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What Employee Benefits are Required by Law

There are many types of benefits you can choose to offer workers, but if you’re starting a small business, you need to know what employee benefits are required by law. These laws range from health services to tax contributions. If you don’t partner with a professional employer organization like Canal HR, then it’s your responsibility to keep track of knowing what the federal and state governments legally require employee benefits.

Exactly What Employee Benefits are Required by Law

Workers Compensation Insurance

The first benefit that you’re legally required to provide to your employees is workers’ compensation insurance. Workers’ comp covers the cost of medical care, treatment, rehabilitation, and paid leave or replacement income for any employees that incur injury or illness in a situation that relates to work. Warehouse fatalities doubled in the past five years, and injury rates grew to 5.1 per 100 full-time employees, making this insurance especially important to workers.

With the cost of an average workplace injury totaling around $38,000, it’s essential to have some kind of risk management service like those that Canal HR. As a professional employer organization, our services help create and maintain a safe working environment to keep workers’ compensation insurance costs to a minimum. 

Health Insurance

The Affordable Care Act (or ACA) currently requires that any company employing 50 or more full-time employees must provide healthcare coverage. These businesses are also required to regularly report the value of said health insurance on the employee W-2 forms and file the appropriate forms with the IRS, providing details regarding the type and cost of insurance plans offered. Not offering affordable health insurance to full-time employees could result in severe penalties from the federal government. 

Health insurance is also an important benefit to offer as quality health care is consistently ranked one of the most important for employees to have from their workplaces, making it crucial for small businesses that want to recruit and keep top talent.

Unemployment Insurance

No matter how many employees a small business has, it is required to offer unemployment insurance. If either a full-time or part-time employee involuntarily leaves their job, unemployment compensation provides partial income replacement. The amount paid out depends on the individual state, but in Louisiana, unemployment is only available to employees who are:

  • Unemployed or partially unemployed through no fault of their own
  • Physically able and available to work
  • Have earned enough wages in your base period or the first four of the last five completed calendar quarters before the claim is filed
  • Actively seeking employment. This may be waived if the employee is only temporarily laid off and has a definite return-to-work date.

Both employers and employees are required to contribute to unemployment compensation insurance, which is then administered at state and federal levels.

Family and Medical Leave

The Family Medical Leave Act (or FMLA) makes family medical leave benefits another requirement for any business that employs 50 or more full-time employees within a 75-mile radius. This allows employees to have a minimum of 12 weeks of unpaid medical leave each year while maintaining their job security and all benefits. 

This law came into fruition to help workers balance family, personal, and medical needs without fear of being fired. For employees to qualify for family and medical leave under FMLA, they must have worked for the company for 12 months or longer and worked a minimum of 1,250 hours (or slightly less than 32 work weeks) before the start of paid leave.

Situations where FMLA applies, can include the birth of a child, caring for a spouse or another family member with a serious illness, dealing with their difficult health conditions, or transitioning into active military service. 

Social Security and Medicare Contributions

Social security, which President Roosevelt created in 1935, ensures that employees will have a retirement fund after they retire or become disabled permanently. Similarly, medicare provides health insurance coverage for those 65 or older with certain medical conditions or disabilities.

These are both federally mandated benefits programs that all employees in the U.S. must pay into while they work. These taxes are paid by both the employee and employer through payroll deductions. These deductions and other federally required withdrawals are payroll services that can be handled by a PEO such as Canal HR.

What Employee Benefits Are Required by Law PEO’s Can Handle

When you outsource to Canal HR, we become your Human Resource Department. Having a PEO means we take care of things such as payroll, workers’ compensation, risk management, and staying on top of any legal changes related to required employee benefits so you can take care of growing your business.

Learn more about how to partner with Canal HR and contact us today!