Review the Different Types of Employee Benefits and Perks (2023)

An employee benefits package includes all non-wage compensation provided by an employer. These benefits might include employer-sponsored health insurance, paid time off, and retirement plans like 401(k)s.

In addition, you may find that a prospective employer is willing to offer other attractive perks in order to attract and retain your services. These include extras like paid gym memberships, phone and internet plans, free meals, and on-site child care.

What benefits and perks can you expect to receive when you're hired by a company? There are some types of employee benefits that are mandated by federal or state law, including minimum wage, overtime, leave under the Family Medical Leave Act, unemployment, and workers' compensation and disability insurance.

There are other types of employee benefits that companies are not required to offer but may choose to provide to their employees. There are also some benefits and perks you may be able to negotiate as part of yourcompensation packagewhen you've been offered a new job.

What Are Employee Benefits?

Employee benefits are non-salary compensation that can vary from company to company. Employers offer employee benefits to attract new employees, retain their workforce, and boost productivity. A typical benefits package includes health insurance, retirement planning, and paid time off.

Employee Benefits Mandated by Law

The following are compensation and benefits that employers are required by federal or state law to provide. Be sure to confirm what is required in your state.

Consolidated Omni-Budget Reconciliation Act (COBRA)

The federal government requires that companies with 20 or more employees continue to provideextended medical benefits to former employees(and their families) for up to 18 months (sometimes longer).


States may have additional requirements for extended medical benefits. Make sure to check your state for "mini-COBRA" laws that will protect you and your family if you lose your job.

Disability & Workers' Compensation

The purpose of both workers' compensation and disability is to make sure that an injured or sick employee continues to get paid (usually a portion of their normal pay) until they are well enough to return to work.

(Video) Top 4 Benefits Employees Value Most | AIHR Learning Bite

Every state has its own workers' compensation and disability requirements for employers. While some businesses are exempt from providing workers' compensation, most payroll employees are eligible if they are injured on the job.

Only a few states require employers to provide disability coverage. However, many employers offer this benefit to employees of their own accord.

Family and Medical Leave Act (FMLA)

TheFamily and Medical Leave Actrequires some employers to provide 12 weeks of maternity, paternity, and adoption leave, but it isn't required to be paid leave.


Most states have their own labor laws pertaining to family additions or medical issues that include paid leave.

Beyond federal and state laws, some employers choose to be generous with paid leave for new parents.

Minimum Wage

TheFair Labor Standards Act(FLSA) sets the currentfederal minimum wageat $7.25 an hour. In addition, many states have their own minimum wage laws. The law stipulates that whichever minimum wage law is highest overrides the other. For example,New York's minimum wage lawsmandate a higher rate of pay than the federal minimum wage; therefore, the state's minimum wage laws override federal minimum wage laws.


Similarly,overtime lawsvary by state. The FLSA also stipulates overtime pay requirements. Whichever law (state or federal) benefits an employee the most takes precedence.

Unemployment Benefits

The federal government requires states to manage allunemployment benefitsfor workers. If an employee worked a qualifying job and was laid off, they are entitled to unemployment pay for a period of time. The amount of unemployment pay varies by state and job title. Employees who resigned or were fired for their misconduct are typically not eligible for unemployment benefits.

Types of Employer-Provided Benefits and Perks

In addition to benefits required by law, companies provide other benefits because they feel socially responsible to their employees and opt to offer them beyond the level required by law.

(Video) Employee Benefit Plan - Employee Benefit Plans Review

Depending on the company, these benefits may include health insurance (required to be offered by larger companies), dental insurance, vision care, life insurance, legal insurance, paid vacation leave, personal leave, sick leave, child care, fitness, retirement benefits and planning services, college debt relief, pet insurance, and other optional benefits offered to employees and their families.

These types of employee benefits are offered at the discretion of the employer or are covered under a labor agreement, so they will vary from company to company.


Some non-mandated benefits are paid for by the employer. Others are voluntary benefits that the employee can opt to participate in.

Who Gets Employee Benefits?

According to the Bureau of Labor Statistics (BLS), 34% of private-sector workers received 10 to 14 paid vacation days after one year of service. Typically, vacation time increases with tenure—meaning the longer the employee stays with their employer, the more paid vacation days they have.

Employers provided health care benefits to 71% of private-sector employees, according to the BLS. Among private-industry workers, 68% had access to a pension or retirement plan.


