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Building out your team: What contractors need to know about employee benefitsJuly 6th, 2021 by
Contractors rely heavily on human labor to meet customer needs. In a very real sense, employees are the most valuable asset you have. Finding and keeping the best skilled craftsmen for your team can go a long way toward getting a leg up on the competition.
Employee benefits are a big part of that.
How well you pay your workers matters. No one is going to pour their heart into a job that doesn’t pay a decent wage. But additional perks are important, too. In fact, the benefits you do (or don’t) offer could be the difference between your dream team and management-level nightmares.
In this article, we’ll cover the basics of employee benefits at a high level. Think of this as a starting point.
To determine what you should offer, specifically, you’ll need to take a lot of additional factors into account. Things like local and state laws, common benefits offered in your area, and the skill level you’re looking for in your labor force.
What are employee benefits?
Employee benefits include any form of compensation paid to employees aside from basic wages or their salary.
Some of the most common benefits employers offer include:
- Health coverage
- Retirement plans (401(K) and other pension plans)
- Paid leave, including sick days, vacations and other forms of excused absence
- Disability insurance
The importance of employee benefits
Employee benefits serve multiple functions.
If you’re in the process of deciding what level of benefits to offer your employees, it may be helpful to consider how the benefits you offer help you, as well as your employees.
Benefits attract the best workers
When skilled workers are on the job hunt, wage isn’t the only consideration. Benefits play a big role, too.
If you want the best folks on your team, you’ll need to offer a competitive benefits package.
“Competitive” is a relative term, though. You’ll want to do your homework to determine what other contractors in your area offer their teams. It may be that a fairly basic benefits package is enough to attract solid employees. Or you may find you need to go above and beyond if you’re looking to hire the best.
Benefits boost employee satisfaction
92% of employees say their benefits package is an important factor when rating their satisfaction with their job.
Since happy employees tend to be 12% more productive, it works in your favor to do what you can to ensure that your team feels appreciated. The more satisfied your workers are, the better work they’ll do.
Benefits improve employee loyalty
In 2020, the construction industry recorded a 68.6% labor separation rate. That figure indicates a lot of turnover for contractors, home builders, remodelers and renovators.
Competitive benefits can help solidify the employer-employee bond and boost retention.
What benefits should you offer?
To determine what benefits you should offer your employees, we recommend taking the following three questions into account.
As we said upfront, we’re not providing legal advice here. Instead, consider this a starting point in your research process. You’ll definitely want to do additional homework before making any final decisions.
What laws and regulations do you need to consider?
While both federal and state laws mandate certain employee benefits, most of them are optional. The law only requires that you provide every employee with five essential benefits.
These are …
- Family and medical leave
- Health insurance (if you have 50 or more full-time employees)
- Social Security, Medicare, and Federal Insurance contributions
- Unemployment insurance
- Workers’ compensation insurance
Each state has unique laws regarding these mandatory employee benefits. Check with your local labor laws just to be safe.
Providing additional employee benefits is not a legal requirement. However, some state and federal laws still govern voluntary benefits.
We encourage you to go over all this with an HR professional and/or an employment attorney.
Which benefits do your employees want?
As an employer, providing additional, non-required benefits is totally up to you. One important consideration is what do your employees actually want?
In a recent survey, Unum found that most employees prefer generous paid time off and more flexible working options. The study took insurance-based benefits off the table to see what workers really desired besides the standard covered benefits. Interestingly, some workers voted for health and fitness perks and professional development.
But those survey results may or may not be true for your employees. The only way to find out is to ask.
There is virtually no limit to the number or types of benefits you can offer your staff. We encourage you to try to align what you offer with what your people want. And, of course, talk to the appropriate professionals to ensure you’re offering what you’re legally required to offer.
Which brings us to our last question …
Do you need to hire someone to handle employee benefits?
Managing payroll is challenging enough without adding benefits to the equation. Handling benefits can put extra pressure on your HR management system. You may need a specialist to do that on your behalf.
But you don’t even have to hire in-house personnel. There are HR agencies that provide compliant options on an outsourced basis.
A specialist can help you navigate the legal maze, calculate costs and gains, develop benefits policies, and optimize your benefits program to mutually favor the staff and the business. Basically, they can do all the heavy lifting for you—while also making sure you’re fulfilling any legal requirements.
It might be possible to tackle employee benefits on your own, but we don’t recommend it.
Benefits are an important part of employee compensation. Not only do they contribute to how happy your employees are, but they also affect how hard-working and loyal your team will be, as well.
Plus, there are some legal hoops you’re required to jump through here.
Take the time to think carefully about employee benefits. And seriously consider contacting a professional who can walk you through the process.