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Types of Employee Benefits and Perks

What are employee benefits? What benefits and perks can you expect to receive when you’re hired by a company? An employee benefits package includes all the non-wage benefits, such as health insurance and paid time off, provided by an employer.

There are some types of employee benefits that are mandated by federal or state law law, including minimum wage, overtime, leave under the Family Medical Leave Act, unemployment, and workers’ compensation and disability insurance.

There are other types of employee benefits that companies are not required to offer, but may choose to provide to their employees. There are also some benefits and perks you may be able to negotiate as part of your compensation package when you’ve been offered a new job.

What Are Employee Benefits?
Employee benefits are non-salary compensation that can vary from company to company.

Benefits are indirect and non-cash payments within a compensation package.

They are provided by organizations in addition to salary to create a competitive package for the potential employee.

Employee Benefits Mandated by Law
The following are compensation and benefits that employers are required by federal or state law to provide. Be sure to confirm what is required in your state.

Consolidated Omni-Budget Reconciliation Act (COBRA)
The federal government requires that companies with 20 or more employees continue to provide extended medical benefits to former employees (and their families) for up to 18 months (sometimes longer).

States may have additional requirements for extended medical benefits. Make sure to check your state for “mini-COBRA” laws that will protect you and your family in the event that you lose your job.

Disability & Workers Compensation
The purpose of both workers’ compensation and disability is to make sure that an injured or sick employee continues to get paid (usually a portion of their normal pay) until they are well enough to return to work.

Every state has its own workers’ compensation and disability requirements for employers. While some businesses are exempt from providing workers’ compensation, most payroll employees are eligible if they are injured on the job.

Only a few states require employers to provide disability coverage. However, many employers offer this benefit to employees of their own accord.

Family and Medical Leave Act (FMLA)
The Family and Medical Leave Act requires some employers to provide maternity, paternity, and adoption leave, but it isn’t required to be paid leave.

Most states have their own labor laws pertaining to family additions or medical issues that include paid leave.

Beyond federal and state laws, many employers choose to be generous with paid leave for new parents.

Minimum Wage
The Fair Labor Standards Act sets the current federal minimum wage at $7.25 an hour. In addition, many states have their own minimum wage laws. The law stipulates that whichever minimum wage law is highest overrides the other. For example, New York’s minimum wage laws mandate a higher rate of pay than the federal minimum wage; therefore, the state’s minimum wage laws override federal minimum wage laws.

Overtime
Similarly, overtime laws vary by state. The Fair Labor Standards Act also stipulates overtime pay requirements. Whichever law (state or federal) benefits an employee the most takes precedence.

Unemployment Benefits
The federal government requires states to manage all unemployment benefits for workers. If an employee worked a qualifying job and was laid-off due to a layoff, they are entitled to unemployment pay for a period of time. The amount of unemployment pay varies by state and job title. Employees who resigned or were fired for their misconduct are typically not eligible for unemployment benefits.

Types of Employer-Provided Benefits and Perks
In addition to benefits required by law, other benefits are provided by companies because they feel socially responsible to their employees and opt to offer them beyond the level required by law.

Depending on the company, these benefits may include health insurance (required to be offered by larger companies), dental insurance, vision care, life insurance, legal insurance, paid vacation leave, personal leave, sick leave, child care, fitness, retirement benefits and planning services, college debt relief, pet insurance, and other optional benefits offered to employees and their families.1

These types of employee benefits are offered at the discretion of the employer or are covered under a labor agreement, so they will vary from company to company.

Who Gets Employee Benefits?
According to the Bureau of Labor Statistics (BLS), the average number of annual paid holidays is 8 for workers in private industry.2 Federal government employees are entitled to 10 paid holidays.

