Whether you are an established company or an entrepreneur, required employee benefits ensure that your team has access to time off and compensation when they need to take care of themselves and their families. Employee benefits requirements are grounded in hard and fast rules that your company is legally required to follow. It’s important you understand and abide by these rules, both to stay compliant and to look after your employees’ wellbeing.
- Family and Medical Leave
The Family and Medical Leave Act (FMLA) is a federal law that guarantees eligible employees the right to take up to 12 weeks of unpaid leave each year and still maintain their job and benefits. Employees can use this time off for:
- Their own health issues
- To care for a family member who’s injured or ill
- To care for a newborn baby, foster child, or newly adopted child
- To take care of an injured service member in the family
Your team members qualify for leave under FMLA if your company employs at least 50 full-time people. Any time spent on FMLA leave is unpaid. However, employees are still eligible for health insurance benefits during their leave, and their jobs are protected until they return. Also, if your workers are providing care to a service member, they’re entitled to take up to 26 weeks of unpaid leave in order to care for them.
- Health Insurance Coverage
It's also required by law that larger companies provide employees with affordable health insurance benefits that deliver minimum value. According to the Affordable Care Act (ACA), you could face penalties if your health insurance plan doesn’t meet these requirements.
To be in compliance, your health plan should also:
- Offer coverage to 95% of your full-time employees and their dependents
- Not require a waiting period of more than 90 days for employees to enroll
Any company with an average of 50 or more full-time employees must follow the ACA’s employer mandates. You can report your own compliance with the employee healthcare mandate by submitting Forms 1094-C and 1095-C to the IRS.
Go beyond your standard employee benefits plan with these 101 unique employee benefit ideas!
- Workers’ Compensation
In addition to required health benefits, employers must also provide workers’ compensation insurance to their employees. This is a type of insurance that covers the cost of medical care and lost wages associated with workplace injuries or illnesses. It’s required by state law in many cases, though some exceptions may apply. Companies can choose to self-insure or obtain workers compensation insurance through a state run insurance fund or insurance company.
If you don’t currently offer workers’ comp to your employees, or if you are required to provide this coverage and are not in compliance, you may be on the hook for a range of legal costs and other expenses. So it’s important that you understand the rules and requirements that apply to your business, and take action as necessary to ensure that you are meeting your obligations.
- Unemployment Insurance
Unemployment insurance is a type of compensation offered to workers who lose their jobs through no fault of their own. It’s required by law in almost every state for employers of all sizes, and is meant to help people get back on their feet while they search for new employment opportunities, generally after a company layoff. To be eligible for unemployment benefits, employees typically need to have worked at their jobs for at least a certain period of time and earned a minimum amount in wages.
In every state, employers are required to pay Federal Unemployment Tax Act (FUTA) taxes, but you might also have to pay taxes at the state level, too.
The more claims that are approved, the higher your tax rate will likely increase. Make sure you’re approving and contesting former employees’ claims on time (usually within 10 days) and paying uninsurance taxes to avoid any penalties.
- Disability Insurance
Depending on which state you operate in, you may have to provide employees with short-term or temporary disability insurance. This is a type of coverage that helps employees replace their income if they’re unable to work due to an illness or injury. It can be a big help for workers who are unable to work temporarily due to serious health issues.
Currently, five states and one U.S. territory require companies to provide short-term disability insurance for their employees: California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico. Employers in other states sometimes offer disability insurance as a voluntary benefit.
- Social Security and Medicare Benefits
Both employers and employees are required to pay Social Security and Medicare taxes through payroll deductions. Social security provides retirement income and benefits to retired adults starting at age 62 and to people with disabilities regardless of age. Spouses, children, and survivors may also qualify for benefits under the program.
Medicare provides health insurance coverage generally starting at age 65, although some recipients can qualify at a younger age if they have certain medical conditions or disabilities.
