One of the things I like best about working with my friends at Greatland is that they make dealing with the logistics of hiring employees so easy. Dealing with W-2s and 1099s can be complicated, but they make it easy.
Indeed, as a business owner or manager, understanding what is legally required when dealing with employees is not always easy. What do you have to pay? What time off is required? And then beyond that, what more need you do to stay competitive?
The fact is, people work for many reasons; compensation is just one. If you want to create and sustain a successful small business you need to take into account the many things people want out of work. From the noble (the desire to make a difference) to the mundane (to get health insurance) work means different things to different people. While pay will be the main way you compensate them for a job well done, it is by no means the only way.
So, just what is required? By law, you are required to give employees only certain benefits, although they are probably not what you think. You must
- Pay them at least the prevailing minimum wage.
- Provide worker’s compensation insurance.
- Withhold and match FICA taxes.
- Pay unemployment taxes.
- Have employees work no more than 40 hours a week, or pay overtime, unless they are exempt employees.
- Give employees time off to serve in the military, on a jury, or to vote.
As indicated, according to the Fair Labor Standards Act, certain employees are exempt from overtime and minimum wage requirements. These employees are executive, administrative, professional, and outside sales employees who are compensated “on a salary basis” regardless of the number of days or hours worked.
You are not required to give employees benefits such as
- Health insurance
- Paid vacations
- Sick leave
- Retirement plans
- Stock options
- Life insurance
- Christmas, New Year’s, or other legal holidays off
Of course, while you are not required to offer such benefits, if you want to create a place where people want to work, a place that engenders loyalty, you will want to provide some or all of the benefits listed above.
The quality of your benefits package is definitely something potential employees will consider carefully. And since the quality of the employees you attract has a direct impact on the quality of your business (and the quality of your bottom line), offering a full benefits package is an important criteria to consider, albeit an expensive one.
Bottom line: Understand what is legally required, decide what you can do over and above that, and then offer that.