How to understand what employee perks are really worth— and which ones aren't optional
by Paul Edwards
You want the best people working for your business—and as an employer you should know that one of your most powerful tools to attract and retain great employees is the benefits you offer. Study after study has shown that the top three reasons why employees stay at a business are culture, pay and benefits. (Plus, it just feels right to offer benefits to your employees.)
Deciding which benefits to offer isn't as simple as it sounds, however. In this article, I'll name some items I often see described as "benefits" that are actually part of your legal obligation as an employer. To make things even more complicated, while many benefits are optional, once offered to employees they invoke compliance regulations, so the wording within your benefit policies has to line up with your legal obligations.
Here's a quick example: Many dental practices include seminars and continuing education (CE) courses as part of their optional benefits—which is great! But practice owners and managers often don't know that once the practice offers that benefit, myriad federal wage and hour regulations automatically take effect. As a result we see dentists offer to take the team to seminars and CEs, which is an optional benefit, but fail to pay employees properly when they participate in the benefit, which is a legal requirement.
But wait—if an offered benefit is "optional," shouldn't the dentist or office manager get to choose how it will be administered? Unfortunately, that's not how it works.
We can clear up the first area of misunderstanding by answering a single question.
When is a benefit not "optional"? When it's your
legal obligation
The specific regulations that apply to you depend on factors like your practice's state of operation and number of employees, but the following items are often referred to as "benefits," when in fact they're your legal obligations.
- Matching funds for Social Security
- COBRA optional health insurance continuation (mandatory if you have 20 or more employees—fewer in some states)
- Compensation and paycheck deduction of taxes and Social Security
- Election Day accommodation if needed, so all employees have time to vote. Requirements vary by state and employee schedules.
- Health insurance (required by the Affordable Care Act if you have 50 or more employees)
- Unpaid family and medical leave (for those with 50 or more employees)
- Jury duty leave—whether paid or unpaid depends on state law
- Maternity leave and accommodations: Laws vary by practice size and state. Anti-discrimination laws in most states require pregnancy to be treated like other temporary medical disabilities. Not having a standard policy can lead to all sorts of issues.
- Military leave of absence (USERRA) is required by federal law. You must reinstate, and shouldn't fire during the first year upon employee's return without documented cause and expert human resources backup.
- Overtime pay. Employees who work more than 40 hours per workweek (or more than 8 hours per day in California, Nevada and Alaska) must be compensated at 1.5 times their "regular rate of pay." An employee cannot waive this right to overtime pay for hours worked.
- Unemployment insurance. Making up rules that imply employees exclude themselves by doing or not doing certain things is useless.
- Uniform reimbursement is state-dependent. In most situations, if the uniform cannot be used for any other purpose, the employer must provide it.
- Workers' compensation insurance is regulated by the states and if you fail to provide it, you may be held liable for a lifetime of medical payments. In most instances, you may also be breaking the law by not providing it.
- Paid sick leave. The number of states and municipalities across the country that require employers to provide a minimum number of paid sick days per year is growing.
Even when benefits
are optional, following
these rules is not
Unless your state laws say otherwise, the following are optional benefits you may choose to offer employees. However, you should understand that just because a benefit is "optional" doesn't mean you also get to choose which rules to follow or (in some instances) how to administer the benefit.
Each of these "voluntary" benefits also has state, federal, and in some instances, local municipality laws with which you must comply.
- Retirement plans
- Profit-sharing plans
- Bereavement leave
- Continuing education: Whether you provide this is up to you, but once it's offered, strict laws apply! If you bring your team, you must pay most employees for their time spent in training, as well as for all travel time that cuts across your regular hours of operation—even on days when your practice is usually closed. You don't get to use discretion about whether to pay, and you can't have employees agree to attend job-related events "voluntarily" to get out of it.
- Dental or vision insurance coverage
- In-house dental care
- Dependent care assistance programs (DCAP)
- Disability insurance
- Employee assistance programs (EAP)
- "Flex" time: Allowing employees to alter the start and end time of the workday around a normal schedule is an optional benefit (although most dental offices can't accommodate this).
