Worker compensation in America refers to cash and benefits in exchange for their services. It will typically include disability insurance, on-site child care, free meals, vacations, different memberships, bonuses and retirement plans like 401(k)s. Employer costs for employee compensation for civilian workers averaged $40.9 per hour worked in March 2022 reported on June 16, 2022. Wages and salaries cost $28.16 and accounted for 68.8% of the total compensation.
On the surface, the US does not have very stringent laws regarding employee benefits. Yet, the federal or state law has mandated a few, including overtimes, leave under the Family Medical Leave Act and unemployment perks. Here’s a look at a few rules and regulations around employee compensation that apply countrywide.
Non-salary compensations are mainly offered to attract new employees, retain and motivate the old ones and appreciate performances. Here’s what you can expect.
- Medical, dental and vision insurance plans.
- Retirement benefits like savings and pensions.
- Paid time off in the form of sick days, personal work or holidays.
- Supplemental pay like overtime and premium and shift differentials.
- Pay raises to keep up with inflation
- Hazard pays for those who work in extreme heights and weather, violent environments and dangerous equipment.
- Severance pays in times of layoffs and redundancies.
The above-mentioned facilities are to be provided even if employees do not have plans to access them or participate in the schemes. Further, workers are free to negotiate a few perks as a part of their compensation package that is initially not provided. It includes additional offers like relocation assistance. Others are social security and OASDI Program.
In a deferred compensation plan, the company does not get to deduct taxes in the year in which the contribution has been done. Non ‘taxable event’ occurs when an employee receives an option grant. Taxes can be delayed or reduced by avoiding premature exercises and holding them until the expiration date is near. Tax benefits in qualifying plans like 401(k), 403(b) or 403 (b) are intended to push lower-to-middle income earners to save better.
Who Can Get Employee Benefits?
The Bureau of Labor Statistics reports that 34% of private-sector workers received 10-14 paid vacation days after one year of service. The duration of days is likely to increase with tenure which means, the longer the employee stays with the employer, the more paid vacations they can earn for themselves. A few benefits that vary between businesses and industries are known as ‘fringe’ benefits or benefits in kind. This can include gratuity, use of company car, stock options, discounts on brand products, tuition assistance and mother care.
Compensation in the US is shaped by history, law and tax policy. Different states have set their own expectations for employment. It is necessary to read the rules around compensation before applying for a job in any of the 50 states in the country. It will help to make an informed choice and ensure a comfortable and smooth work life.