- Paid Sick Leave
It’s important for your team to be able to take time off when they’re ill without worrying about their paychecks. A few states and even some cities have introduced their own laws requiring paid sick leave, so you’ll have to pay attention to local legislation to make sure you’re in compliance. If you operate as a remote-first company, you’ll have to follow the laws for the states where your employees live and work.
According to Paycor, these states and districts all require some form of paid sick leave benefits for employees:
- New Jersey
- New Mexico
- New York
- Rhode Island
- Washington, D.C.
As of the time of writing in December 2022, the federal government doesn’t require paid sick leave, but a bill called the Healthy Families Act has been drawn up. If it passes, this law would require business owners to provide up to 7 days of paid sick leave per year.
Are Mandatory Benefits Enough to Support Total Employee Wellness?
When it comes to required employee benefits, many companies assume that providing healthcare, workers’ compensation, unemployment insurance, and disability insurance is enough to create a truly healthy and supportive work environment.
But, any worthwhile employee benefits strategy will also address areas such as physical, mental, emotional and social wellness, and support employees on their journey to work-life wellness.
Talk to one of our wellbeing specialists today to see how you can go beyond the required benefits to help your team feel good, healthy, and engaged.
- Paid Sick Leave Laws By State for 2022. (2022). Paycor. Retrieved December 16, 2022 from https://www.paycor.com/resource-center/articles/paid-sick-leave-laws-by-state/
- Family and Medical Leave Act. U.S. Department of Labor. Retrieved December 16, 2022 from https://www.dol.gov/agencies/whd/fmla
- The Healthy Families Act Fact Sheet. (November 2022). National Partnership for Women & Families. Retrieved December 16, 2022 from https://www.nationalpartnership.org/our-work/resources/economic-justice/paid-sick-days/the-healthy-families-act-fact-sheet.pdf
- Employer Shared Responsibility Provisions. Internal Revenue Service. Retrieved December 16, 2022 from https://www.irs.gov/affordable-care-act/employers/employer-shared-responsibility-provisions
- Employer Mandate. Cigna. Retrieved December 16, 2022 from https://www.cigna.com/employers/insights/informed-on-reform/employer-mandate
- Smith, Gabrielle. (November 2, 2022). IRS increases employer mandate penalties for 2023. PeopleKeep. Retrieved December 16, 2022 from https://www.peoplekeep.com/blog/irs-increases-employer-mandate-penalties
- What is workers’ compensation? Nationwide. Retrieved December 16, 2022 from https://www.nationwide.com/lc/resources/small-business/articles/what-is-workers-compensation-insurance
- Kagan, Julia. (December 8, 2022). Unemployment Insurance (UI): How It Works, Requirements, and Funding. Investopedia. Retrieved December 16, 2022 from https://www.investopedia.com/terms/u/unemployment-insurance.asp
- Rosenberg, Rebecca. (October 22, 2021). U.S. Chamber of Commerce. Retrieved December 16, 2022 from https://www.uschamber.com/co/run/human-resources/employers-guide-to-unemployment-benefits
- Sigel, Zack. Suh, Elissa. (June 8, 2022). What is short-term disability insurance? Policygenius. Retrieved December 16, 2022 from https://www.policygenius.com/disability-insurance/what-is-short-term-disability-insurance/
- Complying with the New York Disability Benefits Law. (March 2, 2018). Parker, Smith & Feek. Retrieved December 16, 2022 from https://www.psfinc.com/articles/complying-new-york-disability-benefits-law/
- Disability Benefits. New York State. Retrieved December 16, 2022 from http://www.wcb.ny.gov/content/main/DisabilityBenefits/employee-disability-benefits.jsp
- Social Security (Old-Age, Survivors, and Disability Insurance) Program Description and Legislative History. Social Security Office of Retirement and Disability Policy. 2023 August 2. https://www.ssa.gov/policy/docs/statcomps/supplement/2020/oasdi.html
The Gympass Editorial Team empowers HR leaders to support worker wellbeing. Our original research, trend analyses, and helpful how-tos provide the tools they need to improve workforce wellness in today's fast-shifting professional landscape.