Guide to U.S. Full-Time Employee Benefits Required by Law

Picture this: you are in a growth industry. You're offering competitive wages, with flexible working requirements. But you're having a hard time attracting and retaining talent.

Your benefits might be the issue.

A critical part of attracting top talent in the U.S. is offering consistent, comprehensive employee benefits, often benefits that go above and beyond the one required by law.

Don't worry-affordable, competitive, and compliant benefits administration in the U.S. doesn't have to be a headache.

Are you required by law to offer full-time employees benefits in the U.S?

Companies that hire full-time employees in the U.S. must provide federally mandated statutory benefits, including Social Security and Medicare, workers' compensation, and unemployment insurance.

Employers must also adhere to state-level requirements, which vary from one state to the next. For instance, employers in 13 U.S. states, including Colorado and New York, must offer their employees paid leave, while employers in other states don't have to.

Generally speaking, there are fewer employee benefits required by law in the U.S. than in many other countries. Take Germany, the Philippines, and the UAE: Employers in these countries must provide health insurance and paid leave to their employees, both of which are optional at the federal level in the U.S.

Nonetheless, many employers in the U.S. offer supplemental benefits to secure top talent and remain competitive in their industry.

* Applies only to qualifying employers

Full-time employee benefits required by law in the U.S.

Mandatory employee benefits in the U.S. include Social Security, Medicare, unemployment insurance, and workers' compensation. Other statutory benefits, such as family leave, medical leave, and health insurance, only apply to qualifying employers.

Social Security and Medicare

Social Security taxes and contributions in the U.S. support the government-backed retirement fund and Medicare, the public health insurance program for people over 65.

Social Security also provides income support for individuals who can't work due to a disability and survivor benefits for legal dependents of individuals who have passed away.

Employers and employees each pay 6.2%, calculated as a percentage of the employee's earnings up to a taxable maximum of $160,200, while self-employed individuals pay 12.4%.

Unemployment insurance

Unemployment insurance, otherwise known as the Federal Unemployment Tax Act (FUTA), provides income support for individuals who are unemployed or have lost their job but are willing and able to work.

FUTA is an employer-only contribution of 6%, applied to the first $7,000 of an employee's annual earnings. A similar program called the State Unemployment Tax Act (SUTA) exists at the state level, with tax and contribution rates varying between states.

Workers' compensation insurance

Workers' compensation insurance provides income support and covers medical expenses and rehabilitation costs for employees who can't work due to a job-related injury or illness.

Employers in most sectors in the U.S. only pay workers' compensation tax to the state, not the federal government. Nearly every state mandates workers' compensation insurance. Additionally, federal workers' compensation programs exist for all federal employees and individuals working in the longshore, energy, and mining sectors.

Family and medical leave

The Family and Medical Leave Act (FMLA) guarantees qualifying employees up to 12 weeks of job-protected, unpaid annual leave for certain family and medical reasons, such as caring for a newborn, adopting a child, or taking care of an immediate family member.

Employees qualify for FMLA leave if they have worked for their employer for at least 1,250 hours over the past 12 months and if their employer has 50 or more employees within a 75-mile radius.

Health insurance

The Affordable Care Act (ACA) is a federal mandate that requires qualifying businesses to make affordable health insurance coverage available to their full-time employees.

The key difference between the ACA and the health insurance requirements of many other countries is that the ACA only requires qualifying employers to make an affordable plan available but not to provide guaranteed coverage.

According to the ACA terms, any employer with 50 or more full-time employees must make an affordable healthcare policy available to at least 95% of its full-time employees and their dependent children. The policy must cover 60% of healthcare costs, and the employee shouldn't have to pay more than 9.86% of their household income.

Companies with fewer than 50 full-time employees don't have to offer coverage. Learn more about providing comprehensive health insurance to U.S. employees in our guide to healthcare benefits in the U.S.

Common supplemental employee benefits in the U.S.

Providing comprehensive supplemental benefits to employees in the U.S. is especially important for talent retention since federal and most state regulations don't require basic benefits such as healthcare and paid leave.

