Starting and managing your own small business can be the most fulfilling experience, but it comes with several responsibilities, including providing certain employee benefits. In fact, according to a survey by Glassdoor, 57% of job seekers report benefits and perks being among their top considerations when deciding whether to accept a job offer.

Employee benefits can feel expensive and complex. So if your business is on a tight budget, you may wonder what minimum employee benefits you must provide.

Minimum Legally Required Benefits

If you’re a small business owner who can’t afford to offer a comprehensive benefits package, these are the benefits you must provide.

• Social Security and Medicare. The federal government requires all employers to pay Social Security and Medicare taxes, regardless of the company’s size. Social Security helps provide an income for older Americans and disabled individuals who have left the workforce. Medicare provides health insurance coverage for Americans who are age 65 or older. Both the employer and employee pay Social Security and Medicare taxes via payroll deductions.
• Workers’ compensation. Most states require small business owners to purchase workers’ compensation insurance when they hire their first employee. Workers’ compensation covers medical bills, lost income, rehabilitation costs, and death benefits for employees impacted by work-related injuries or illnesses.
• Unemployment insurance. Unemployment benefits help provide income for workers who’ve lost their jobs. All employers pay federal unemployment taxes (FUTA) for part- and full-time employees. Most states also require employers to cover state unemployment taxes (SUTA), although some states allow employers to deduct SUTA taxes from employee wages.
• Disability insurance. California, Hawaii, Rhode Island, New Jersey, New York, and Puerto Rico require employers to carry disability insurance for their employees. Disability insurance benefits help protect workers who must miss work for an extended period due to an illness or injury that isn’t work-related.
• Time off. While employers aren’t legally required to provide vacation or sick time, nearly every state mandates that employers provide adequate time off for jury duty service or voting. Also, the Uniformed Service Employment and Reemployment Rights Act (USERRA) required businesses to provide employees with time off or restatement of a prior position following military service.

Required Benefits for Businesses with 50 or More Full-Time Employees

Several other employee benefits become mandatory once a business has 50 or more full-time employees.

• Health insurance. The Affordable Care Act (ACA) mandates that any company that employs 50 or more full-time workers (or full-time equivalents) must provide them with health insurance. Businesses must also report the value of health insurance benefits on employees’ W-2 forms and file the appropriate forms with the IRS. Companies that don’t provide affordable and adequate coverage must pay a penalty to the federal government.
• Family and Medical Leave. The Family and Medical Leave Act (FMLA) requires employers with 50 or more employees to provide employees with up to 12 weeks of unpaid leave per year and protect their job security when they take time off due to a medical condition or a family-related issue. To qualify for FMLA, employees must have worked for the company for at least 12 months and worked at least 1,250 hours.

Not Required, But Expected

Several benefits aren’t required but are culturally expected for full-time professional jobs in the U.S. For example, most full-time employees presume employers will make at least some contribution to their health insurance coverage.

Other culturally expected benefits include:

• Paid federal holidays (in some industries)
• Paid vacation time and sick leave
• Retirement benefits like a 401(k) or SIMPLE IRA

While most states don’t require these benefits, companies that choose to offer them will likely have an easier time attracting talented employees!

As a small business owner, providing a comprehensive employee benefits package can seem out of reach.  However, you may be surprised to find that offering some form of these benefits isn’t as complex and expensive as you may think! Plus, employee benefits aren’t just about treating employees well—benefits can increase productivity, engagement, and loyalty, leading to long-term business success!

Please reach out if you need help determining which benefits you need to offer and how to afford them.