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August
8, 2001 - There is
no requirement to provide health care or other benefits to your employees – even
if they’re full time.
But there
is some incentive to provide them, Millian says.
“Just because you don’t have to, that doesn’t mean
you don’t want to,” she says. “You can use benefits to attract qualified
employees when there is shortage in the market.”
There are
some rules regarding having employees, however. “Most will come under the
Federal Fair Labor laws if you are involved in interstate commerce,” she says.
“Then you have to meet minimum wage and overtime requirements.”
But as a
minimum, you’re obligated to meet state regulations regarding minimum wage,
overtime and working conditions.
If you
have five or more employees, then other regulations come into play, Millian
says, such as those guided by the Americans with Disabilities Act (15 employees)
or the Family and Medical Leave Act (50 or more employees). With 50 or more
employees, you also need to meet the regulations of the Occupational Safety and
Health Administration (better known as OSHA). These rules are generally
regarding the working environment, safety and the use of chemicals.
“To all
businesses with even one employee (yourself or another employee), I recommend
they go to a payroll tax service,” Millian says, “because the service will write
the paychecks and make sure the proper paperwork gets filed. It’s important to
be timely.”
Now then,
if you do decide you want to go beyond the requirements, you’ve already hired
yourself a payroll service and now you want to provide benefits to your
employees, Millian says you should consider going to an employee leasing
company.
These
companies do all the payroll plus offer a package of benefits (also known as a
cafeteria plan) that you can choose from to provide to your employees.
“The more participants in a benefit plan, the
lower the individual price for each employee,” Millian says. It’s a simple
equation. More employees covered equals lower coverage costs. That’s why General
Motors pays so much less for Blue Cross/Blue Shield coverage than your business
with 50 employees would.
“You can
get some really good bargains with employee leasing companies, as well as good
choices for 401K plans,” Millian says. These companies then provide the benefits
to your employees and bill you the cost plus an administration fee on a
pay-period basis.
“Ah, an
administration charge -- there’s the hitch,” you might be thinking to yourself.
Well, not so fast, Millian says.
“Usually
the administration fee you’ll pay to the employee leasing company for providing
those benefits is offset by the reduction in price for the benefits,” she says.
“Plus you save the value of your time. You don’t have to do anything. They take
care of the payroll, the benefits. They do it all.”
There is
one negative to using one of these companies, Millian points out. “Because
they’re a big company with a lot of employees, you’re going to come under all
those state and federal regulations you might otherwise not have had to follow.”
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