For many small businesses, it isn’t feasible to offer employees high salaries that can compete with larger enterprises and more established organizations. But one area where small businesses can compete with (and edge out) larger companies is how much they care about their employees. One way to show that is by offering top-notch employee benefits.
In fact, a study conducted by the Society for Human Resource Management (SHRM) showed that 61% of employees claimed benefits boosted their job satisfaction.
Many small businesses start with the basics, like group health insurance, dental insurance, and vision insurance. But for a truly appealing fringe benefits package, a mix of mandatory benefits (like workers’ compensation) and optional ones (like flexible spending accounts or tuition reimbursement) can help your employees feel appreciated—and give your business a competitive edge.
Luckily, a PEO like Rippling can provide your small business with access to big-company benefits at a lower cost.
Read on to learn how to offer your employees the most competitive benefits package as a small business.
Mandatory employee benefits
In the US, small businesses are required by law to provide employees with certain benefits; failing to do so can result in legal and financial consequences—even business closure. While some legally mandated employee benefits vary from state to state, some are mandated at the federal level, like the benefits listed below:
- Unemployment insurance: Unemployment insurance is a government program that provides financial support to eligible workers while they seek new employment opportunities. To be eligible for unemployment insurance, they need to have lost their job through no fault of their own (for example, through layoffs). The payment amount they receive is based on their previous earnings, and the duration of payments varies by state.
- FMLA leave (Family and Medical Leave Act): FMLA allows eligible employees of covered employers, including private and public-sector businesses with 50 or more employees, to take up to 12 weeks of unpaid, job-protected leave for reasons like illness or caregiving. State and local laws may also apply.
- Health insurance plans: The Affordable Care Act (ACA) mandates that all employers with 50 or more employees provide health benefits for their full-time employees. The coverage they provide needs to meet certain standards for affordability and quality.
- Workers’ compensation insurance: Workers' compensation is a state-mandated benefit designed to assist injured workers with medical expenses, lost wages, and death benefits. Eligibility hinges on the injury or illness being job-related or occurring in the workplace.
Note: The above list isn't exhaustive; you also need to consider state-mandated benefits. For example, small businesses in California, Hawaii, New Jersey, New York, Puerto Rico, or Rhode Island must offer employees long-term disability or short-term disability insurance.
With Rippling PEO, managing your critical compliance responsibilities is easy. For example, if an employee sustains an injury on the job, the Rippling PEO workers’ comp policy helps protect employers from potential litigation and covers employees' lost wages and medical benefits, ensuring a smooth and worry-free process.
Optional employee benefits
Simply offering statutory employee benefits isn’t enough—it’s the baseline for almost every small business. So if you’re trying to stand out, it helps to create an enticing employee benefits package with voluntary benefits, like PTO, retirement plans, and more.
Generous paid time off (PTO)
PTO can include paid vacation, personal days, and sick days. This allows employees to take time off work to rest, recuperate, go to appointments, or care for their family without giving up any pay. In the US, paid time off (PTO) isn't legally required, although some states mandate paid sick leave.
Many small businesses now offer PTO, granting employees flexibility (subject to manager approval) to take time off as needed. This fosters a healthier work-life balance and can help reduce the risk of burnout for your employees. When deciding on how much PTO to offer, consider your organization's needs and your employees' well-being, taking their workload and family configuration into account.
Employee Assistance Programs (EAPs)
EAPs support employees in handling personal challenges that impact work performance, offering everything from mental health counseling to practical services like insurance discounts. With the support of dedicated representatives, EAPs connect employees with necessary resources for both work and personal matters—like addiction counseling, family services, financial services, and more.
When included as part of a larger benefits package, EAPs are relatively affordable. These programs are also adaptable to your business size, preferred services, and usage frequency (which ultimately determine the cost).
Retirement plans
While you must contribute to social security as an employer, offering pension plans and other retirement benefits isn't mandatory. However, retirement benefits are crucial for long-term financial stability and show employees you care about their financial well-being.
A 401(k) plan is an excellent choice. It's a retirement savings plan with tax advantages, where employees agree to a portion of each paycheck going into an investment account. Employees can choose to participate in a traditional or Roth 401(k), the former using pre-tax dollars and the latter using post-tax. Employers can decide whether and how much they'll match employee contributions, which can make this benefit even more attractive and valuable for prospective employees.
For a streamlined approach to employee benefits like 401(k) plans, Rippling makes retirement plans more accessible and easier to manage.
Life insurance
Offering life insurance gives your employees peace of mind and affirms your commitment to their well-being and their families' financial security. In the unfortunate case of their passing, life insurance guarantees benefits for their chosen beneficiaries, which can include cash, wage replacement, and other benefits.
