What is a fair benefits package for a new startup to offer employees and what is the minimum required by law?
I am ready to launch my new startup company in the next few weeks and am ready to hire people to work for this company. I will have 5 employees including myself. What am I required by law to offer, ie sick pay, vacation, medical. etc. At how many employees does the law change? How does FT vs PT affect the requirements?
Hello Amber, this will depend in which country your are based, so where are you?
As previously stated, what the law requires depends on what state your in. PT vs FT is a consideration as well. If you are hiring independent contractors, or 1099 workers, you don't have to offer any benefits as they are self employed working by contract for your organization. Depending on what type of organization you are starting this may be worth considering. It also gives you more autonomy with retirement plan set up, 401k, DB, etc.. Solo plans are allowable and may be a useful source of start up financing. Email me at firstname.lastname@example.org for more specifics.
As others have already said, it does depend on the state and the city your company is based (not registered) Here are some recent articles by my colleagues which you might find useful, http://swalegal.com/2013/10/22/new-legal-obligations-for-employers-in-new-york-new-jersey-and-maryland/, http://swalegal.com/2013/10/16/update-employer-notice-requirements-under-obamacare/. Please be in touch if you want a further consultation.
You are asking about required by law - most of the answer will depend on which state you are. On the federal level - no benefits are mandated until you reach 50 employees (ACA, FMLA, etc.). However on the state level it differs by state. Most states require Workers' Comp insurance and unemployment. If you provide your state, more info can be given.
On a secondary note, while most benefits aren't required by law you should look at where you will getting employees from, what your competition offers and create a plan. Determine what you can offer now and at what milestones other benefits will kick in. Then share so all know what is needed to obtain additional benefits.
I provide this support to many small businesses, if you would like to discuss your particular situations, please contact me.
I've worked for many start-ups, and initially, no benefits were offered. Benefits that don't cost you any additional money include paid time off and paid holidays.
The most successful start-up I worked for offered the above, and didn't even offer medical insurance until I came on board, and it became my job to get medical insurance for the company.
Other no cost to the company benefits include so-called "voluntary" benefits. These benefits are completely employee-paid. Most insurance companies offer employee-paid plans for STD, LTD, life, retirement, etc. (think AFLAC, etc.).
You might want to consider offering high-value employees shares in the company until you're making enough money to pay for traditional benefits.
P.S. The minimum required by Federal law starts at 25 employees (sometimes 15). You should find and work with a good HR consultant. He/she can guide you in the areas of employment laws.
It will depend on the type of work - and the Award for that work, Try this website:
Good luck with your launch!
I am not an HR expert however i work with 100's of fledgling startups who face the same issue.Sick pay is the main concern here, companies offer various days some 5, then its taken from vacation after that. Medical is not mandatory however information on Cobra etc is heavily encouraged (Obama care though is changing things). You can put in your new hires contracts guidelines on sick pay, not exactly the law but not having sick days and not being paid for that time can be demoralising.
If you hire contact to perm you have the benefit of having a payroll company handling all the taxes, paying them on time and you do not have to concern yourself with health and vacation benefits. A 5 man company called Dabo did exactly that for their first employees, avoids HR issues and spending $'s on HR processes. Employees under a certain hourly rate are entitled to vacation and sick pay but above a certain $/hour this is not required.
Some advise here is to start with individuals who you can try out for 3-6 months, yo haven't lost anything, you haven't had to put that in as an expense and have an agency or payrolling firm take care of all that for you.
Technically you dont need to offer any of the above perks however it will be costly for the employee and they may need more compensation so that they can pay for it themselves. Most often recuiting/payrolling companies can actually handle that all for you.
In a nutshell full time employees off the bat will cost, however if you can work with consultants who can convert may be a good way to avoid some of these HR issues in the mean time. If you want to talk off line about this contact me at email@example.com.
I'm mentoring at 500startups so this is not an uncommon issue, and i'm also dealing with foreign startup companies who are brand new to this whole thing.
Medical always is the main concern for everybody, so if anything focus on this it will be money worth spending.
I often find that while small startups want to to grow a team from scratch, sometimes the best way to do it is to hire the contractors first so you can delay the expenses involved with medical. HR solutions company to handle this is a very good idea. Cost these solutions up and again i can't stress enough candidates all want medical.
We specialize in this area if you would like to converse please let me know and I would be happy to call you and discuss. I can be reached at Jeff@hrknowledge.com
I am not an HR lawyer, but I can tell you from a business perspective that you should offer what you think it's going to take to hire the talent that you're looking for. As far as I know, and again, I'm not a lawyer, I'm not aware of any minimum requirement other than workman's comp, that you are required to offer. I would be more than willing to help you find those 5 employees. Feel free to write to me to discuss it. firstname.lastname@example.org