A Guide to Handling Employee Benefits
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There are some types of employee benefits which the employer is required to provide to employees. This can include Family & Medical Leave Act, disability, COBRA, overtime, minimum wage, unemployment benefits, social security disability insurance, and workers comp. But there are many other forms of benefits which are not mandatorily required to be provided. In other words they are not entitled to be given to your workers.
Some non mandatory employee benefits may be offered by the employer but are not required under labor agreement. These benefits can vary from one company to another, usually depending on the size of the business and the industry. Some of the common ones include healthcare, hazard pay, paid holidays, maternity, adoption leave and paternity, severance pay, pay raise, termination, sick leave, work breaks, meal breaks and leave.
Risks & Complications
The moment you start offering benefits, there is a good chance that complications can arise. Important benefits like retirement plans and health benefits are scrutinized by government. It is relatively easier to make mistakes in setting up such benefits. It will be a mistake to believe that your employee policies will go unnoticed.
Even the IRS can find out in audits whether your policies are in compliance or not. Similarly, the Department of Labor can also detect discrepancies. Any errors in implementation could mean penalties in various forms – from loss of tax exemptions to direct penalties.
It is important to ensure that your employees are not left out of the mandatory plans. Some of the common mistakes conducted by organizations include excluding part-timers and not extending employee benefits to clerical or other staff. It is required to extend the same benefits to all the employees. Excluding any group of employees could raise suspicions and potential action from the authorities. Even if there are legible exemptions, it will be best to seek the guidance of experts.
Even before you set up any type of employee benefits, it is recommended to seek the advice of a legal professional. You may do your own research, but it could still leave several loopholes with potential hazards.
Avoid Costly Mistakes
Meeting all the regulations and providing benefits to meet employee needs costs more than 30% over what you will usually pay to your staff. Most employers will seek ways to get the most out of these expenses. But you don’t want to be doing anything that could result in expensive mistakes. Your actions may place you in financial trouble with your employees or even with your insurers.
There are many errors that could prove to be costly. You don’t want to be absorbing the entire cost of the benefits. It will be more economical to get the employees share the costs. Avoid any temptation to cover nonemployees. Many owners will want to cover their friend or relatives to take advantage of the group coverage rates. If there is a major claim, it could lead to the insurer making detailed investigation, which could put you in trouble.
Similarly, it is also important to avoid poor paperwork. Especially in small businesses it will be a small team that will be the jack of all the works. They may not be technically sound to ensure the paperwork is thorough and accurate.
So if you want to run your business safely, it is important to handle the employee benefits with utmost care.
Employers Resource helps every business at all stages with growth and development. Find out more! Call us today at (800) 559-2350.
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