November 01, 1998
Meetings & Conventions: Planner's Portfolio November 1998 Current Issue
November 1998 Independent LifePLANNER'S PORTFOLIO:

The Independent Life


Enjoying the Benefits

As a small- business owner, what are you required to offer employees?

Employees of small businesses might all wish their bosses were like John Roth, CMP, president of Complete Meeting Concepts in Orlando. With only four people under his care, Roth always felt it was important to offer health benefits. So he assigned a staff member to the task of tracking down the best policy for his little group and ended up letting them choose individual policies, based on a set amount of money he kicks in per person. Roth's approach is not the norm, however, especially for ventures as small as his. According to the bureau of Labor Statistics' 1996 Employee Benefits Survey of small establishments in private industry, vacation time was the most common benefit for full-time employees; medical benefits, retirement plans and life insurance were less prevalent. The reality is, no matter whether you have one employee or 1,000, offering benefits is totally optional. "It comes down to competition and wanting to keep one's workers," says Russell Orban, assistant chief council of the Office of Advocacy for the Small Business Administration.

What's Required
Some elements of having employees on the payroll are not optional. For instance, you have to make contributions to social security (you pay half and the employee pays half), medicare (the FICA line on your paycheck) and your state's workers' compensation fund and disability programs (amounts and procedures vary depending on the state).

You also have to allow employees time off for jury duty and compensate them for those days, depending on the law in your state. You must let them vote and serve in the military. Many states also have laws governing pregnancy and parental leaves; these are usually applied to companies with 15 or more employees.

However, the much-welcomed Family Leave Act - which basically requires companies to allow employees time off for the birth or adoption of a child, or for a serious illness of the employee or his or her spouse, child or parent - only applies to companies with 50 or more employees.

The Perks
Many potential employees are so used to getting health benefits, they might be surprised to find that the independent world doesn't always offer them. if, in the hiring process, you're finding that the benefits question is always a sticking point, you might want to look into what you can offer without undermining your company's bottom line. The most common plan would be basic health insurance; the extras include dental plans, prescription plans and retirement packages.

How do you figure out what to offer? Ask other small business owners in your area about their plans, and find out how they evaluated the packages and which insurers they chose. Inquire whether the chamber of commerce or local small business association offers group plans to companies like yours. To get a better rate on your own, form an employee pool with several businesses and get quotes for the group.

What's right
Insurance isn't the only variable. Businesses are not required to give their employees vacation time, sick leave, personal days or time off for holidays. But putting on paper your company's policy for these items not only helps your staff manage their time at the office but also gives you parameters for judging their performance. If you allow five sick days a year and your assistant takes 10, you may have a problem, but without a set policy, you have nothing to enforce.

Of course, many would consider offering time-off benefits the right thing to do as a business owner. Before hiring anybody, put your policies in place. Decide on which holidays the office will be closed. The minimum is often the big seven: New Year's Day, President's Day, Memorial Day, Fourth of July, Labor Day, Thanksgiving and Christmas. Then form a vacation policy; for example, two weeks the first two years, adding weeks as people stay with the company. Personal days and sick days are also yours to determine - whatever you think is best for both your employee and your company.

Whatever you decide to offer as you bring people on staff will probably reflect the job market in your town. If there are lots of potential employees available, you can be as generous or stingy as you want. But keep in mind this prediction from the SBA's Orban: "We anticipate that the labor force will remain flat while the demand for skilled labor will increase over the next five to 10 years. This means businesses will have to start competing harder for those workers. Small-business owners may want to consider offering more benefits."

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