On average, workers received 10 paid vacation days after one year of service. This average increases with tenure – that is, the longer the employee stays with their employer. Employees who have worked five years or more receive 15 paid vacation days. This increased to 20 days after 20 years.3

Among non-government employers, 87% offered health benefits according to the BLS. Another 67% offered their employees a pension or retirement program.4

In addition, more employers are using bonuses, perks, and incentives to recruit and retain employees. Many leading employers offer extra benefits, including health club memberships, flexible schedules, daycare, tuition reimbursement, relaxation classes, and even on-site dry cleaning.

Employer-Provided Health Insurance Requirements
Under the Patient Protection and Affordable Care Act (Obamacare), minimum standards are set for health insurance companies regarding services and coverage. Most employers with 50 or more employees are required to offer healthcare plans or pay a fine.

Healthcare exchanges have been set up for employees who aren’t covered by employers or who elect to seek coverage outside their employer plans.

Health Insurance Coverage
Most plans provide coverage for visits to primary care physicians and specialists, hospitalization, and emergency care. Alternative medical care, wellness, prescription, vision, and dental care coverage will vary by the plan and employer.

Employers are required to provide healthcare to employees who work at least 30 hours per week. Some (though not many) part-time workers are covered by employer plans.

More Company-Provided Employee Benefits
These types of employee benefits are offered at the discretion of the employer or are covered under a labor agreement, so they will vary from company to company.

Dental Care Plan Coverage: Companies with dental care benefits offer insurance that helps pay a portion of the cost for dental treatment and care. Depending on the company’s policy for dental care benefits, dental coverage includes a range of treatments and procedures.

Paid Holidays: The law does not require employers to provide their employees with paid leave for holidays. However, many employers make sure that their employees get time off for holidays (paid and unpaid) or provide overtime pay for those willing to work on a holiday.

Pay Raises: Some employers increase wages for everyone a certain amount each year to keep up with inflation. There are also different types of incentive pay that allow employees a chance to earn more on a merit system. A common type of incentive pay is commission. Inside sales or customer service employers frequently try to motivate employees to upsell customers for a commission.

Severance Pay: Employers are not required to provide severance to employees that they lay off due to downsizing or redundancies. However, many employers want to help these employees who they would otherwise want to keep if their budget permitted. Therefore, they choose to offer severance pay and benefits to these employees.

Breaks and Flexible Schedules: To attract top talent, some employers offer flexible paid work schedules that include 30-minute (or longer) breaks for rest, fitness, and recreation. Also, employers may compensate employees for meals and events that include face-to-face time with prospects and customers.

Hazard Pay: Jobs in security, construction, military, and other dangerous professions usually provide hazard pay to any employees that must work in unsafe conditions. These may include extreme weather, dangerous equipment, violent environments, or working at extreme heights, for example.

College Debt Assistance: Because of the growing student debt crisis, some employers are granting debt repayment assistance. There are no current laws requiring employers to do this, but it is a great perk for employees struggling to make ends meet as they begin their professional careers.5

Fringe Benefits and Perks
Other benefits can vary between industries and businesses and are sometimes referred to as “fringe” benefits. These perks, also known as “benefits in kind” can include bonuses; profit sharing; medical, disability and life insurance; paid vacations; free meals; use of a company car; pensions; stock options; childcare; gratuity; company holidays; personal days; sick leave; other time off from work; retirement and pension plan contributions; tuition assistance or reimbursement for employees and/or their families; discounts on company products and services; housing; and other benefits and perks that are provided by companies in addition to the employee’s salary.

Fringe benefits are not required by law and vary from employer to employer.

Review Your Employee Benefits Package
Whether you are job searching, deciding on a job offer, or happily employed, it’s important to review what benefit coverage is provided by the company and to decide whether the employee benefits package is one that fully meets your needs. It’s also important to take full advantage of what the company provides to employees.

Benefits Questions to Ask
There are employee benefits questions you should ask to ensure that your overall compensation plan is right for you and your family. Also, ask specific questions based on your needs and on the criteria that are important to you.

The information contained in this article is not legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law.

Source: Types of Employee Benefits and Perks

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