Managing employee benefits: rewarding workers and complying with requirements.

• Author: Barbour, Tracy
• Position: INSURANCE

[ILLUSTRATION OMITTED]

Employee benefits enable businesses to reward workers for their contributions while complying with a myriad of statutory and regulatory requirements.

Often referred to as fringe benefits or simply perks, employee benefits compensate workers above their normal wages and salaries. Typically given in the form of indirect and non-cash payments, benefits are an integral part of employees' overall compensation package.

Benefits versus Statutory Requirements

When Northrim Benefits Group President Joshua Weinstein thinks of employee benefits, he thinks of perks that are given to recruit, retain, and reward talent. Employee benefits, in essence, are intended to reward the people who make an organization successful. "Employers offer benefits because they believe they will make their workers better, and it will be good for their business," says Weinstein.

There is no such thing as legally-required "benefits," but there are certain areas of coverage that are mandated by statutes, according to Weinstein. These statutory requirements generally relate to protecting workers against occupational illness, injury, and job loss. For example, employers generally must match workers' Social Security and Medicare payments, as well as pay unemployment and workers' compensation insurance. And some states stipulate more requirements.

"Some of the more progressive states are pushing for more and more mandatory protection for their workers with things like disability or maternity leave," Weinstein says. "But those aren't benefits; they are legislated employment practices."

Statutory responsibilities for employers vary by state and municipality. In Alaska, for example, companies with one or more employees must carry workers' compensation insurance, which helps protect employees in the event of work-related injuries and illnesses. Workers' compensation insurance also benefits employers by eliminating lawsuits for employees' work-related injuries or illnesses. In general, worker's compensation insurance represents the largest expense of an employer's total business insurance budget.

[ILLUSTRATION OMITTED]

Unemployment insurance is another key statutory obligation. In general, the Federal-State Unemployment Insurance Program provides unemployment benefits to eligible workers who are unemployed through no fault of their own. Unemployment insurance payments--often referred to as benefits--are intended to provide temporary financial assistance to eligible unemployed workers. Most employers pay both a federal and a state unemployment tax.

Employers' mandated coverage requirements often depend on the size of the business, according to Thomas Alinen, SHRMSCP, SPHR. For instance, the Family and Medical Leave Act (FMLA) entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons. Any company or organization--public or private, for-profit or nonprofit--is required to comply with FMLA regulations if it has at least fifty workers employed within seventy-five miles.

An employee's ability to take FMLA leave is not a benefit, but a type of protection, says Alinen, who is an assistant vice president and head of human resources at Denali Federal Credit Union. "It is not necessarily a paid leave," he says. "It is a job protection status."

Under FMLA, eligible employees can take up to twelve workweeks of unpaid leave in a twelve-month period for various reasons, including a serious health condition, the illness of a close family member, or the birth or adoption of a child.

The Alaska Family Leave Act (AFLA), on the other hand, applies only to public-sector (state) employees. Under the...