Your Compliance Edge

Introduction to Employee Benefits


As you develop your employee benefits program, it is vitally important to understand the laws, featured in this section, which can potentially impact your program, including Health Care Reform, COBRA (if your company has 20 or more employees), and the Family and Medical Leave Act (if your company has 50 or more employees).

Types of Employee Benefits

There are two types of employee benefits:

  • Those the employer must provide by law; and
  • Those the employer offers as an option to compensate their employees.

Examples of required benefits include Social Security and workers' compensation, while optional benefits include health care and retirement. Both required and optional benefits have both legal and tax implications for the employer.

Employee Benefits Legal Compliance

While employers largely have discretion to choose what benefits to offer their employees, and how, employee benefits are also highly regulated by law. Thus, as employers explore the Employee Benefits section, they should keep the following ideas in mind:  

  • Which benefits must be provided by law to employees- such as family and medical leave and continuation of health coverage- and which benefits are voluntary.    
  • For each benefit, determining who is a covered employer, and who is a covered employee, keeping in mind whether your workers are properly classified as  independent contractors or employees.
  • Knowing whether the benefits you provide are regulated by federal and/or state law. For example, health coverage and retirement plans, while optional, are both governed by the federal Employee Retirement Income Security Act (ERISA). Health insurance is further subject to a variety of other federal laws, including the Affordable Care Act (Health Care Reform), and state laws that add to or expand federal law.
  • Finally, employers should understand the tax consequences of employer-provided benefits, such as cafeteria plans. 

The Employee Benefits section includes:Businesspeople working on laptop

For more on each of these topics, please click on the appropriate link above or at left. 

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