Benefits Corner

Employee Benefits: The Only Guide You Need

Submitted by Kylie Freyaldenhoven, Sales Operations Analyst, Educational Benefits, Inc., Written by Kellie Wong

The term “employee benefits” is used regularly, but often with a limited, traditional definition in mind. The traditional concept refers to legally mandated benefits plus a few voluntarily added by employers. With a new generation of employees, soon to become the majority of the workforce, and a competitive, global labor market, comes new workforce needs and expectations. Employers are responding with a menu of voluntary employee benefits, driven by generational shifts and technology that is dramatically changing the workplace.

What are employee benefits? Employee benefits are non-salary compensation and perks. They consist of government mandated and voluntary indirect and noncash compensation. Federal and state mandated benefits include health insurance, worker’s compensation, unemployment insurance, and required leave time for caring for family and/or personal medical purposes. Health insurance, and family and medical leave, are not required for all businesses. Some states have mandated disability insurance and retirement plan requirements.

What are benefits that are voluntary? These are benefits an employer voluntarily offers employees, and benefits programs are a top employee recruitment, retention, and engagement strategy. The list of benefits in this category began fairly simply with things like dental insurance and life insurance options. Today, the list of voluntary benefits has grown significantly to include things like reward programs, unlimited vacation time, and flexible work schedules. Bottom line is that voluntary benefits are any perk offered to employees that is not mandated by law.

Employee benefits have always been important, but today they have new implications. Employers use benefits to attract top talent, especially in a tight labor market, and to retain employees once hired. They enable smaller companies to compete with larger businesses that may be able to pay higher salaries. Benefits also act as employee engagement tools and support a positive corporate culture. One survey found that 35 percent of American workers would not accept a position if the corporate culture was not positive, even if the job was ideal.

Millennials have had an enormous impact on the types of benefits offered and with good reason. Pew Research Center analysis of U.S. Census Bureau data found that millennials already account for 35 percent of the U.S. labor force with 56 million people working or looking for employment. They will comprise 75 percent of the global workforce by the year 2025, an important fact to know in a globalized labor market.

The question that is frequently asked is, “What are employee benefits that have meaning for millennial employees?” Some involve money, but many don’t. Numerous employee surveys and research projects, including by Gallup, have discovered millennials want meaningful work and benefits like always-on feedback. Millennials also want opportunities to develop strengths and skills, pursue career growth, enjoy work-life balance, and work remotely. These needs and expectations drive the benefits companies are offering.