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It’s the Law: Benefits You Must Provide Employees

Employers have a lot of options for increasing the appeal of their benefits plans. But there are also certain minimums to comply with — benefits required by law.

Here is a list of benefits required by either the federal government or by state governments.


The federal government requires all employers to offer these benefits to their employees:

Social Security Taxes – Employers must pay Social Security taxes on each employee’s earnings at the same rate paid by their employee. That rate in 2017 is 6.2 percent on taxable earnings up to $127,200 as of 2017 — which means your company must pay the Internal Revenue Service a total of 12.4 percent of payroll.

Medicare Tax – withholding of 1.45 percent paid by employers and employees. In addition employers must pay an additional 0.9 percent Medicare tax if the employee’s compensation exceeds the threshold amount, which is $200,000 for someone filing single.

Workers’ Compensation – In every state except Texas, where an opt-out with certain conditions is available, employers must purchase insurance to provide benefits to any employee who suffers a work-related injury or illness. The coverage is no-fault but employers are protected from lawsuits by injured employees. Each state has different laws regarding the rates paid to employees injured on the job.

Paid Leave for Service – You must allow your employees time off to serve on a jury or perform military service. The Fair Labor Standards Act does not require employers to pay employees for jury duty service, although some states do. You must rehire employees at a comparable level after they return from military service.

Check to see if your company must comply with the federal or state requirements for offering these benefits:

Unemployment Insurance – This insurance pays compensation to employees who lose their job through no fault of their own. Employers must pay both state and federal unemployment taxes if they pay wages totaling $1,500 or more in any quarter of a calendar year; or if they had at least one employee on any day of a week during 20 weeks in a calendar year (regardless if the weeks were consecutive). However, some state laws differ from the federal law. Register your business with your state’s workforce agency to learn your state’s requirements.

Disability Insurance – You must purchase partial wage replacement insurance for your employees for non-work related illness or injury if you operate in the following states and territories: California, Hawaii, New Jersey, New York, Puerto Rico and Rhode Island.

Family and Medical Leave – The Family Medical Leave Act provides eligible employees with 12 weeks of unpaid, job-protected time off during a 12 month period for maternity leave, adoption, foster care, care of an immediate family member, or an employee’s illness. Several states and local jurisdictions require employers to provide leave under additional circumstances. Contact your state labor department to determine if you need to provide Family and Medical Leave. Usually, only companies employing 50 or more employees in 20 or more workweeks during the current or previous calendar year are subject to these regulations. However, some states have family leave laws for businesses with fewer than 50 employees.

COBRA Benefits – The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers with 20 or more employees to allow their employees and the employees’ family members to maintain their health insurance coverage at the employer’s group rates for up to 18 months after leaving their job and longer in some cases.

Paid Leave for Service – You are not required by federal law to allow your employees time off to vote, but most states have regulations in place that make it easier for employees to vote during work hours.

If you want to evaluate the legality and compliance of your benefit offerings, contact your local Alera Group firm or send us an email today at