(Video) Understanding Your Employee Benefits Package

Watch Now: 9 Benefits Employees Really Want

Employer-Provided Health Insurance Requirements

The Patient Protection and Affordable Care Act (Obamacare) sets minimum standards for health insurance companies regarding services and coverage. Most employers with 50 or more employees are required to offer health care plans or pay a penalty.


Employees who aren’t covered by employers or who elect to seek coverage outside their employer plans can find plans during open the enrollment period

Health Insurance Coverage

Most plans provide coverage for visits to primary care physicians and specialists, hospitalization, and emergency care. Alternative medical care, wellness, prescription, vision, and dental care coverage will vary by the plan and employer.

Employers are required to provide health care to employees who work at least 30 hours per week. Some (though not many) part-time workers are covered by employer plans.

More Company-Provided Employee Benefits

These types of employee benefits are offered at the discretion of the employer or are covered under a labor agreement, so they will vary from company to company.

Dental Care Plan Coverage:Companies with dental care benefits offer insurance that helps pay a portion of the cost of dental treatment and care. Depending on the company's policy for dental care benefits, dental coverage includes a range of treatments and procedures.

Paid Holidays:The law does not require employers to provide their employees withpaid leave for holidays. However, many employers make sure that their employees get time off for holidays (paid and unpaid) or provide overtime pay for those willing to work on a holiday.

Pay Raises:Some employers increase wages for everyone by a certain amount each year to keep up with inflation. There are also different types of incentive pay that allow employees achance to earn more on a merit system. A common type of incentive pay is commission. Inside sales or customer service employers frequently try to motivate employees to upsell customers for a commission.

Severance Pay:Employers are not required to provide severance to employees that they lay off due to downsizing or redundancies. However, many employers want to help these employees who they would otherwise want to keep if their budget permitted. Therefore, they choose to offerseverance payand benefits to these employees.

(Video) Reviewing Your Employee Benefits Package

Breaks and Flexible Schedules:To attract top talent, some employers offer flexible paid work schedules that include 30-minute (or longer) breaks for rest, fitness, and recreation. Also, employers may compensate employees for meals and events that include face-to-face time with prospects and customers.

Hazard Pay:Jobs in security, construction, military, and other dangerous professions usually providehazard payto any employees that must work in unsafe conditions. These may include extreme weather, dangerous equipment, violent environments, or working at extreme heights, for example.

College Debt Assistance:Because of the growing student debt crisis, some employers are granting debt repayment assistance. There are no current laws requiring employers to do this, but it is a great perk for employees struggling to make ends meet as they begin their professional careers.

Fringe Benefits and Perks

Other benefits can vary between industries and businesses and are sometimes referred to as "fringe" benefits. These perks, also known as "benefits in kind," can include:

  • Bonuses; profit sharing
  • Medical, disability, and life insurance
  • Paid vacations
  • Free meals
  • Use of a company car
  • Pensions andstock options
  • Child care
  • Gratuity
  • Company holidays, personal days, sick leave, and other time off from work
  • Retirement and pension plan contributions
  • Tuition assistanceor reimbursement for employees and/or their families
  • Discounts on company products and services; housing


Fringe benefits are not required by law and vary from employer to employer.

Review Your Employee Benefits Package

Whether you are job searching, deciding on a job offer, or happily employed, it's important to review what benefit coverage is provided by the company and to decide whether the employee benefits package is one that fully meets your needs. It's also important to take full advantage of what the company provides to employees.

Benefits Questions to Ask

There areemployee benefits questionsyou should ask to ensure that your overall compensation plan is right for you and your family. Also, ask specific questions based on your needs and on the criteria that are important to you.

Key Takeaways

  • Employee benefits packages include non-salary compensation like health care coverage, retirement benefits, and paid time off.
  • Federal law requires employers to offer benefits like COBRA, FMLA, and minimum wage standards; many states mandate further coverage including disability, workers comp, and additional leave.
  • Companies often provide more than the legal minimum in terms of benefits in order to attract and retain workers.
(Video) New Employee 103 - Benefits and Perks


What are the 4 major types of employee benefits? ›

There are four major types of employee benefits many employers offer: medical insurance, life insurance, disability insurance, and retirement plans. Below, we've loosely categorized these types of employee benefits and given a basic definition of each.

What are the 5 types of employee benefits? ›

The most common benefits are medical, disability, and life insurance; retirement benefits; paid time off; and fringe benefits.

What are perks and benefits for employees? ›

Essentially, benefits pay for expenses that an employee would have to cover with their income, such as health insurance, savings for retirement, and transportation costs for commuting to and from work each day. Perks, on the other hand, are extra rewards or incentives on top of salary and non-wage compensation.

