What’s required and What’s not?
Once you have great employees on board, one way to keep them from jumping ship is by offering a good benefits package.
A common misconception around employee benefits is that many small-business owners believe they simply cannot afford to offer their employees benefits. But boosting your bottom line in the short run by not offering them could strangle your business’s chances for long-term prosperity.
There are certain benefits employees feel they must have, chiefly medical insurance. But demand for a retirement plan, disability insurance and more is also high.
Giving you employees benefits carries benefits for your business as well. Give employees what they value, and they’ll be less likely to quit, miss fewer workdays, and have a closer attachment to the company’s goals. Research shows that when employees feel satisfied, they are in turn more productive.
All employers are required by law to provide certain benefits. You must:
- Allow employees time off to serve on a jury, vote, and perform military service.
- Observe all workers’ compensation requirements.
- Pay state and federal unemployment taxes.
- Withhold FICA taxes from employees’ paychecks and pay your own portion of FICA taxes.
- Comply with the Federal Family and Medical Leave Act (FMLA).
If you have 50 or less full-time equivalent employees, you are not required to provide:
- Health, dental or vision plans
- Retirement plans
- Life insurance plans
- Paid vacations, holidays or sick leave
If you have more than 50 employees you are required to provide health insurance or you could get fined.
In reality, however, most companies offer some or all of these benefits to stay competitive and retain talent.
Most offer paid holidays for New Year’s, Thanksgiving, Christmas, and more. Many also allow their employees to take unpaid time off or to use vacation days for religious holidays.
Pro Tip: To avoid confusion, when explaining your vacation policy to employees, specify how far in advance vacation requests should be made, and whether it must be verbal or in writing.
As soon as a business begins offering benefits, complications can quickly arise.
The biggest mistakes are usually around leaving employees out of the plan. Failing to extend benefits to clerical and custodial staff is another common mistake.
A good rule of thumb is that if one employee gets a tax-advantaged benefit, the same benefit must be extended to everyone. As you consider who to include or exclude, consult with an expert benefits adviser.
You can cut costs by doing the preliminary research yourself. But before starting up any benefits plan, it’s best to seek advice from a lawyer or a benefits consultant. An upfront investment can save you far more money down the road by helping you sidestep expensive legal problems.
GET HELP WITH SHOP BENEFITS
Navigating the world of employee benefits can be complicated. This quick start guide is just a glimpse into the issues and questions to consider as you take a deeper dive into selecting specific benefits.
At Shop Benefits, our dedicated agents are committed to making insurance easier and more accessible for businesses of all shapes and sizes. Our motto is we won’t just give you the link; we’ll be there with a helping hand whenever you need it. We’ll work with you to determine if your business is an Applicable Large Employer, how many full-time employees you have based on legal definitions, and whether you are offering affordable and adequate coverage for employees.