The benefits required by federal and most state laws are Social Security, Unemployment Insurance, Worker’s Compensation, and FMLA. These benefits can account for up to 10% of wages and salaries per employee. The legally required benefits are usually the most expensive benefit costs.
Social Security provides 3 different types of benefits; retirement benefits for individuals that retire at the age of 62 or later, survivors/death benefits for a person’s dependents at death, and disability payments for employees who become disabled. Employer’s and employee’s each pay about 8-9% tax on the employee’s wages.
Unemployment Insurance is mandated by states and the federal government. This benefit is paid through a tax on the employers, which can range from 1%-6% of taxable payroll. The rate is affected by the rate of employee terminations the company has. This benefit is provided for a person that is dismissed/released from a job through no fault of their own.
Worker’s Compensation provides medical benefits and in some instances income benefits to employees ( or their dependents) because of a work related accident or injury.
FMLA covers any employee (of a company with 50 or more employees) that has worked for a consecutive 12 months and 1,250 hours or more. The employee is entitled to up to 12 weeks of unpaid leave for things like their own illness, birth or adoption of a child, and care of a seriously ill child, spouse, or parent. Even though the leave is unpaid, it is not costless. The company may have to hire a temporary replacement worker, pay another employee overtime, and will still have to provide the employee with their benefits during their time of absence.