If your business has outgrown your garage and you’ve become more than a one-man band, well, congrats! But you may also be a little confused when it comes to hiring employees and exactly what to offer upon hiring. Choosing which benefits to offer employees is a critical and important task for small business owners. Speaking practically, and assuming you’re not yet offering free on-demand back massages like Google, or fancy scooters to ride around the office like Dropbox, let’s break down the most valued benefits for employees.
Many small business owners find it advantageous to look out for their employees first, and then their customers. After all, happy employees will look after customers which reduces demands on you and keeps your company growing. Thus, it only makes sense to offer as many benefits to employees as reasonably possible, without hurting your business.
Not surprisingly, some benefits are required by law. Plan on allowing your employees time off to vote, to serve on a jury, perform military service, and to have a baby or use FMLA (Family and Medical Leave). You must also comply with worker’s compensation, withhold taxes, and offer retirement and disability benefits. State and federal unemployment taxes are also mandated.
1. Health Insurance
The most sought-after and common benefit for employees is insurance. Unfortunately, as an employer, this is also the most expensive benefit to offer. The Affordable Care Act has changed the requirements for many businesses regarding health insurance and expanded coverage to a wider number of Americans. As of 2014, business owners with fewer than 50 employees are not required to provide a health coverage plan. However, those employees are still required to obtain health insurance whether it be a private plan or through your company.
If you have less than 50 employees and you do choose to offer health insurance, use the Small Business Health Options Program Marketplace (SHOP). Businesses that offer insurance through SHOP and have fewer than 25 employees may be eligible for certain tax credits. Businesses with more than 50 employees are required to offer health insurance.
While the decision is ultimately yours, providing healthcare for employees tells prospective and current employees that you care for their wellbeing. Healthy workers are happy workers, which translates to higher productivity, less stress, and less sick days.
2. Retirement and Life Insurance
Many businesses that begin hiring employees also like to offer 401k retirement plans, as well as life insurance. These are fairly inexpensive benefits to implement and are almost always taken advantage of by employees. These two benefits give employees a sense of security in their present position, as well as for their future.
3. Paid Leave
Most employers are surprised to learn that they are not required to give employees paid vacation, sick days, or holidays. While in the short term not offering these benefits can save you money, generous leave pay attracts high-quality employees and improves morale. Basically, if you choose not to offer any paid leave, you may find yourself without any employees to offer it to. The majority of employers offer some kind of paid leave to their employees.
If you choose to offer vacation pay, you’ll also need to determine a clear and thorough explanation of what is to be done with unused vacation time. Some employers choose to carry it over into the next year, some will pay it out in cash, and others abide by a “use it or lose it” policy. Find what works for you and make sure it is clearly outlined in your company handbook.
4. Health and Wellness Plans and Incentives
An increasingly popular perk employers are offering employees are wellness plans. These often come in the form of gym memberships, pool passes, memberships to various fitness classes, and the like. Many offer an incentive program for employees to set a fitness goal and receive compensation for meeting that goal within a certain time period. Some even join in the fun of offering prizes or money for an office weight loss program. Wellness benefits are a relatively inexpensive perk to offer to employees, and many are thrilled at the prospect of a little extra incentive to meet their existing goals.
5. Childcare Assistance
With a changing workforce and evolving family dynamics, more and more companies are assisting employees with childcare. Many offer child care referral services, and some even offer contracted daycare or in-office childcare.
Visit more posts in our Payroll 101 series: