State and Federal Law require employers to provide their employees with certain mandatory benefits. Since these laws may be subject to change, it is important that employers are always informed to maintain compliance.
What you will learn:
Mandatory Employee Benefits Requirements for:
- Social Security and Medicare
- Minimum wage
- Workers compensation
- Health insurance
- Overtime pay
- Civic duties
Mandatory Employee Benefits Requirements.
Mandatory employee benefits requirements are subject to a company's size, location and payroll. In general, all employers must allow employees to perform certain civic duties, provide health insurance options, subtract payroll taxes and pay their employees fair compensation.
Requirement #1 - Social Security and Medicare.
The IRS mandates that every employer, regardless of size, must withhold part of social security taxes and Medicare from their employees’ paychecks. In general, the employer pays half the tax and the employee pays the other half from his or her paycheck. The Social Security Administration has set the withholding rate for social security taxes is 6.2 percent.
Requirement #2 - Federal Family & Medical Leave Act.
According to the Federal Family and Medical Leave Act (FMLA), employers with 50 or more employees must provide up to 12 weeks of unpaid time off for certain medical events and family/life situations.
Covered events include the birth of a child, adoptions, serious illnesses and caring for ill family members.
To qualify for FMLA, employees must:
- Be employed by the company for minimum of 12 months
- Have worked at least 1,250 hours in the last 12 months
- Live within 75 miles of the employment site
Requirement #3 - Unemployment Benefits.
Businesses are required to pay into the unemployment insurance system. Unemployment insurance pays a qualifying ex-employee a certain amount of money each week they are unemployed. Specific amounts are dependent upon the state in which the company operates, the size of the company’s payroll and the number of filed claims.
Here are the eligibility requirements for the DMV:
Requirement #4 - Minimum Wage.
The Fair Labor and Standards Act (FLSA) applies the standards for minimum wages, overtime pay, recordkeeping and child labor.
The federal minimum wage is currently $7.25 per hour. However, certain states may have minimum wage requirements that are higher than the federal minimum wage. In those instances, the employer must pay the state required minimum wage. See where all states stand here.
Requirement #5 - Disability Insurance.
If your business operates in California, Hawaii, New Jersey, New York or Rhode Island, you are required by state law to provide your employees with short-term disability insurance and partial wage replacement for off-the-job injuries and illnesses.
Depending on the circumstances surrounding the disability or injury, employees may also be covered by the Americans with Disabilities Act (ADA) and/or the Family and Medical Leave Act (FMLA), according to the United States Department of Labor.
Requirement #6 - Workers Compensation.
Workers compensation insurance pays the medical expenses for employees who are injured while working and a certain amount of wage compensation if the injury results in a temporary disability.
You guessed it! Each state has their own requirements when it comes to workers compensation insurance requirements.
Requirement #8 - Health Insurance.
The Affordable Care Act (ACA) requires large employers with 50 or more full-time employees or the equivalent of 50 full-time employees provide the option of purchasing health insurance that meets the ACA standards. Businesses that meet the large employers criteria but fail to offer any health insurance may face stiff fines and penalties.
Requirement #9 - Overtime Pay.
Another mandatory requirement regulated by the FLSA is overtime pay. According to the Department of Labor, employees, who are not exempt and work more than 40 hours in a given week must be paid 1.5 times their hourly rate for each overtime hour worked.
The Fair Labor and Standards Act doesn't specifically provide provisions for night, weekend and holiday work unless it exceeds the weekly 40-hour threshold. Click here to see who is exempt from FLSA coverage.
Requirement #10 - Civic Duties.
According to State and Federal Laws, employers must allow employees to serve in the military or take care of an injured military member, participate in jury duty and vote for government officials.
Jury Duty – Employees must be allowed to serve on a jury providing they give adequate notice. However, the exact terms vary by state.
Military Service – Military personnel and their family members have rights introduced and protected by the Uniformed Services Employment and Reemployment Rights Act (USERRA).
Voting – Depending on the state, employees must be given either paid or unpaid time off in order to vote. Check out state laws here.