Types of Employee Benefits and Perks

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Types of Employee Benefits and Perks

Theresa Chiechi / The Balance

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 your compensation package when 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 provide extended 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.

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)

The Family and Medical Leave Act requires 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

The Fair Labor Standards Act (FLSA) sets the current federal minimum wage at $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 laws mandate a higher rate of pay than the federal minimum wage; therefore, the state's minimum wage laws override federal minimum wage laws.


Similarly, overtime laws vary 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 all unemployment benefits for 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.

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.


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 at Healthcare.gov.

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 with paid 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 a chance 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 offer severance pay and benefits to these employees.

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 provide hazard pay to 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 and stock options
  • Child care
  • Gratuity
  • Company holidays, personal days, sick leave, and other time off from work
  • Retirement and pension plan contributions
  • Tuition assistance or 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 are employee benefits questions you 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.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Department of Labor. "FAQs on COBRA Continuation Health Coverage for Workers," Pages 1, 6.

  2. Department of Labor. "Family and Medical Leave Act (FMLA)."

  3. U.S. Department of Labor. "Wages and the Fair Labor Standards Act (FLSA)."

  4. Bureau of Labor Statistics. "Employee Benefits Survey."

  5. Bureau of Labor Statistics. "Employee Benefits in the United States," Pages 2, 7.

  6. SHRM. "IRS Lowers 2022 Employer Health Plan Affordability Threshold to 9.61% of Pay."

  7. Healthcare.gov. "Full-Time Employee (FTE)."

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