- Holiday pay
- Leave of absence (LOA): Until you hit 50 employees, it's up to you whether you'd prefer to have no LOA policy (not recommended), or if you want to create a legally compliant unpaid leave policy (a good idea!). On the other hand, if you do have 50 or more employees, then under a specific set of circumstances, you must grant unpaid leave.
- Life insurance
- Medical coverage via a company-sponsored health insurance plan, if there are fewer than 50 employees.
- Personal time, paid vacation time or PTO
- Sick and emergency leave (unless it's a requirement of your state or locality)
- Professional dues or license fees
- Tuition assistance
Note that neither list is all-inclusive. There are many other benefits you could choose to offer employees. Likewise, many other laws apply to you as an employer—often depending on your state, how many employees you have, and even your specialty.
Plus, as you offer additional benefits, watch out! You may unintentionally incur additional requirements. (One example is the need for ERISA compliance if you're offering a health insurance or a retirement or disability plan.)
Handling benefits effectively
Ensuring that you fully understand your employer obligations versus your employee benefit options—and the laws that apply to both—can be a painstaking process. But does that mean employee benefits are bad for employers, and that it's easier to offer the minimum you can get away with?
Not at all. First, offering less won't make you HR-compliant. You still need to follow all employment laws that apply to you, whether or not they're benefit-related. It doesn't matter if you offer only five benefits instead of 15—if one of those five is problematic, you'll still find yourself fined by a government agency—or worse, sued by an employee.
Instead, take the easy (and smart!) way out, and have your benefits and other HR policies checked regularly by an expert you trust. Consult that expert again any time you consider modifying benefits or plans—and also just on a regular basis, to make sure your policies stay up-to-date and are powerful enough to help protect your interests. That way, you'll benefit, too.
This is only the beginning of what benefits bring to you as the employer, because great benefit plans are essential to hiring and retention.
Cui bono: Who benefits?
Offering competitive benefits to your employees is a way to add value to both sides of the employment equation. Your employees get enhancements that have a direct impact on their quality of life—health insurance, for instance, and paid time off, so they don't burn out. Meanwhile, you stand a better chance of attracting high-quality job candidates each time you hire.
But do benefits really matter to job seekers as much as salary alone? Yes! Top-caliber candidates know what they're worth, and often won't even apply if they don't find the benefits they want or need the most. After all, you've got hiring competition from the practice down the road, across town and even across the country. You stand a better chance of finding and keeping great team members long-term if they know they're valued and have reasons to love working for you.
And if you can't yet offer all the benefits you'd like to, don't despair. Even great candidates look for many other factors, from schedules that suit them to career growth in a direction they'd like to go. You'll have time to build up your benefit offerings as you build your practice and your team. Here's a secret: If you create a great team, it will help you create the profit needed to fund more benefits.
Last all-around benefit: Building the pyramid
As employers, we shouldn't forget that employees have lives to lead—including families, health issues, homes, hobbies, and goals they can't work toward until their lives are stable enough to let them try.
This concept of needing a certain level of stability before growth can occur is known as "Maslow's hierarchy of needs." According to Maslow, a 20th-century psychologist, living at one's full potential can't happen until more basic needs—physical and physiological, shelter and security, love and friendship, self-esteem, etc.—are all met, step by step. You may have seen this hierarchy represented as a five-level pyramid, with the most basic needs on the bottom and self-actualization at the top.
Why am I telling you this? As employers, we want our employees to love what they do and do it at the highest level—but humans literally cannot climb to higher levels of self-direction, purpose, advanced morality and achievement until their lesser needs are fulfilled.
Of course, that's not up to you entirely, but what you can do is consider offering security-related benefits that may help your employees complete the second level of Maslow's pyramid—like fair wages, health insurance, sick leave, retirement planning and a way to care for their families—so they can move onward and upward. Nobody can make anybody else grow as a person, but we can and should give each other what help we can.
Besides, the benefits are mutual. After all, which employee is more likely to be able to concentrate on patients and love what she does:
- One who's in debt up to her eyeballs, stressed about her
unsafe neighborhood and worried about paying for her child's
health condition?
- Or one who feels optimistic about her life's progress and journey?
I know how much you can offer is a balancing act against the needs of your business—plus what you need for your own journey up Maslow's hierarchy. On the whole, though, and when you can, offering reasonable benefits to employees is reasonably likely to help. And that means everyone wins.
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