Some benefits for full-time employees are required by law, while others can help you attract and retain talent. The average cost of employee benefits for a small business can seem daunting, but small business owners can create a benefits package that works for both you and your employees — and keeps costs under control.
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Civilian workers and employees in the private sector cost employers about $13-14 per hour, according to 2023 data from the U.S. Bureau of Labor Statistics. State and local government employees cost about $23 per hour for benefits.
To help keep costs and resources in check for small businesses, it is generally best to choose a third-party benefits administration provider for employee benefits and payroll. These costs can vary based on the location of your business, the number of employees you have, and the benefits you choose.
Since there are so many complex laws and regulations surrounding benefits for full-time employees, it can be best to leave it to the experts. Choose a company that lets you customize your benefits program in the way that makes sense for you.
There are three options to provide benefits when you work with a benefits administrator:
While some employee benefits are federal mandates, what’s required for your business can vary state-to-state and county-to-county. These worker benefits are the ones most frequently required by law.
Workers’ comp coverage can help protect employees who are injured at work or develop a work-related illness, and the cost for a workers’ comp policy can vary based on your location, the type of work you do, and many other factors. It is mandatory in nearly every state; be sure you know the local law because each state’s requirements are slightly different.
Unemployment insurance pays those who are temporarily out of work. It’s governed by a complex web of federal and state laws, so check with your state workforce agency to ensure you are in compliance.
Employers are required to pay a portion of employee contributions to Social Security and Medicare, and to withhold the employee’s portion of these contributions from each paycheck.
The FMLA requires employers with 50 or more employees to allow employees to take up to 12 weeks of unpaid leave each year to care for themselves or a relative with a serious health condition. This leave can also be used for pregnancy-related conditions or to care for a newborn or newly adopted child.
Employers must allow the employee to return to the same or an equivalent position at the end of the leave period. Special rules apply for military families. Note that some states require this leave to be provided even if the employer has fewer than 50 employees.
All employers are required to provide time off for jury duty, and some states also require time off for employees appearing as a witness in a court case. In addition, about 30 states require employers to give employees time off to vote. Depending on your jurisdiction, you may or may not be required to pay employees for this time off.
These benefits for workers are not mandated by law, and you are free to choose which, if any, you want to provide. However, know that perks like these are a great way to attract employees and keep them on your team long term — which may end up being more cost-effective than offboarding and onboarding a revolving door of workers.
A typical benefits package for a small business could include:
The average cost of these employee benefits for a small business can vary widely. For example, some employers keep health insurance costs down by splitting premiums with employees. You could provide a small amount of life insurance at your expense and allow employees to purchase more at your negotiated group rate.
Automatic pre-tax payroll deductions for employees’ share of benefits can help save money for both you and your employee. Talk to your payroll company or tax professional to ensure that you’re in full compliance with the law.
Some extra perks at work can help boost employee morale and retention — and don’t cost that much to provide.
Get a sense from your workers about what they want to help make work more engaging and make them feel more special. Examples include, but are not limited to:
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We’ll ask a few questions about your business and give you a quote. You can select your coverage options and purchase your policy — all in about 10 minutes. Your certificate of insurance will be available immediately, and you can access your policy 24/7 via web or mobile app.
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