With different types of life insurance available, you can choose the best option for your small business and employees. For example, term life insurance provides coverage for a predetermined time, while universal and whole life insurance offer lifelong coverage and potential investment benefits.
Flexible savings account (FSA)
An FSA allows employees to use tax-free dollars to cover various out-of-pocket medical expenses, such as copayments, deductibles, prescription drugs, insulin, and medical devices.
Here's why offering FSAs can be a win-win for both your employees and your small business:
- FSAs work with any insurance plan, allowing you to provide this benefit without being tied to a specific insurance provider.
- Offering FSAs doesn't require a separate insurance plan, making it accessible for resource-constrained small businesses.
- FSAs cover insurance deductibles and can help employees pay for surprise healthcare costs when needed.
- Employees enjoy tax savings as FSA contributions are deducted from their gross income, lowering their income taxes and increasing their take-home pay.
- FSAs follow the "use it or lose it" rule, encouraging efficient healthcare expense management. Unused funds return to your company, offsetting administrative costs.
Flexible or remote work options
Flexible or remote work arrangements are another valuable perk, especially in the digital age. A flexible schedule can allow employees to address their personal responsibilities, such as attending parent-teacher meetings or medical appointments, without fearing work-related consequences. This, in turn, can make them more motivated and productive. It also creates a more harmonious work environment where they can better focus on their tasks.
Flexible work schedules and remote work require balance—you’ll need to craft a schedule that aligns with your business needs while accommodating your employees. This could mean adopting a hybrid schedule, allowing extended lunch breaks, or instituting flexible shifts. And, if you need help simplifying HR tasks for your remote or flexible workforce, Rippling can help you efficiently hire, pay, and manage your whole team, no matter where they live or work.
Health and wellness resources
As an employer, investing in health coverage should be strategic. Consider this: 73% of job seekers prioritize health and wellness benefits when choosing a job. And for employers, implementing wellness programs can lead to a remarkable 72% reduction in healthcare costs.
What makes wellness resources especially attractive is their adaptability to various budgets. Whether it's providing discounted gym memberships, therapy services, or mental health days, these incentives can be tailored to your specific financial parameters. By offering benefits to support your workforce’s health and wellness, you invest not only in your employees' overall well-being but also in your business’s prosperity.
How to offer a competitive small business employee benefits package
With so many benefits choices, putting together an attractive benefits package can seem daunting. That’s why you need to take a strategic approach and balance employee wants and needs with your small business’s financial limitations.
Rippling centralizes all your benefits—medical, pension, commuter, and more—into one system and automates all the busy work that comes with benefits enrollment and administration.
While having a centralized system for benefits administration and management is key, you’ll also want to keep the following steps in mind as you curate a competitive benefits package for your employees.
Determine your budget
Your budget is your compass in the world of employee benefits offerings. First and foremost, you’ll want to factor in the cost of mandatory benefits into your budget. Then, you can consider the addition of any voluntary or fringe benefits, granted you have the capital for them. In the beginning, it’s better to offer less and gradually add more benefits as your budget increases—remember, it’s easier to add than to take away.
Create a balance between salary and optional benefits
A hefty salary isn't the only way to attract talent. Many employees are equally—if not more—enticed by a well-crafted benefits package. Offering PTO, flexible hours, and wellness resources, for instance, can sometimes offset the desire for higher base pay, especially among employees with families.
If you aren’t sure how to strike the right balance between pay and benefits, you can always ask. Solicit feedback from your employees and job candidates to help you fine-tune your benefits program over time.
Consider opting for a PEO
As a small business owner, you have a lot on your plate—hiring and managing employees, running day-to-day operations, thinking strategically about future growth and how to scale, and much more. The administrative demands of your business’s HR functions can really add up. That’s why a Professional Employer Organization (PEO) can be a great choice for a small business.
A PEO is a strategic partner that co-employs your workforce and specializes in administrative HR tasks. The PEO can take on tasks like running payroll, enrolling employees in benefits, managing compliance with labor and employment laws, and other employee-related administrative duties. Meanwhile, that frees up your time and resources to work on strategic and higher-value work, like growing your revenue.
What’s even better, though, is that PEOs can help small businesses offer way better benefits at lower costs. Since a PEO “co-employs” the workforces of up to thousands of businesses, it has the purchasing and negotiation power to secure big-company benefits at affordable prices–so your small business can offer the kinds of benefits that attract and retain top talent.
Ready to explore the benefits of a PEO for your small business? With Rippling PEO, you can effortlessly manage all your employee benefits in one convenient platform, streamlining your HR processes, and saving both time and money.
Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.
