Are you ready to build your small business team? Here’s what you need to know about employee benefits.
Your small business has grown rapidly and it’s time to think about hiring. But before you start sending out those job offer letters, you’ll need to establish employee benefits. The world of benefits can be complex to navigate, so to help you, here are four basic things to know.
Some benefits are legally requiredLegally mandated benefits vary at different levels of government, so make sure you’re up to date with federal, state, and local requirements. All companies that plan to hire employees are required to contribute to certain federal programs that protect employees or provide social security protections.
Some of these are:
- worker’s compensation insurance
- Unemployment insurance
- Social Security and Medicare
Some mandatory benefits will not appear in a new employee’s compensation package, but still offer important protections for workers. All US companies are required to offer overtime pay, and more recently, coronavirus leave, under federal law.
Other benefits, such as health insurance and family and medical leave (FMLA), are only required at specific companies. Health insurance under the Affordable Care Act (ACA), for example, must be offered by all companies with more than 50 employees who work at least 30 hours a week and who are 26 years of age or older. Not offering health insurance can result in a public review and heavy fines. Family and medical leave, which gives an employee up to 12 weeks of job protection and unpaid leave, is required at federal, state and local government agencies, at most schools, and at all companies with more than 50 employees.
Each state has different requirements for employees. Some states like California, Hawaii, New Jersey, New York, and Rhode Island have made disability insurance mandatory, while others require employers to pay for jury leave.
Other benefits are voluntary, but remain industry standard
You may be used to seeing 401(k) and PTO plans at larger companies. But the truth is that those benefits aren’t really mandatory, and a lot of smaller companies and those that hire temporary or part-time workers don’t offer them.
Here are some other benefits you may think are required for best bank for small business employers, but aren’t:
- paid personal days
- Paid sick days or leave
- Life insurance
- Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs)
And remember that some of the mandatory benefits mentioned above are only required if your company is large enough. So health insurance, family and medical leave, disability insurance, and jury leave may also be voluntary if you have a small staff and do not operate in certain states.
Free, fringe benefits can help you stand out as a potential employer
Workers applying for a job are often looking for more than basic paid benefits; they also take an interest and look for what other “perks” are offered to make them work for their particular company. Benefits like retirement accounts and paid sick days aren’t necessarily going to draw much interest unless they’re an unusual option in your industry. But by offering unique free and complementary benefits, you can more easily attract and retain the talent you hire. These could include employee-focused offerings such as flextime, remote or hybrid work, employee assistance programs (EAPs), or mental health support.
Other popular benefits:
- Scholarships for professional development
- Child care support
- Gym memberships or other wellness programs
Your employee benefits should match the responsibilities, budget, and needs of your company’s future workers.
Now you have a list of employee benefits to consider. But how to choose between them? You may be a little worried about how much all this could cost you, but don’t worry, it’s less than you think.
Here’s an easy way to create your benefits package:
- Define a budget for benefits.
- Make a list of the mandatory benefits you must offer (and their costs).
- Figure out what’s left in your budget so you know what you have left to spend.
- Find out what perks and benefits are most important to workers right now so you can lower your costs.
- Make your final selection and add them to your total compensation package for future hires.
Choosing a good benefits package for your first hires is just as important as a good job description. With the right mix of benefits, you can attract the best talent to support your company’s future growth.
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