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Over the past decade, the employee benefits landscape has shifted dramatically. Employees still expect employers to meet their traditional insurance needs (i.e., by providing health, life and disability insurance). But recently, employee values have shifted to include new expectations, especially in the realms of mental health, telemedicine, wellness programs and family leave.
With the influx of new and creative ways for employers to strengthen their compensation packages, many employers are left wondering: where do we start? What do we need to provide, by law, and how do we know if we’re meeting those requirements?
In this article, we’ll pause the noise (if only for a moment) and get back to basics. We’ll run through which benefits employers are required to offer by law—that is, the “statutory benefits.”
In the end, you’ll know what you need to offer and where to turn to help you sort it out.
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“Statutory benefits,” or benefits required by statute, are the mandatory benefits employers must provide to employees under federal, state or local law. These are non-wage and non-salary benefits that vary depending on your business size, industry and location.
If a benefit isn’t required by statute, offering it is optional.
All U.S. employers must provide full-time employees:
The Federal Insurance Contributions Act (FICA) requires employers to pay taxes that are used to support the federal government’s Social Security and Medicare initiatives, which in turn provide for employees.
While both employers and employees pay into these funds, employers must withhold Medicare taxes at 1.45% of an employee’s gross compensation, plus 0.9% of their compensation if the employee is a high earner. Businesses are also required to match 6.2% for Social Security funding (up to the wage base) and 1.45% for Medicare funding.
For all employers, the statutory benefits required by state or local law for full-time employees vary based on location. Examples include:
Short-term disability insurance in states like California, Hawaii, New Jersey, New York and Rhode Island.
State-sponsored retirement plans in states like California, Connecticut and Illinois (unless employers offer a qualifying alternative).
Paid sick leave in certain states and municipalities, regardless of company size.
Because state and local requirements differ, it’s best to consult with an HR compliance expert.
Businesses with 50 or more full-time employees have additional requirements under the Affordable Care Act (ACA), including:
If you are an ACA-covered ALE, you are required to offer qualifying health insurance to your full-time employees. The health insurance you provide must meet affordability and adequacy requirements set by the federal government.
In general:
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While state-required leave may raise these minimums, the federal government’s FMLA provides that covered employers (i.e., those with 50 or more employees) must allow for 12 weeks of protected (unpaid) leave during the year for qualifying family and medical-related reasons.
If you run a business that employs fifty or more full-time employees, or if you’re growing and getting close to that number, it’s critical that you understand your obligations under the Affordable Care Act.
RELATED: FMLA Rules: Answers to Your FAQs & Free Compliance Checklist
Providing statutory benefits isn’t just about compliance—it’s about protecting your company from penalties, supporting employee well-being, and building trust. Going beyond the basics with voluntary benefits can also help attract and retain top talent.
For many small businesses, deciding which benefits you offer can feel like an overwhelming task. Luckily, you don’t have to do it on your own. You have experts on your side, ready to help you fill in knowledge gaps and make compliant decisions confidently.
With assistance from dedicated HR compliance experts, you’ll be empowered to make people-focused choices with the peace of mind you deserve.
Axcet HR Solutions is a certified professional employer organization with over thirty years of experience in risk management, HR compliance and more.
Let us handle the HR details while your business continues to grow and thrive. To find out more about how Axcet can help, schedule a consultation with our experts today.
A: Statutory benefits are the mandatory benefits employers are legally required to provide, such as Social Security, Medicare, unemployment insurance and workers’ compensation.
A: Not all. Only Applicable Large Employers (50+ employees) are required under the ACA to provide qualifying health coverage.
A: No. While federal laws apply nationwide, state and local governments often add their own requirements, like paid sick leave or short-term disability insurance.
A: Noncompliance can lead to hefty fines, legal liability and employee claims. It may also damage an employer’s reputation.
A: Statutory benefits are required by law, while voluntary benefits (like wellness programs or telemedicine) are optional enhancements employers offer to stay competitive.
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