The Minimum Requirements For Employee Benefits
Varies From State To State
The state of Texas does not require employers to carry workers compensation benefits. Employers are required to pay a certain percentage for the employees’ social security (6.2%) and Medicare (1.45%) tax to comply with the Federal Insurance Contribution Act (FICA). Employers are required by law to pay into unemployment insurance on the state and federal level. Unemployment insurance is delegated from the federal leave to the states to operate; employers are required to pay into the Federal Unemployment Tax Act (FUTA), as a backup fund for the states. The Employee Retirement Income Security Act (ERISA) requires employers to meet minimum standards (i.e. fiduciary duty) in managing voluntary pension plans in the private sector. The Railroad Retirement Act (RRA) requires employers in the rail industry to pay into annuities as opposed to paying into social security. The rail industry companies are required to pay into the Railway Unemployment Insurance Act for employee sickness benefits insurance. Under the Affordable Care Act (ACA), employers with 50 or more full-time equivalent are required per the ACA to offer health insurance to their employees and the employer must pay at least 50 percent of the employees’ healthcare insurance.
All other benefits are offered at the discretion of the employer in the private sector. Such optional benefits for savings and retirement plans are: 401 (k), stock options, profit-sharing, and pension plan. There is not a law that requires employers to pay for paternal medical leave; employees who qualify under the Family and Medical Leave Act (FMLA), are allowed up to 12 weeks of unpaid leave each year. There are no laws requiring employers to offer life insurance, short-term and long-term disability insurance, death benefits, paid vacation, or child care benefits.
A total rewards model should reflect what benefits employees value and what benefits an organization can offer given their budgets (i.e. benefits needs assessment). An organization can offer special benefits called “perquisites”; such perquisites can be: subsidized employee meals or meal allowances, mobile devices, professional association or certification, training programs, housing, company car and/or car allowance, and tuition assistance. An organization can offer health and welfare benefits like employee assistance programs (EAP) and wellness programs. An organization can offer short-term and long-term disability insurance, paid time off, paid sick days, and paid maternal and paternal leave. An organization can offer family-oriented benefits for work-life balance such as flexible work hours, compressed workweeks, work remotely, childcare, elder care, and domestic partner benefits. An organization can offer retirement benefits such as stock options, which is good for cashflow purposes, and 401 (k) plans. Other benefits an organization can offer are workers' compensation and severance packages.