.
- Health insurance. Until recently, this was optional. But that’s changed under the Affordable Health Care Act (“Obamacare”), which requires businesses with 25 or more employees to provide health coverage to full-time employees. Get more info at the U.S. Department of Labor’s Health Benefits Advisor interactive website.
Optional employee benefits include the most common leave benefits (holiday/vacation, jury duty, personal leave, sick leave, funeral/bereavement leave), COBRA benefits, retirement plans, pensions, and employee incentive programs such as flex time, workplace wellness programs, and bonuses.