Most adult employees today expect to have employee benefits in addition to their normal pay for virtually any job they do. This has turned offering benefits into something of a selling point for businesses who want to attract the best employees. Of course, nothing is free, including employee benefits, some of which can come at a significant cost to your company.
Depending on different qualifying factors, you may be required to allow your employees to leave under FMLA. Some businesses go the extra mile and offer paid maternity leave, or even paid paternity leave. While highly beneficial to employees, this can rack up a significant cost to your business. You have to pay an employee who isn’t producing, everyone else will have to balance the workload, and you may need to bring someone else in to temporarily fill the position. That leaves you having to effectively pay two employees to do one person’s job and requires you to take the time to perform any necessary training. That said, offering paid family leave can earn you the loyalty of your employees and reduce your turnover rate, which could be worth the cost by itself.
Businesses tend to carry a lot of different insurance policies as a matter of necessity. Almost every state requires employers to pay for workers’ compensation insurance. Then there’s the general liability insurance that most carry in addition to the policies you offer your employees. Many businesses offer health, dental, and vision insurance. Some go beyond that and offer life insurance and short- or long-term disability insurance. Since businesses often subsidize these insurance policies, they can take on quite a hefty financial burden. In 2019, businesses paid an average of $5,711 for single coverage and $14,069 for family coverage, and costs are only increasing.
Taxes are one of life’s certainties. What is less certain is how much tax you’re responsible for as a business. One of the ways businesses reduce their tax liability is by offering retirement benefits to their employees. When employers match employee contributions to retirement accounts, they effectively reduce the amount of taxes they are liable for. Investing in 401(k)s for your employees can cost a little under $2,000 per employee per year on average. That can add up quickly, but you may find qualifying for that tax deduction makes it worthwhile.
When it comes to offering employee benefits, the reality of the situation is that it’s going to cost your business financially. Family leave, insurance benefits, and retirement benefits are some of the more costly employee benefits you can offer. That said, if you want to attract and retain the best talent you can, it’s usually worth your while to invest well in your employees.
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