From a legal point of view there is much to consider.
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In a perfect world and economy, every employer could provide benefits such as health insurance, matching the retirement plan and reimbursing travel to all employees. However, for many it is often impossible financially small business.
According to the Bureau of Labor Statistics, benefits are about a third of the cost of the employee. That is, an employee who paid a salary of $ 50,000 would actually cost other employers 30 percent more, which is $ 65,000. For small businesses with low profitability, such as in local grocery stores, such costs per employee per hour may be almost impossible.
The ethics of not providing benefits is a topic that has long been discussed elsewhere (despite the difficulties that the benefit can help reduce turnover, which can offset the additional costs), but the legality of granting benefits is simple and straightforward: yours business can be severely fined and even shut down for non-compliance with federal benefits.
It is better to avoid this scenario! Poorly study what benefits you should provide to your hourly staff.
According to Affordable Care Act (ACA), which employs 50 or more full-time employees, must be provided with affordable health insurance and provides a minimum cost, that is, pays at least 60 percent of the cost of the services covered.
What you need to pay attention to: while most workers may see “full-time” and think that their hourly workers, who work only 30 hours a week, are considered part-time, this is not the case. The ACA recommendations state that employees who work at least 30 hours a week or 130 hours a month (on average) are considered hired.
So if you employ at least 50 people who work 30 or more hours a week, your business will need to provide health benefits.
Social Security and Medicare
If you pay annual employees as regular wages, social security and health care benefits will be withheld from your employees and they will eventually return that money to retirement. The bad benefits we take for granted, though employees pay for them at the same rate as employees. Thus, the employer pays 6.2 percent of social security taxes and the employee pays 6.2 percent (as of 2020).
However, hourly employees are counted contractors pay 12.4 percent and the employer doesn’t have to pay anything. Same with the Medicare tax.
So how do you relate an hourly employee to a contractor? Unfortunately, there is no definition of one size, but, but federal guidelines are available to help you determine the difference. Rather say most likely you will be fined and fined if you try to pass it on everything your hourly staff as contractors will simply save on benefits.
Family and medical leave
The Family and Medical Leisure Act (FMLA) it is a federal act that gives certain workers the right to unpaid leave for specific reasons. For private sector employees who have 50+ employees, you must provide FMLA leave to those who have worked 1,250 hours 12 months prior to departure.
Although this benefit is unpaid leave, it protects even hourly staff from being fired from their long-term work due to medical or family problems, such as pregnancy.
Other government benefits
While the above covers basic federal benefits for annual employees, there are certain government considerations that employers should be aware of. For example, California law includes paid hospital program for all employees, including part-time workers, providing 1 hour of paid leave for every 30 hours worked.
Consult your employer’s recommendations on other specific benefits you should provide.
Of course, so far this is the minimum payment to employees should provide hourly staff, the best employees who want the lowest turnover and the highest level of employment from its employees will go above and beyond the federal minimum. It’s just good business.