When potential hires are considering whether to accept a job offer, one of the first considerations alongside salary is often whether the employer provides competitive benefits. This type of non-salary compensation can go a long way toward attracting new talent and retaining employees.
What are some of the top and most important benefits you should be offering? We’ll look at the legal requirements, as well as the perks employees want the most.
What are employee benefits?
Employee benefits are forms of compensation outside of your salary or paycheck. They are methods of making employers competitive, attracting new talent and keeping existing employees. Some benefits are mandated by law, while others are provided at the discretion of the employer.
What’s in a typical benefits package?
By law, employers must provide the following benefits to employees:
• COBRA (employers with 20 or more employees)
The Consolidated Omnibus Budget Reconciliation Act (COBRA) enables employees who lose health benefits due to leaving the company for some voluntary or involuntary reasons to continue to receive the benefits, often at full cost.
• Social Security, Medicare and Federal Insurance Contributions Act (FICA)
Employers and employees must contribute, and employers are required to withhold Social Security and Medicare tax from and match at certain percentages of employees’ paychecks.
• Unemployment insurance
Unemployment insurance assists workers who lose their jobs. Eligible workers who lose their jobs through no fault of their own may file a claim to receive benefits.
• Workers compensation insurance
Employees who are injured because of a workplace accident or illness may receive financial support.
• Disability (California, Hawaii, New Jersey, New York and Rhode Island)
These states provide benefits to employees who are unable to work because of disabilities. The benefits are generally short-term. Employers may elect to offer additional disability benefits.
• Health insurance (employers with 50 or more full-time employees)
Under the Affordable Care Act, large employers must offer coverage to full-time employees.
• Family and Medical Leave Act (employers with 50 or more full-time employees and some smaller employers)
FMLA enables employees to take up to 12 weeks of job-protected unpaid leave for qualified medical and family reasons every year. Examples include parental leave to care for a new child.
Common employee benefits
Paid time off (PTO)
Collectively, PTO refers to paid vacation days, personal days, sick days and any other paid time off employees receive, excluding federal holidays. This is one of the most common and sought-after employee benefits.
The Bureau of Labor Statistics (BLS) reports that 73 percent of workers in private industries receive paid vacation. The amount can vary significantly, with employees with five years of experience receiving an average of 15 days. Many employers offer more PTO to employees who have been with the company longer as an incentive to stay. Some employers also pay employees out for unused vacations days or allow them to roll over their time to the next year.
As discussed above, the Affordable Care Act mandates that some employers are required to provide health coverage for full-time employees. Regardless of size, most employers do provide insurance plans to assist employees with the cost of health care. Many offer multiple options, including HMOs, EPOs and PPOs. Premiums vary, often due to company size and other factors, as do deductibles and restrictions in terms of physicians workers are able to see in-network.
In addition to offering the benefit, some employers offer assistance with choosing the most appropriate plan for the individual. Some employers also offer vision and dental plans at an additional cost.
Retirement programs encourage employees to save for retirement. Many employers offer 401(k) or 401(b) (nonprofits) retirement accounts for employees. Some offer matching contributions up to a certain percentage, often 50 percent contributions up to 6 percent of employees’ salaries, although this can vary widely.
Commuter benefits enable employees to pay for expenses such as mass transit, parking, vanpooling, bicycling and others through pre-taxed payroll deductions. They can save employees substantial expenses because commuting is made tax-free. They can also incentivize workers to use mass transportation or carpool. Some employers offer bicycle-use benefits, such as Citibike.
Childcare benefits come in multiple forms. Some employers offer packages that include dependent care reimbursement accounts, allowing employees to have a portion of their pre-taxed salary placed in a flexible spending account (FSA) to use for childcare. Others cover or help cover the cost of childcare, including daycare, nannies and other childcare service providers.
Many employers provide life insurance that would match the amount of the employee’s salary for one or more years at no cost to the employee. Some may offer larger amounts at a price, while still others may have employees contribute to the policy for life insurance and deduct it from their paychecks.
Education assistance or tuition reimbursement
Employers who want to demonstrate that they are investing in their employees' success may offer tuition reimbursement or education assistance programs. This benefit allows workers to go back to school, take courses or earn certifications with financial assistance; some employers even cover full tuition for certain degrees or classes.
Some employers may require people who take advantage of this program to remain with the company for a designated period of time to reduce employee turnover, but this type of perk can benefit employers, too, since employees are learning skills that may improve the company. The fear is that staff will become overqualified for their roles and seek new opportunities, so employers should work to provide opportunities for growth to those who want to gain new skills.
The United States is one of few developed countries that doesn’t mandate paid parental leave. Many employers do offer this benefit to mothers and sometimes fathers as well, enabling them to bond with newborns or adopted children. This is one of the most sought-after benefits, so it’s important to offer a generous paid leave package for retention and other purposes.
Other perks and benefits
For more ideas of benefits and perks that will keep employees happy, check out 45 Employee Incentive Ideas — That Won’t Break the Bank. A few benefits include:
• Gym and wellness reimbursement
• Museum and cultural institution memberships
• Remote working options
• Employee discounts
• On-site amenities (cafeterias, snacks, office gym, pets allowed in the office and others)