What Are Mandatory Benefits?


Man with right index finger appearing to touch a benefits overlay. AUI logo bottom right.


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:

  1. COBRA:

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.

  1. Disability:

Close-up of a man in a wheelchair. AUI logo top right.

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.

  1. FMLA:

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.

  1. Minimum Wage:

Minimum wage spelled out in blocks lying on top of a US dollar bill. AUI logo bottom right.

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.


  1. Unemployment:

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!

Additional Reading:

Understanding Total Compensation and Benefits

Benefits You Can Offer Part-Time Employees

Mental Health & Your Benefits Packages

Maternity and Paternity Leave for Small Business


We do more than cover small businesses and individuals with the right insurance policies and benefit plans – what motivates our team is helping you save more so you can invest more in your team, family, and goals.

Recent Articles

AUI Gives Back – Act #16 April Dress Down Days for Friends of Stark Pound

In April, 2024 the teams of AUI and ClarityHR raised money for one of our favorite charities Friends of Stark Pound.  Several members of our team have adopted their pets through this amazing organization.  Julie and Danielle are fur-ever homes for two former Stark Pound rescue dogs. With our combined efforts, AUI and ClarityHR were […]

AUI Gives Back – Act #14 AUI Sponsors the Heart to Heart Breakfast

On May 7th, 2024 Heart to Heart Leadership held their 31st annual breakfast. AUI was proud to be a nickel sponsor and honored to take part in the breakfast.  We were welcomed by purposeful leaders from all over Northeast, Ohio at the John S. Knight Center.  We were proud to invite our friends from Choices […]

Sign Up for Our Newsletter!

Never miss an update from AUI – sign up for our newsletter today for the latest from our team and industry!

This field is for validation purposes and should be left unchanged.

Request a
Personalized Quote

Tell us a little about your insurance needs, then we will contact you for a quick conversation about what you do, what you love, and how we can help!