Which employee benefits U.S. employers must provide, which are optional but expected, and how small businesses with hourly teams can offer meaningful benefits on a budget.
| Benefit | Who it applies to | What the employer does |
|---|---|---|
| Social Security and Medicare (FICA) | Almost all employers | Pay the employer share and withhold the employee share |
| Federal unemployment (FUTA) | Most employers | Pay federal unemployment tax; employees do not contribute |
| State unemployment insurance | Most employers | Register and pay state unemployment tax |
| Workers’ compensation | Nearly all employers, under state law | Buy coverage or self-insure where allowed |
| FMLA leave | Employers with 50 or more employees | Provide up to 12 weeks of unpaid, job-protected leave to eligible employees |
| COBRA continuation | Employers with 20 or more employees and a group health plan | Offer continued coverage after qualifying events |
| ACA employer mandate | Applicable large employers (50 or more full-time employees including equivalents) | Offer affordable, minimum value coverage to full-time employees or risk a penalty |
| USERRA | All employers | Reemploy service members and protect certain benefits |
Federal law does not require paid vacation, paid holidays, paid sick leave for most private employers or severance pay. Those are set by state law, contracts or company policy. See holiday pay rules and our glossary entry on paid time off.
To record clock-ins, breaks and overtime automatically, see EZTime time and attendance software.
Rules on accrual, carryover and payout differ widely. Check your state labor law page before writing your policy.
| Benefit | Why it matters to hourly employees |
|---|---|
| Health insurance | Often the most valued benefit; part-time eligibility rules matter |
| Dental and vision | Lower cost to the employer, appreciated by families |
| Paid time off | Rest, family time and fewer unplanned absences |
| Retirement plan | A 401(k), SIMPLE IRA or state program, ideally with a match |
| Flexible or predictable scheduling | For many hourly workers, worth as much as a raise |
| Shift premiums | Extra pay for nights, weekends and holidays |
| Employee discounts and meals | Low cost, used every week |
| Training and tuition support | Growth and promotion paths |
Small employers that are not applicable large employers are not required to offer health insurance, but many do to compete for staff. Common options include a small group plan, a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) for employers with fewer than 50 full-time equivalent employees and no group plan, and an Individual Coverage HRA (ICHRA). Small employers that buy coverage through the SHOP marketplace may qualify for a small business health care tax credit if they meet the size, wage and contribution conditions. A licensed broker can compare the options for your workforce.
Retirement plans range from simple to complex. A SIMPLE IRA is designed for employers with 100 or fewer employees and has low administration. A 401(k) offers higher contribution limits and more flexibility but more administration. Some states require employers without a plan to facilitate a state auto-IRA program. Recent federal law also added tax credits for small employers that start a new plan, so ask a provider which credits you may qualify for. Look closely at how part-time employees become eligible, since federal rules now extend eligibility to many long-term part-time workers in 401(k) plans.
A paid time off policy works best for hourly employees when it is simple and earned as people work. Many employers use accrual per hour worked, for example one hour of PTO for every 30 or 40 hours. Decide on caps, carryover and what happens at separation, and check your state’s rules, because some states treat earned vacation as wages that must be paid out. The PTO accrual calculator helps you set rates, and our glossary covers accrual caps and carryover.
A benefit nobody understands is wasted money. Explain benefits at hire and again at open enrollment in plain words, with a one-page summary and examples: “If you work 30 hours a week, you earn about one hour of PTO each week.” Make enrollment easy on a phone, remind people of deadlines and show the total value of pay and benefits once a year. See open enrollment and benefits administration.
EZTime tracks hours, PTO accruals and balances in one place, so you know who is eligible for what. Employees request time off in the mobile app and see their balances, and managers approve time off requests with full visibility of coverage. Benefits enrollment forms can be sent and signed with digital HR forms.
Only applicable large employers, generally those with 50 or more full-time employees including equivalents, face the ACA employer mandate. Hawaii has its own requirement.
Not under federal law. Some states regulate how earned vacation is paid out, and many states and cities require paid sick leave.
It depends on the law and your plans. Paid sick leave laws usually cover part-time workers, and retirement plan rules now extend to many long-term part-time employees.
Predictable schedules and flexibility often rank high and cost little.
A health reimbursement arrangement that lets employers with fewer than 50 full-time equivalent employees and no group plan reimburse employees for individual health insurance and medical costs, within annual limits.
EZTime tracks hours and PTO balances so you always know who is eligible.