Working a full-time job is more than just a paycheck for many people throughout the U.S. The majority of employers in the country provide employees with additional benefits. For example, 57% of employees have access to life insurance through their employer, and 74% have access to healthcare benefits.
Employee benefits come in many shapes and sizes, and they’re all designed to provide employees with the support they need to care for themselves and their family, along with adding some incentives to continue their employment. For employers who want to create a better work environment for their employees, here’s a complete employee benefit guide to answer your questions and point you in the right direction.
Employee benefits are any sort of compensation (whether tangible or intangible) given to employees in addition to their standard wages or salaries.
These benefits range from anything including simple perks like free snacks or a ping pong table (yes, that counts) up to paid leave, childcare, healthcare, or even bonuses. Anything an employer provides their employees outside of regular pay counts as an employee work benefit.
It’s true; implementing and managing benefits for employees takes time and energy for your HR team — which means money from your business. But it’s worth it to ensure your employees are happy, healthy, and can sufficiently provide for themselves and their families.
When your employees feel like the company cares about their wellbeing, they’re more likely to stick around for the long-term. Employee benefits are one of the best employee retention strategies that you can implement for your business.
According to online surveys, 49% of employees will start looking for new jobs in the next year because their current work benefits are insufficient or difficult to understand. Considering the average cost of replacing an employee is between one-half to two times the employee’s annual salary, which can be upwards of $60,000 per incident, providing sufficient employee benefits can actually save your company time and money — not to mention headaches of going through the hiring process time and time again.
And speaking of hiring processes, providing sufficient employee benefits can also help you speed up the hiring process and find quality candidates. Seeing enticing benefits in a job listing encourages more quality applicants to apply to your positions. Potential applicants are even more likely to apply to a job that pays less than what they want if the benefits meet or exceed their needs.
Yes, providing employee benefits will add to your HR workload, but they will also help decrease it in other areas. Your HR team will be able to enjoy faster and smoother hiring processes, along with lower turnover rates. In the end, work benefits save your company time and money. Plus, they help you retain experienced workers, boosting your overall productivity for years to come.
Since benefits include literally anything beyond standard pay, there’s really no limit to the number of employee benefits you can offer. However, most employee benefits packages fall into these four categories:
The ideal employee benefit package will contain elements of each of the four types of employee benefits; however, you’re welcome to mix-and-match as your company sees fit. Each type of benefit provides specific “benefits” to your business.
Health and wellness benefits are the most common type of employee benefit offered by employers. These are benefits that support an employee’s wellbeing, the most common typed of employee benefits insurance are:
In many cases, employers will match a portion of their employees’ insurance costs, or they’ll provide a base level of coverage that employees can build upon from there. There are some employers that cover the entire cost of insurance for their employees. It all depends on what your company wants to do and can afford.
Providing health and wellness employee benefits shows that your business cares about your employees. Since most health insurance options cover the family as well, it also shows you care about your employees’ families.
Typically, standard health insurance like medical were enough to make employees happy, but times could be changing. According to online polls, 82% of employed Gen Zers believe mental health benefits should be a priority in the workplace. This is something that wasn’t even on HR professionals’ radars even a few years ago, but it’s becoming increasingly important for employers to offer more comprehensive health benefits if they want to make their employees happy.
One of the best employee benefits is retirement plans. Nobody wants to work forever, and employees want to know that all their hard work will pay off (quite literally) when they’re ready to retire. Retirement employee benefits show that a business isn’t just invested in their employees for what they can provide right now. Instead, it shows they’re interested in their employees’ entire lives and wants them to feel secure in their future.
The most common type of retirement benefit is a 401(k) contribution. With every paycheck, both the employee and the employer contribute to the employee’s 401(k) retirement account. The employee chooses how they want to invest their contributions and how much they want to contribute, and the employer matches a percentage of the employee’s contributions.
Employers may also choose to implement a defined retirement plan that’s completely funded by the company, otherwise known as a pension plan. When an employee retires, they receive a set monthly benefit based on their tenure at the company and retirement age.
Who couldn’t use a little extra cash every now and then? Additional compensation bonuses are simply monetary bonuses given to employees in addition to their regular pay.
These are some of the most common additional compensation bonuses provided by employers:
Although everyone loves a little bonus every now and then, there are some arguments against compensation employee bonuses. The biggest issue with monetary benefits is that it could spur unethical behavior and hinder teamwork.
For example, if a salesperson knows they can earn more money if they perform well, they might be tempted to steal prospects from their coworkers. Not only does this hurt team morale, but it also makes your company look unprofessional.
Before implementing additional compensation work benefits, it’s a good idea to clearly outline the bonus policy and give everyone the same opportunity for bonuses. The more transparent, the better. A little competition is good, but unhealthy competition can hurt your work environment.
The elusive work/life balance has been a touchy subject for employers and employees for decades. It’s a fine line between optimizing productivity and giving your employees enough time outside of work to do the things they love.
Work/life balance benefits are perks designed to help your employees get out of the office to spend more time doing what they enjoy. The most common work/life balance benefit is paid time off (PTO). Almost 80% of private industry employees have access to PTO vacation leave.
Although U.S. employers aren’t required to offer paid vacation leave, it can be a great way to give your business a competitive advantage when it comes to hiring and retention. If a potential applicant sees that your company offers more PTO compared to the competition, there’s a good chance they’ll choose to work for you, even if the pay isn’t quite equal.
