Today’s workers expect generous benefit packages, so many companies offer more than fair wages to recruit top talent. By law, you must provide several indirect compensation forms to your staff. These non-negotiable employer requirements involve various state and federal regulatory and tax responsibilities. Reviewing each will help you stay current on your legal obligations.
Small firms tend to assign benefit administration to employees wearing numerous hats. If those staffers are not familiar with all necessary technicalities, they may miss key details, forms, and deadlines. Resulting penalties and fines can add up quickly. Outsourcing your benefit management to National PEO will take those complex duties off their shoulders while ensuring proper, timely compliance.
Minimum Wage and Overtime
Laws require most public and private employers to follow standards for hourly and overtime compensation. Your company must allocate the federal minimum wage or higher to hourly workers unless you state dictates a better rate. Also calculate overtime for hours exceeding 40 per week as time and a half of your regular rates.
Per the Affordable Care Act (ACA), organizations with 50 plus workers must offer minimum essential health insurance to 95 or more percent of eligible staffers. Being compliant with all of ACA’s complexities is a mandatory responsibility that avoids hefty penalties.
Companies have legal obligations to provide self-insured, no-fault Workers’ Compensation Insurance through commercial carriers or your state’s program. Every state dictates its unique financial protection plan for crewmembers who suffer on-the-job injuries, illnesses, or emotional strains. Reparations may cover medical expenses, a percentage of lost wages, dismemberment, permanent disability, and/or death benefits to survivors.
Family and Medical Leaves
Rulings require all public employers and private ones with at least 50 workers to abide by the Family and Medical Leave Act (FMLA). It entitles personnel to take off as much as 12 weeks per 12-month interval. Law demands that group health benefits continue during those unpaid but job-protected breaks. Afterward, your firm must reinstate staffers in the same or equivalent positions. Employees do not need to use their 12 weeks in a row. Taking one day per week may be necessary. Acceptable FLMA reasons are:
- Birth and supervision of eligible worker’s newborn
- Employee’s adjustment period with newly adopted or placed foster child
- Seriously ill immediate family (child, spouse, or parent) needing staffer’s care
- Team member’s recuperation from a serious medical condition
Five states (California, Rhode Island, New York, New Jersey, and Hawaii) along with Puerto Rico must provide disability insurance. That coverage replaces partial wages when eligible employees are unable to fulfill their duties due to non-work-related injuries or illnesses.
This benefit compensates personnel who experience job separations without work-related misconduct. Wages that each claimant earned in the previous year determine this stipend’s specific amount. If laws require your business to remunerate unemployment insurance taxes on staffers, registering with your state’s workforce agency is compulsory. Each state manages its own unique program.
Social Security Taxes
Retired personnel age 62 and up and disabled talent or their survivors can receive monthly Social Security income. Funds come from companies matching staffers’ contributions, a fraction of their earnings with inflation adjustments. Your firm must withhold Social Security and payroll taxes. All crewmembers who are eligible for retirement benefits also receive Medicare health insurance. Worker and employer taxes fund that coverage.
The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires companies with at least 20 employees to allow former personnel to stay on their health insurance for as long as 18 months. Ex-workers must pay the full premiums at their previous employers’ group rates. This ruling also affects retirees as well as former staffers’ spouses and dependent children.
Many employers round out their required compensation packages with additional optional benefits to attract, motivate, reward, and retain staffers. Common examples include voluntary insurance policies (like dental, vision, and life), discounts on company services or products, relocation expenses, tuition reimbursement, child care, bonuses, profit sharing, stock options, retirement plans, tax-sheltered annuities, savings plans, and pensions. National PEO experts are ready to administer various elective employee perks along with legally mandated ones.
Federal laws do not require the most common paid time off (PTO) policies that firms offer. Comprehensive compensation and benefit plans may include holidays, vacations, personal days, sick days, bereavement and funeral periods, and jury duty. Each state governs PTO payments to separated employees when earnings remain.