What are 3 examples of employee benefits? ›

Employee benefit examples
  • Health insurance.
  • Paid time off (PTO)
  • Retirement plan benefits.
  • Flexible work schedule.
  • Dental insurance.
  • Vision insurance.
  • Life insurance.
  • Paid family leave.
Oct 20, 2022

What are common employee benefits? ›

These benefits typically include medical insurance, dental and vision coverage, life insurance and retirement planning, but there can be many more types of benefits and perks that employers choose to provide to their teams.

What are the most popular employee benefits? ›

Paid Vacation

Many companies providing this benefit have seen it be the most popular benefit among their employees. And employees also tend to take almost the same amount of vacations as they used to earlier.

What are perks examples? ›

Employee perks: 9 affordable examples for any company
  • Condensed work week. ...
  • Paid birthdays off. ...
  • Free food. ...
  • Dog-friendly office. ...
  • Flexible schedules. ...
  • Event tickets & gift cards. ...
  • Professional development. ...
  • Fitness/wellness subsidies.
Jul 9, 2019

What type of perks are there? ›

These perks, also known as "benefits in kind," can include:
  • Bonuses; profit sharing.
  • Medical, disability, and life insurance.
  • Paid vacations.
  • Free meals.
  • Use of a company car.
  • Pensions and stock options.
  • Child care.
  • Gratuity.
Dec 5, 2022

Is there a difference between perks and benefits? ›

The Difference Between Benefits and Perks

Benefits are a part of an employee's salary, while perks are auxiliary, for example: rewards for exemplary work on a particular project.

What are the three most important benefits? ›

Most Desirable Benefits According to Employees

If you want your benefits package to remain competitive, you'll want to offer health insurance, some disability and life insurance, and probably a retirement plan, such as a 401(k).

What are the top 3 most sought after employee benefits? ›

Here's a look at the top ten:
  • Flexible work hours. ...
  • Company-sponsored retirement plan or pension. ...
  • Leave early on Fridays. ...
  • Four-day work week. ...
  • Family health insurance. ...
  • Private health insurance. ...
  • Healthcare cost reimbursements. ...
  • Paid self-care days or time off for mental health.
Oct 2, 2022

What benefits do employees want most in 2022? ›

The top five benefits trends of 2022
  • Trend #1: Employees will demand more flexible work arrangements and hybrid work. ...
  • Trend #2: Organizations will work to improve workforce mental and emotional health. ...
  • Trend #3: Organizations will develop and implement a holistic employee leave strategy.

What are the three 3 most important benefits an employer can give to an employee? ›

After all, there are baseline employee benefits that most industry experts say are needed to attract talent competitively: healthcare, paid time off, and possibly a retirement savings option.

What are examples of perks? ›

Employee perks: 9 affordable examples for any company
  • Condensed work week. ...
  • Paid birthdays off. ...
  • Free food. ...
  • Dog-friendly office. ...
  • Flexible schedules. ...
  • Event tickets & gift cards. ...
  • Professional development. ...
  • Fitness/wellness subsidies.
Jul 9, 2019


1. What employee benefits matter MOST?
(Culture Engineered)
2. Employee Benefits: The Year in Review (COVID-19 and Everything in Between)
(Bond, Schoeneck & King PLLC)
3. 2021 Employment Law Certificate Series: Top Employee Benefits Developments
(Nexsen Pruet)
4. 2021 Trends: The Rise of Employee Benefits | Zenefits
(TriNet Zenefits)
5. Overview of the Employee Retirement Income Security Act: Module 1 of 5
6. Review Benefits Summary
(Berkeley UCPath Training)
Top Articles
Latest Posts
Article information

Author: Virgilio Hermann JD

Last Updated: 05/19/2023

Views: 5794

Rating: 4 / 5 (61 voted)

Reviews: 92% of readers found this page helpful

Author information

Name: Virgilio Hermann JD

Birthday: 1997-12-21

Address: 6946 Schoen Cove, Sipesshire, MO 55944

Phone: +3763365785260

Job: Accounting Engineer

Hobby: Web surfing, Rafting, Dowsing, Stand-up comedy, Ghost hunting, Swimming, Amateur radio

Introduction: My name is Virgilio Hermann JD, I am a fine, gifted, beautiful, encouraging, kind, talented, zealous person who loves writing and wants to share my knowledge and understanding with you.