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- 27 Feb 2023Zenefits Review
Fringe Benefits are the additional benefits a company provides an employee aside from their regular salary. In simple words, it can also be called common employee benefits.
Employers also provide fringe benefits for a worker’s hard work and job satisfaction.
There are many types of fringe benefits that are given to employees in various ways. Some can be given to all employees, while others are given to only the top executives.
However, an employer utilizes fringe benefits to assist with employee performance, skills development, motivation, and recruitment of top talent.
It is vital for a company to hold onto its skilled and talented employees. Fringe benefits give companies a chance to do precisely that.
Here are some other advantages for a company offering Fringe Benefits:
There are primarily two categories of Fringe Benefits. One is mandated by the law and must be provided, and another is optional. Many benefits fall into these two categories, and it is important to know about them.
The following fringe benefits are mandatory for employers to provide under various federal and state laws.
According to the Federal Unemployment Tax Act (FUTA), all employers must pay the Department of Labor a mandatory federal and state unemployment tax. The government uses this tax to support people who become unemployed and are left without an income. However, the government only provides temporary assistance to eligible unemployed people.
The Patient Protection and Affordable Care Act (ACA) states that employers with over 50 employees must offer healthcare coverage and insurance.
The healthcare plans should include primary physician care, specialist doctor care, and emergency care.
Employees will also have the opportunity to take unpaid medical leaves for up to 12 weeks in an organization with over 50 workers. However, only employees with a year of working experience in an organization will be eligible for the medical leave.
The Department of Labor assists employees with workers' compensation benefits when they are injured in the workplace or catch a disease there. These benefits include offering medical care, rehabilitation, wage replacement, etc.
The benefits can vary statewide, and employees must check with their state worker’s compensation board for assistance.
Employers offer the following benefits at their will, some of which are taxable.
These are a handful of benefits that employers commonly offer.
Yes, some fringe benefits fall in the Internal Revenue Service (IRS) taxable category. The department maintains a “Tax Guide to Fringe Benefits,” which lists all the taxable and non-taxable fringe benefits.
It is essential to get a clear idea of some of the exempted fringe benefits.
An achievement award is primarily an exempted form of Fringe Benefit, but it can become non-exempt from tax if it falls within specific criteria.
Achievement Awards will become taxable when:
However, any physical gift, like a wristwatch, clothing, shoes, purse, electronic appliance, etc., will not be counted as taxable and the achievement award will still remain exempted from tax.
A Cafeteria Plan is a collection of Fringe Benefits offered to an employee at the beginning of joining the company. It allows workers to pick their own fringe benefits according to their preferences.
