As you can see, federally required employee benefits are pretty basic, yet they still add up to almost 8% of wages. Adding voluntary benefits to those offerings makes your company a more attractive prospect for job seekers.
1. Paid leave
While not required at the federal level, paid holiday, vacation, personal, and sick leave are among the most valued employee perks. And giving employees a chance to recharge is good for business, too.
According to the most recent benefit survey from the BLS, the share of small businesses employees with access to paid leave breaks down as follows:
- Holiday: 70%
- Vacation: 69%
- Sick leave: 64%
- Jury duty: 42%
- Funeral leave: 39%
- Personal: 33%
- Family leave: 14%
Participating small businesses offer an average of 7 paid holidays and 10 vacation days, with additional vacation tied to tenure.
While there is no federal requirement for paid leave, many states and cities have enacted requirements of their own. For example, 11 states and at least 18 cities have paid sick leave laws, and 8 states have paid family and medical leave laws.
When managing leave, be sure to consult state and local laws in addition to federal requirements.
On average, paid leave adds up to $2.53 per hour worked, or 7.3% of compensation.
2. Unpaid leave
Interestingly, 80% of small business employees have access to unpaid family leave, even though it’s not required under the Family Medical Leave Act until a business reaches 50 employees. Allowing employees time off to care for a new baby or a sick family member is a high-impact, low-cost benefit.
3. Health insurance
Small businesses are not required to provide medical benefits or prescription drug coverage to employees, yet roughly half of small business employees receive them. Dental care is available to 29% of small business workers, and vision care is offered to 18%.
If you do offer healthcare insurance, the Affordable Care Act (ACA) requires that you offer it to all employees when they become eligible. You must also meet ACA employee notification requirements.
Costs of healthcare benefits average $2.61 per hour worked.
4. Life and disability insurance
Only 37% of employees at smaller companies receive life insurance benefits. Short- and long-term disability benefits are rarer yet, with access rates of 30% and 23%, respectively.
That might be a missed opportunity, as the hourly costs for these employee benefits are just $0.04 for life insurance, $0.07 for short-term disability, and $0.04 for long-term disability.
Roughly half of the small business employees receive retirement benefits, with the vast majority being defined contribution plans such as 401(k)s. These benefits cost roughly $1.22 per hour worked, or 3.5% of compensation.
This e-book from the National Federation of Independent Business (NFIB) is a great resource for constructing a benefit plan.
6. Fringe benefits
Fringe benefits are benefits you can offer on a low- or no-cost basis because employees bear the bulk of the costs. Examples include daycare, tuition assistance, employee discounts, and gym memberships.
7. Free benefits
Many employee benefits prized by workers are cost-neutral for you. Inviting work spaces, casual dress, remote work options, flexible schedules, and even pet-friendly policies can enrich your culture and help your small business stand out in the marketplace.
Your business needs will dictate the kinds of employee benefits that make sense for you, but getting creative with benefits can pay off in recruitment and employee engagement.