Below, we list some of the most common supplemental benefits global employers offer their U.S. employees:

• Retirement plan benefits. Due to limited social security coverage in the U.S. and the high cost of living, employees in the U.S. value supplementary retirement plans like contribution-matching policies that enable them to make greater contributions to their retirement savings and secure long-term financial security.
• Private healthcare. Robust healthcare is fundamental to an employee's quality of life. Many companies offer private health insurance to their employees in the U.S., regardless of whether or not they qualify for ACA, to ensure their employees have the coverage they need.
• Vision and dental insurance. If vision and dental coverage aren't included in your employee healthcare plan, consider offering additional, separate policies that cover important things like annual cleanings and eye exams, plus access to lower-cost care for additional services like orthodontics.
• Paid time off. Paid time off helps employees establish a healthy work-life balance, dramatically improving their well-being. As paid time off is not a federally mandated benefit in the U.S., it plays a fundamental role in any comprehensive benefits plan.
• Paid sick leave. In addition to allowing employees to take rest when they're sick, paid sick leave also allows them to recover from a cold or flu at home, reducing the risk of getting other employees sick.
• Paid family leave. Parents comprise most of the U.S. workforce, and many employees who aren't parents yet may become parents in the future. Family-friendly benefits, such as paid parental leave, are essential to a company's employee value proposition.
• Equity benefits. Equity benefits include non-cash payments, such as stock options, restricted stock, and performance shares. Because their value fluctuates in line with company performance, these benefits boost employee retention and engagement.

The challenges of providing benefits to U.S. employees

Companies that hire employees in the U.S. face unique challenges when administering benefits to their distributed workforce across the country.

Because the U.S. has so few full-time employee benefits required by law, global employers must offer more robust supplementary benefits to their U.S. employees than they generally would for employees in other countries.Administering benefits to multiple employees across different states can quickly increase the complexity..

Research

You want to allow your employees to work from any state, but you aren't familiar with each state's regulations or top carriers. You have to perform time-consuming research to ensure compliance and source affordable, comprehensive coverage nationwide.

Affordability

You want to hire talent in multiple states, but purchasing numerous policies in many jurisdictions results in mounting costs that exceed your budget.

Administration

Administering benefits for employees located within one jurisdiction requires a robust, experienced, in-house HR team. But, administering benefits for a distributed workforce across multiple states requires even more resources, including additional HR staff with the necessary experience and proper legal counsel to avoid fines and other noncompliance penalties.

Comprehensive coverage

Providing your U.S. employees with only the statutory minimums reduces total employee cost in the short term but leads to decreased employee satisfaction and higher turnover in the long run.

To build a strong, unified team and retain top talent, employers must offer comprehensive benefits that account for all of their employees' needs. This includes basic benefits like healthcare, retirement plans, and paid leave, as well as additional benefits like dental and vision coverage and equity benefits.

Compliance

You want to attract talent nationwide or keep an employee who is moving to another state. To keep your mobile workforce intact while recruiting new teammates from across the country, you have to offer compliant benefits nationwide, adhering to state-level requirements in each jurisdiction where your employees reside.

Attraction

You want to stand out among other employers in your industry and secure top-tier talent. To entice the highest-impact candidates into joining your team, you need to provide competitive, locally-tailored benefits that set your company apart from the competition, which requires thorough knowledge of the local market.

Ready to simplify benefits administration?

Don't let benefits prevent you from building your dream team in the U.S. Simplify benefits administration nationwide and secure top-tier talent by partnering with Pebl.

With our Global Benefits service, we make it easy for companies of any size to engage U.S.talent and administer consistent, compliant, and competitive benefits in 185+ countries worldwide. And all without setting up a local entity..

We partner with a network of renowned brokerage firms across the U.S. to source the best-in-class benefits plans in each state and offer scalable coverage at low rates.Our world-class support team is there for you every step of the.Give your employees in the U.S. and beyond the coverage they need and let us handle the paperwork. Contact us today to get started.

Disclaimer: This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided "as is," and no representations are made that the content is error-free.

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