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How Do Employee Benefits Work? | A Guide For Managers

Many managers wonder, “How do benefits work to keep my team, and my business, running strong?”

When it comes right down to it, employees are the lifeblood of your company. Without a strong team in place, success is all but unreachable.

Your goal, then, is to attract the top talent and retain them in your business as long as possible. Compensation goes a long way in this regard, but sometimes your business needs to offer more.

Benefits, in all their myriad forms, are a strategy many companies use to entice the best employees to their team. You can do the same.

In this article, the workforce-management experts at Sling answer the question, “How do benefits work?” and provide insight into how you can choose the right employee benefits to build a cohesive team and a successful business.

What Are Employee Benefits?

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Before examining the question, “How do benefits work?” in more detail, it’s vital to discuss another question first: “What are employee benefits?”

A benefit is any perk that your business provides for its employees in addition to their hourly wage or salary.

As you’ll see in the next section, compensation is a benefit of sorts, but it’s basically mandatory when it comes to hiring and retaining employees.

Having said that, benefits typically fall into one of three categories:

There’s a bit of overlap when it comes to common and fringe benefits, but it’s not about which benefits you do or do not offer. Instead, the important point to consider is how those benefits affect your employees and your business.

How Do Benefits Work?

business professionals discussing the question "how do benefits work"

Benefits work to entice high-performing and high-potential employees into choosing your business over every other business out there.

For example, if Business A offers a competitive wage while Business B offers the same competitive wage as well as medical insurance, most job seekers will choose Business B because they receive something more than just a wage for their efforts.

This illustrates the importance of answering the question, “How do benefits work?” for your business. What combination of extras will make people want to work in your company?

To help you decide what’s best for your particular situation, we categorize the most common benefits into the three categories mentioned above: mandatory, common, and fringe.

Armed with this information, you can create a benefits package that brings the best team members to your organization.

Mandatory Benefits

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Minimum Wage

The United States government, in partnership with state and local authorities, sets the minimum wage that every business must pay its employees.


The 1985 Consolidated Omnibus Budget Reconciliation Act (or COBRA for short), states that employers who offer a group health plan must continue to offer health coverage for a limited period of time after an employee loses their job.

Smaller businesses aren’t required to offer health insurance, but if they do, they’re subject to the COBRA guidelines.

Overtime Pay

Federal law mandates that an employer must pay at least 1.5 times (time-and-a-half) an employee’s standard wage for any time over 40 hours they work in a given week.

Reasonable Breaks

While not all states have laws on the books to regulate rest periods, most businesses will offer reasonable breaks (usually 10 to 15 minutes) periodically throughout the workday.

Unemployment Benefits

Each state has its own form of unemployment benefits that all employers must provide.

As long as the employee shows that they are actively seeking a job, they will receive such benefits as food stamps, healthcare of some sort, or monetary assistance to help pay for utilities and other necessities.

Workers’ Comp

If an employee is injured on the job, the business’s insurance company is obligated to pay for any treatment and rehabilitation costs.

Social Security Disability

Social Security Disability is a program run by the federal government that allows an employee to receive social security if they are over the age of 18 and are unable to work for more than 12 months because of a medical condition.

Family & Medical Leave

The Family & Medical Leave Act (or FMLA for short) requires that employers provide unpaid, job-protected leave for events such as childbirth, adoption, or caring for sick dependents.

Common Benefits

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Not so long ago, common benefits were fringe benefits that only the largest or most forward-thinking companies could offer.

As other businesses noticed the beneficial effects these extras had on hiring and employee turnover, they started offering the same perks in order to stay competitive.

Most businesses will now offer a form or combination of these common benefits to some or all of their employees.

Competitive Wage

Businesses that require employees to have specialized skills or knowledge can offer higher compensation as well as regular pay raises, bonuses, commission, or hazard pay.

Meal Breaks

Most businesses offer at least a half-hour break in the middle of the workday so employees can eat, relax, and prepare themselves for the rest of the day.

Some businesses continue to pay employees during this break, while others don’t.

Paid Leave

Paid leave includes options such as:

  • Sick leave
  • Maternity/paternity leave
  • Vacation leave
  • Adoption leave
  • Caregiver leave
  • Bereavement leave

This type of paid time off is different from the mandatory Family & Medical Leave mentioned in the previous section because the employer continues to pay employees while they’re gone.

Paid Holidays

Paid time off during major holidays (e.g., Thanksgiving, Christmas, New Years, Labor Day, Memorial Day, etc.) is increasingly common as a benefit for most businesses.


Some businesses have a severance package program that provides extra compensation and other benefits to employees leaving the company because of a layoff.

Fringe Benefits

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Fringe benefits are any unique extras your business provides above and beyond the mandatory and standard benefits mentioned above.

Workplace Extras

Workplace extras include perks such as:

  • Cafeteria (free or pay)
  • Game room
  • Bring your pet to work
  • Friday happy hour
  • Employee discounts
  • Standing desks
  • Ergonomic furniture
  • Inclement weather policy

Anything that makes your workspace stand out and attracts prospective employees is a benefit of sorts.

Wellness Benefits

Wellness benefits like gym memberships and discounts on athletic gear, fitness trackers, and healthy foods help your employees stay fit and active — healthy employees are productive employees, after all.

Student Loan Assistance

Helping your employees repay their student loans is a fairly recent fringe benefit that makes your business stand out from the rest.

Relocation Assistance

If your business attracts employees from far and wide, a perk that’s sure to please is relocation assistance.

Paying for moving trucks, rental vehicles, and even a temporary place to live goes a long way toward making your business appealing to job seekers.

Partnerships With Other Businesses

Some businesses forge partnerships with other businesses to provide benefits for their employees.

For example, your manufacturing business may partner with an insurance company to offer discounted property or vehicle insurance.

Other Creative Benefits

Fringe benefits can be anything you choose them to be. You might offer such extras as:

  • Year-end performance bonuses
  • 401k
  • Life insurance
  • On-going educational assistance
  • On-the-job training
  • Profit-sharing
  • Childcare
  • Company car
  • Commute assistance
  • Free smartphone or tablet
  • Stipend for cable connection or smartphone bill

The list goes on and on. And, really, you can create your own fringe benefits to suit the way your business operates and what it can afford to offer.

Transform Your Schedule Into A Benefit

Sling's scheduling feature

When considering the question, “How do benefits work?” and choosing the package that is just right for your business, don’t overlook one of the best and least expensive options available: a flexible schedule.

Giving your employees an alternative work schedule transforms the routine details of when, where, and how your team works into an exciting benefit that attracts top talent to your business.

There are many types of scheduling options available, including:

Once you decide to offer a flexible schedule as a benefit for your team, the Sling app makes it easy to incorporate even the most complicated shifts into your regular workflow.

Sling is packed with intuitive tools — like employee and task color coding, recurring shifts, and time-off notices.

Sling even makes it easy to notify employees about no-shows and available shifts with advanced communication features and push notifications sent directly to their phones.

These features (and many more) make Sling the best schedule maker for businesses of all sizes.

Try Sling free today and you’ll discover how it opens up blocks of time for more important tasks and allows you to offer a valuable benefit without putting an undue burden on your business.

For more free resources to help you manage your business better, organize and schedule your team, and track and calculate labor costs, visit today.

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This content is for informational purposes and is not intended as legal, tax, HR, or any other professional advice. Please contact an attorney or other professional for specific advice.

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