Wages & Benefits: Overview
By Christie Nicholson, J.D. | Legally reviewed by Susan Mills Richmond, Esq. | Last reviewed January 06, 2024
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The most important considerations when looking for a new job are wages and benefits. Whether you're a full-time or part-time employee, you'll want to know your salary. You'll also want to know what benefits come with the job. For example, does your new employer pay for health insurance? Will you receive paid vacation time and a retirement plan?
U.S. Department of Labor laws and state laws concerning wages and fair pay have evolved over the years, and the rules governing employee benefit plans can take some work to understand. Exemptions apply to salaried workers and other types of workers.
This article offers an overview of wage and benefits laws and how they impact employees.
Wages
Federal and state laws determine the minimum wage workers must receive. These laws also identify when employers must pay overtime for employees who work longer hours. Unfortunately, some employers fail to comply with these legal requirements.
Common violations of the wage and hour laws include:
- Not paying the correct minimum wage
- Paying a lower "training wage" or "youth minimum wage" to workers who aren't minors and who should earn more
- Not paying overtime
- Improperly classifying exempt employees
- Forcing employees to work "off-the-clock" and not paying them for it
- Deducting too much for tips
- Deducting for employee wages paid in goods, such as meals or food
Regulators set wage and hour laws to protect employees and ensure employers pay them fairly. If this doesn't happen, you may have a potential legal claim.
Benefits
The term "benefits" is broad. It covers everything an employee receives besides cash wages. The federal government requires that employers offer certain benefits, such as family and medical leave. These benefits generally do not cost an employer anything. The laws do not require other benefits, such as sick leave and health care.
Workers negotiate with their employer for these optional benefits. These benefits include:
- Health insurance/medical care
- Disability insurance
- Life insurance benefits
- Employee pension plans
- Profit sharing
- Insurance for dependents and family
- Paid time off
- Retirement benefits
- Tuition reimbursement
- Higher rate of pay
- Fringe benefits
Typically, the higher an employee's compensation, the more optional benefits they'll receive. Companies tend to value higher-paid employees since they are in critical roles. They are more willing to offer extensive benefits to entice these workers to join their team.
Are Optional Benefits Governed by Federal and State Law?
Although some benefits are optional, employers must follow specific federal regulations. These regulations are often complex and challenging to understand.
Most health benefits and pension plans fall under a federal law called the Employee Retirement Income Security Act of 1974 (ERISA). Among other things, ERISA regulations require that employees receive notice of the terms of any employee benefit plan.
These terms include, but are not limited to:
- What it is
- Who is eligible
- What the plan covers
- What the plan costs
- How you receive payments
- How and when changes take place
If you are part of a plan, ensure you receive this information. If you don't, contact your company's human resources department.
Who Typically Receives Employment Benefits?
Not all workers receive benefits from their employer. For the most part, the state and federal laws only protect employees. There is a difference between a worker and an employee. Anybody who provides services to a company in exchange for pay is a worker. However, only certain people are legal employees.
Wage laws and other employment regulations protect eligible employees. The same is true for laws that govern employee benefits. They do not cover specific categories of workers, such as independent contractors. You must know how your employer classifies you.
If you fall into any of the below categories, the wage and hour laws may not fully protect you:
- Independent contractors
- Temporary employees
- Freelancers
- Agricultural workers
- Railroad workers
- People who work for companies with less than two employees
- Employees at companies with less than $500,000 in annual revenue
Either way, you must consider this when looking at an employment opportunity.
Have Specific Questions About Wages and Benefits Overview? Ask a Lawyer
Federal and state laws control rules and regulations surrounding wages and benefits. This area of law can get tricky, so it's best to seek out the guidance of a local employment law attorney when trying to understand your obligations and rights.
Wages and Benefits: Additional Resources
We can't answer all questions about wages and benefits here. If you have additional questions after reading this article, click on the links below to learn more.
Next Steps
Contact a qualified employment attorney to make sure your rights are protected.