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What employee benefits are required by law

Employee benefits can be classified as benefits required by law and voluntary benefits provided by an employer to employees. Legally required benefits include benefits provided to employees and their family members with medical care, retirement income, hardships due to loss of job and disabilities, and liabilities due to workplace illness and injuries.
  • Social Security and Medicare Taxes
  • Unemployment Insurance
  • Workers Compensation Insurance
  • Disability Insurance
  • Family Medical Leave
  • Health Insurance
  • COBRA Benefits
  • Other Benefits

Social Security and Medical Taxes (FICA)

Every employer in the U.S is required to measure up to the employee’s social security and Medicare Tax contributions irrespective of the size of the business. FICA is a federal payroll (employment) tax used to fund Social Security and Medicare. The amount and percentage of contributions from both employers and employees are based on the age of the employee and their earned income.

Unemployment Insurance

Irrespective of the number of employees in a company, the company has to contribute to the unemployment tax requirements. The cost of Unemployment Tax may differ from state to state. Both full-time and part-time employees are covered and entitled to unemployment benefits when such employees are involuntarily separated from the company due to reasons such as Lay-off etc. Companies must have to register with the State Workforce Agency to make payments. Note: Proper documentation has to be recorded for the termination of any employee to avoid the claims against the company for the charges filed by any former employee for a wrongful Termination

Workers Compensation Insurance

Workers’ compensation is very essential to any employer as it gives a replacement and financial aid to employees who are not able to perform regular work due to workplace injury or illness and it protects business owners from potential and legal lawsuits. Different options are available to an employer to select for benefits packages, in which an employer may choose a self-insured plan where the business owner takes the risk of providing benefits or an employer can also claim coverage through their state insurance coverage at a premium rate but it’s consistent.

Disability Insurance

Disability Insurance is a state-specific and mandated in some states where an employee is benefited with Partial wage replacement insurance coverage in an event who suffers from an illness or injury caused by a work not related to employment and stopped him or her to attend his or her regular duties. The businesses operating in the following states such as New York, California, New Jersey, Hawaii, Puerto Rico, and Rhode Island are mandated to provide disability insurance benefits to their employees, whereas in all other states, the employer (business owner) have the option and not mandatory to provide disability insurance benefits to their employees. Generally, the cost of the policy is paid for in full by the employee.

Family Medical Leave

For businesses in private establishments, who employ 50 or more Full-time employees (FTE) or Full-time equivalents are mandated to provide applicable family leave benefits, subject to employees eligible to receive up to 12 weeks of job-protected and unpaid leave for qualifying family and medical reasons, qualifying exigencies during a 12 month period. As per law, Employers are not required to provide any financial compensation to an employee during medical leave. Family medical leave can be used for the events such as childbirth, child adoption, to care for an immediate family member with a serious medical condition, or on the severity of employee’s own medical condition Note: Some states and local jurisdictions require paid family leave and/or paid sick and safe leave. 

Health Insurance

The Affordable Care Act (ACA) enacted in the year 2010 enforces employers of private establishments with employees 50 or more Full-time employees (FTEs) or Full-time equivalents are mandated to offer acceptable health insurance coverage to their FTEs or Full-time equivalents and their dependents. Violation of  ACA requirements leads the employer to face excessive penalties from the government at the time of Tax payments. Employers need to check with the current requirements of ACA benefits coverage and are mandated to satisfy reporting requirements.

Cobra Benefits

COBRA Benefits are required for employers with 20 or more employees who are subject to the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA).  COBRA allows the employee to maintain their insurance coverage at the employer’s group rates for a period of up to 18 months. This coverage applies to former employees, former employee spouses, dependent children and retirees

Other benefits

Employees may be entitled to certain more benefits such as 

Time off for/reinstatement after military service

The employers are required to provide with time off or reinstatement of a prior position following military service for applicable employees as per the Uniform Services Employment and Reemployment Rights Act (USERRA)

Time off for jury duty or to vote

Every state mandates his or her employer to provide a required period of Time off for jury duty or to vote for their employees and the regulations for such events may vary from state to state.

Voluntary Benefits at the whole discretion of the employer

There are many more voluntary benefits provided to an employee at the whole discretion of the employer as a best practice and are required to provide as per law and can be added to the benefits package provided to an employee which may include life insurance, retirement savings plans, dental and vision care, wellness programs, and some salary perks, educational assistance, child care assistance, and paid vacation life and disability insurance (in some states, short-term disability leave is mandatory) If an employer has decided to offer retirement planning such as 401(k), they must meet certain rules and regulations set forth by the Employee Retirement Income Security Act (ERISA). Plans subject to ERISA generally include medical, dental, 401, and retirement plans.Note: Employers have to refer to their state and local regulations to check whether they apply to your business Sources: