Beyond money, there are other ways companies can compensate employees for their performance. Employee benefits, also known as fringe benefits, are provided in addition to salaries and wages. From health insurance to pet insurance and 401(k) to unlimited PTO, employers can offer a mixture of traditional and modern perks that are valuable on many levels.
Why are fringe benefits important?
By offering benefits that support the whole person, employers demonstrate they are invested in employees’ health, happiness and future. Improved employee wellness means fewer doctor visits and less time away which also positively impacts productivity. These employees aren’t just clocking in, they want the organization to succeed and share this enthusiasm with others. Benefits can create a workplace culture that motivates and inspires.
With a tight labor market, fringe benefits play an important role in differentiating your company from competitors as well. When recruiting and retaining top talent, a carefully curated benefits package can be a game changer for candidates and employees alike. Stay current on trends so your company can offer benefits that make you shine in your industry and amplify your corporate culture.
Are fringe benefits taxable?
All compensation paid to an employee is taxable unless specifically excluded by IRS code. Health insurance, education assistance, commuter benefits, athletic facilities, retirement planning services and many more are excluded. The IRS provides a comprehensive explanation and list of taxable and tax-free benefits in the 2018 Employer’s Tax Guide to Fringe Benefits. Taxable fringe benefits must be included as income on employee W-2 forms.
Must all employees get the same benefits?
Federal laws do not require equal benefits to all employees. Employers have discretion when structuring access to benefits and can base eligibility on a variety of employment-based classifications such as: tenure, full- or part-time status, exempt/nonexempt status, job group, department, etc. Benefit plan decisions cannot discriminate against protected groups. Even unintentional discrimination can be deemed unlawful and carry penalties and fines.
“To remain competitive in the talent marketplace, 1/3 of organizations increased their overall benefit offering in the last 12 months”1
As 2019 approaches, experts anticipate companies will continue enhancing benefits. Are your benefits luring the right talent? Or are your top performers being lured away? As one of the first certified professional employer organizations (CPEO) in the country,2 MidwestHR has partnered with clients for over 20 years and protected them against these types of threats. Our team of tenured HR experts monitor benefit trends, so you can focus on growing your business. Our completely customizable business model means you decide what HR help you need most and only outsource those areas to us. Give us a call at 630-836-3000 and learn more today.
1Society for Human Resource Management. (2017) Employee Benefits Remaining Competitive in a Challenging Talent Marketplace. Alexandria, VA: SHRM.