Required Employee Benefits

As an employer, you're required to provide certain benefits for your employees. There can be both state and federal rules with which you must comply, and the terms of those rules can vary. In general, the three types of benefits you must provide involve:

In a few states, employers must also provide short-term disability or health benefits.

Time Off

In addition to the requirements of the FMLA, several states require employers with fewer than 50 employees to provide family leave.

Workers’ Compensation. Every state has enacted workers’ compensation laws to protect employees against loss of income and to make medical payments required due to a work-related injury, accident, illness, or disease. In every state except Texas, workers’ compensation coverage is mandatory.

FICA. The Federal Insurance Contributions Act (FICA) requires you to pay the employer’s portion of both a Social Security tax and also a Medicare tax. The law requires you to withhold the employee’s portion of these taxes from each employee’s wages.

FUTA. The Federal Unemployment Tax Act (FUTA) requires you to pay federal unemployment tax when you have employees. States also have unemployment taxes. The rules in every state are at least as broad in scope as the federal rules so, if you're paying FUTA, you'll also be paying state unemployment taxes.

Social Security Benefits. The Social Security Administration also provides benefits to workers whose disability is of a type that will last at least 12 months. Fortunately, arranging for these benefits is something that a disabled employee will handle directly with the SSA.

State Disability Programs. California, Hawaii, New Jersey, New York, Rhode Island, and Puerto Rico all have state disability programs. These jurisdictions require anyone with at least one employee to offer temporary disability benefits to an employee who is unable to work due to illness or injury, but who does not qualify for unemployment benefits or workers’ compensation.

Health Care Benefits. Hawaii is the only state that requires employers to make health benefits available to employees.