There are some compensation and benefits that are mandatory. Such benefits are mandatory or statutory benefits. These are employment benefits that, by law, employers must provide. The purpose of the required benefits is to protect and provide for employees. Mandatory benefits help employees and their families through medical care and retirement income. They also allow for employees to have paternity and maternity leave. Most of all, they protect employees in the case of an injury, illness, or disability in the workplace.
Under Medicare, all states are required to have mandatory benefits. As the government mandates these, the requirements may differ state-to-state. The federally managed benefits programs include Social Security and Medicare. Employers and employees pay for these equally through payroll deductions and taxes. Other mandatory benefits are employer and state-funded. Benefits equate to thirty percent of the total cost of a worker’s employment.
Types of Mandatory Benefits
Here are the compensation and benefits required by federal or state law that employers are obligated to provide:
Under the Consolidated Omni-Budget Reconciliation Act (COBRA), the federal government requires companies that have 20 or more employees to provide extended medical benefits to former employees and their families for up to 18 months, but sometimes it can be longer. Note that states can have additional requirements for these medical benefits, check state “mini-COBRA” laws to confirm these. For more information, look at the US Department of Labor’s guide.
The purpose of disability & workers’ compensation is to ensure injured or sick employees continue to receive payment until they can work again. Some businesses are exempt from providing workers’ compensation, but most payroll employees are eligible if injured while on the job. There are only a few states that require employers to provide disability coverage, but most employers rightfully choose to provide it. To see whether your condition qualifies you for disability, check the blue book. To apply for disability benefits visit your local Social Security office, call 800-772-1213, or register online here.
Under the Family and Medical Leave Act (FMLA), some employers are required to provide 12 weeks of maternity, paternity, and adoption leave, but this isn’t required to be paid leave. Most states have their own labor laws regarding family additions or medical issues that include paid leave.
Under the Fair Labor Standards Act (FLSA), the current federal minimum wage is $7.25/hour. Regarding State vs. Federal laws, whichever minimum wage law is highest overrides the other. For example, if a state’s minimum wage is higher than the federal minimum wage, the state law overrides federal law and vice versa.
The FLSA also determines overtime pay requirements. Like the minimum wage, whichever law (being federal or state) benefits an employee the most, is the law that will be enacted. Click here to read more about coverage under the FLSA. Read this FLSA handbook for further reference and/or research.
States manage unemployment benefits for workers. Unemployment pay is given for a given period of time when an employee worked a qualifying job and was laid off. Employees that were fired or resigned are generally not eligible for unemployment benefits. The amount of unemployment pay is determined by state and job title.
Mandatory benefits are mandatory! Employees rely on mandatory benefits to protect their rights and quality of life. Hence, the government requires every employer to provide them for all their employees. Not providing mandatory benefits results in serious legal consequences. Compensation and benefits can be confusing. AUI insurance is here to assist you in making the best choice for your company. Contact us today!