Plus, if you give your employees enough paid time off throughout the year, they won’t get burned out, increasing happiness rates. And happy employees increase your business’s retention rates and boost overall productivity.
Since PTO can be pricey for employers (in terms of both money and productivity), many employers are starting to offer work-from-home options as a part of their work/life balance benefits. Hybrid work models have grown in popularity for a few nears now with some days per week in the office and others working remotely. Working from home gives your employees the freedom to build a work/life balance that works for them without sacrificing productivity, since they can still work.
Other types of work/life employee benefits include parental leave, bereavement, training days, and sabbaticals.
While there are dozens and dozens of employee benefits employers can choose to offer, there are a few benefits employers are required to provide by law. According to the Bureau of Labor and Statistics (BLS):
“Legally required benefits provide workers and their families with retirement income and medical care, mitigate economic hardships resulting from loss of work and disability, and cover liabilities resulting from workplace injuries and illnesses.”
Under BLS laws, there are four legally mandated work benefits:
Any applicable employer with full-time employees is required to provide at least these four work benefits.
Social Security and Medicare are both considered legally required employee benefits. As such, it’s mandatory for employers to withhold a 6.2% Social Security tax from employee’s gross compensation up to the Social Security wage base. These funds are added to the Social Security program, which the employee can draw upon when they reach retirement age. It acts as a mandatory federal retirement plan.
Similarly, employers must also withhold a 1.45% Medicare tax, with additional withholding rules depending on employee’s income. Medicare is a federal healthcare program that people are eligible for once they reach retirement age.
If a worker can no longer perform their duties after an injury on the job, workers’ compensation covers the medical bills and a portion of their wages until they’re physically fit enough to go back to work. Employers are required to maintain some level of workers’ compensation insurance to protect their employees from the financial burden of potential on-the-job injuries.
Most state requirements for unemployment insurance benefits can be met either through self insurance or state-run programs:
Unemployment insurance assists workers who lose their jobs. Workers may file for unemployment to get financial assistance and temporary benefits during transition periods after being fired or laid off if they meet specific criteria.
Employers are required to contribute to unemployment insurance when processing payroll taxes to protect their workers if they ever become unemployed. Each state has different requirements for employer contributions, so make sure you understand the minimum coverage regulations in your area.
Because healthcare is such a major cost in the U.S., employers are required to provide a minimum level of healthcare coverage to employees. Applicable large employers (ALEs), which are typically companies with an average of 50 or more full-time employees (including equivalents), must offer adequate and affordable medical coverage for their employees.
The specific policies and coverages are up to the employer, but the employee must not pay more than a specific percentage of their income for premiums. Employees should also have access to a reasonable network of healthcare providers, and the plan should cover at least 60% of the cost of medical services. These basic coverages are called the “minimum value standard.”
Employers are also required to provide unpaid, job-protected leave for specific medical and family reasons under the Family and Medical Leave Act (FMLA). According to the U.S. Department of Labor (DOL), employers must provide up to 12 weeks of unpaid, job-protected leave per 12-month period for family and medical reasons that qualify, like a chronic personal illness, birth of a child, or caring for immediate family member with a chronic or serious illness.
Although employers are welcome to offer any type of employee benefits they want (as long as they meet the federally required benefits), some benefits are more common than others in the workplace. Here are the top ten most common employee work benefits in the U.S.:
If you’re wondering which employee benefits are the best, most employees value any and all benefits. There aren’t any specific benefits that are inherently better than others. But typically, the better the benefits you offer, the higher-quality candidates you attract and the lower your turnover rates.
According to the Bureau of Labor and Statistics, employee benefits accounted for 31% of total employer compensation costs in 2022. In some cases, the cost of health benefits alone can reach up to $15,000 annually per employee! While that might seem like a lot (and it is), these benefits are essential if you want to maintain a high-quality workforce.
Providing employee benefits does cost your company money, but there are creative ways to lower the cost without hindering your ability to remain competitive or maintain your workforce. For example, allowing remote or flexible work schedules doesn’t cost your business much money and still provides your employees with the work/life balance they crave. And never underestimate the power of free lunches or snacks!
All over the country, employers are getting creative with their benefits to remain competitive without hurting their bottom line. Here are just a few cost-effective benefits to make your employees happy:
The only limit to the benefits you can offer your employees is your imagination! And remember, employee benefits don’t entirely count as a cost; they’re an investment. If you provide sufficient benefits to your employees, it can increase morale, generate productivity, and boost retention rates — all of which will help your company save money in the long run.
It’s not easy for your HR team to monitor and maintain all the various employee benefits offered by your company — especially when government regulations are involved. To reduce the possibility of errors and limit the strain on your HR team, follow these employee benefits management best practices:
Providing benefits for employees isn’t an unnecessary cost for your business; it’s an investment in your workforce. If you can provide your team with benefits beyond their standard paycheck, it gives them the feeling that the company actually cares about them and their lives, increasing retention rates, bringing in the best quality candidates, and boosting morale and productivity.
It’s easy to see how providing basic benefits to your employees can “benefit” your business. When you care for your team, your team will care about your business.
If you’re looking for more HR-related tips and guides, check out the Workstream blog. You’ll find everything you need to optimize your human resources team and create efficient hiring and onboarding processes. Build the team of your dreams with Workstream.