Why Offer Small Business Benefits
With more and more companies offering good wages, attractive benefits packages, and remote work options, small businesses must offer enticing benefits that attract prospective talent and retain top-notch employees. Benefits are a strategic tool for building your workforce: you want people to want to work for you.
Small business benefits also help generate employee loyalty: you want people to continue working for you once they’re hired. And a happy workforce at your company goes a long way toward generating a healthy workplace culture.
Read more about why your small business should offer benefits packages.
Mandatory Small Business Benefits
Every small business must offer a few legally required benefits. According to Motley Fool, these benefits generally comprise about 8% of employee wages on average in a small business. So what are they?
Small business of all sizes must provide their employees with:
- Social Security and Medicare Benefits
Small businesses not only must withhold social security and Medicare taxes, but they also must contribute an equal amount on behalf of their employees.
- Unemployment Insurance
The Federal Unemployment Tax Act requires employers to pay this tax to fund unemployment compensation.
- Workers Compensation
This is a state-required benefit that small businesses pay to a state fund that’s administered by the state to employees injured at work.
- Overtime pay
Under the Fair Labor Standards Act, employers must pay time and a half to employees who work more than 40 hours a week and make less than $684 per week or $35,568 per year.
- Jury duty leave
All employers must offer unpaid time off for jury duty, but some states require paid jury duty leave.
Other Mandatory Benefits
- Disability insurance
California, Hawaii, New Jersey, New York, Puerto Rico, and Rhode Island all require small businesses to offer disability insurance. This insurance provides short-term and long-term payments to employees unable to work due to a non-work-related injury or illness.
Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), businesses with 20+ employees and group health insurance must continue to provide former employees and their families with health insurance coverage for 18-36 months.
If a business has 50+ employees who live within 75 miles of the business location, the employees are legally entitled to family and medical leave (FMLA).
- Health insurance
Businesses with 50 or more employees must provide their employees with health insurance benefits under the Affordable Care Act.
Learn more about mandatory small business benefits in this Forbes article.
Voluntary Small Business Benefits
The following benefits are not legally required. But many of them are a standard element in benefits packages so offering them can help your business be appealing to prospective hires.
- Paid Leave
According to the U.S. Bureau of Labor Statistics:
- 79% of employees receive paid holiday leave
- 77% of employees receive paid vacation
- 25% of employees receive paid family leave
Many businesses also offer employees paid leave for sickness, jury duty, funerals, and personal days.
- Unpaid Leave
Even if your small business doesn’t have the budget for multiple paid leave options, offering flexibility for maternity leave, family leave, etc. (even if unpaid) can help make employment at your company enticing.
- Life insurance
Many businesses offer life insurance in their benefits packages. According to Forbes, the coverage amounts are usually low and employees don’t need a medical exam to receive it.
Small businesses can offer retirement plans like 401(k)’s, (SEP-IRAs), and SIMPLE IRAs. Employees can choose to participate through a payroll deduction that the employer can also choose to match up to a certain amount.
- FSA’s and HSA’s
FSAs and HSAs can help employees cover medical expenses. Among other differences, FSA funds must be used by the end of the year while HSA funds carry over to the next year or the next job.
- Employee Assistance Program
EAPs can help employees with mental health, personal, and family issues. They can be offered through health insurance or through a stand-alone EAP company.
Fringe and Free Benefits
Like voluntary benefits, the following small business benefits aren’t legally required. Many are somewhat out-of-the-box compared to the above voluntary benefits (pet-friendly offices, anyone?). But, prospective hires often look for many of these. Some are free, some are not. But they all can help your business be a more appealing place to work!
Finding and paying for daycare can be a hassle! You can take this off your employees’ plates by offering a daycare stipend or even providing in-building daycare services.
- Tuition and Student Loan Assistance
Many companies offer to help employees pay for a college degree, or help pay off the debt accrued obtaining one.
- Employee Discounts
Does your business sell or create consumer products? Offering employee discounts gets your employees testing and building loyalty toward your products!
- PTO for Volunteering
What better way to build office morale and camaraderie than by offering paid time off for time spent volunteering at local charities?
- Professional Development Opportunities
Good employees like to grow. You can foster that growth by offering opportunities to take online training courses, attend conferences, and more.
- Health and Wellness Programs
As Elle Woods knows, “Exercise gives you endorphins. Endorphins make you happy.” You can encourage that happiness by subsidizing gym memberships, offering health and wellness incentives, and more.
- Pet-friendly office
Post-pandemic pets are a real thing. You can create a welcoming environment for your employees’ pets and emotional support animals (within reason). After all, who doesn’t love working with cute dogs?
- Remote Work Options
An increasing number of employees want to work from home thanks to the pandemic. Setting up flexible remote work options for your employees is a relatively low-cost benefit to offer that can create high employee satisfaction!
For more great fringe small business benefits ideas check out this article from Gusto.
Strategize Your Small Business Benefits
Still trying to decide which small business benefits you should offer your employees? Our finance and HR professionals can help you evaluate your budget, employee demographics, and more to develop a strategic benefits plan for your company.