It's no secret that remote work is on the rise. Ever since the advent of COVID-19, remote or hybrid work has become the norm for businesses able - and willing - to accommodate it. Research firm Gallup estimates that more than 70 million individuals can do their job from afar as of 2023, while Forbes reports a whopping 98% have a desire to do so at least part of the time.
It's easy to see why; experts have built a long list of factual arguments for remote work arrangements, ranging from their lower overhead costs to their ability to lessen employee burnout rates.
The normalization of digital teams also opens the door to a wider pool of talent. Companies are no longer limited to candidates that reside within their own region and can instead reach across borders to neighbouring states and countries. That's a great thing with respect to both diversity and the broadening skills gap currently challenging employers around the world.
But it also presents a challenge to employers, who must now find a way to manage their international payroll while abiding by various local labor laws. Not every benefits package for employees working overseas will be the same; some countries guarantee their working citizens specific rights (think: paid vacation days and parental leave) while others may not.
The United States' rules on statutory and supplementary benefits are particularly confusing. Standards can vary from region to region, and even from city to city.
To help get you up to speed, we've put together this article. It details the various requirements when it comes to statutory and supplementary benefits as per local employment laws in the US. It also provides helpful advice on how you can ensure your digital team members are properly compensated in accordance with - or even better, above - legal requirements.
Hiring Remote Workers In the US
The system for hiring remote workers in the US is somewhat piecemeal, as in addition to federal employment laws, there are also unique regulations between states. Local municipalities can also have their own policies on issues such as payroll, tax withholding, and paid time off.
The best advice we can give any business looking to hire remote talent in the US is to start by studying the local ordinances of the cities you're recruiting in. From there, you'll be able to expand with a review of what laws apply on the state level. In most cases, cities' special tax rates and employment rules either supersede or go in tandem with whatever the state requires.
Federal Labor and Benefits Laws for Remote US Workers
Regardless of city or state, employers should always be prepared to follow the American federal government's employment standards.
The Fair Labor Standards Act (FLSA) protects American workers who hold almost any kind of job - whether in-person or remote - on the federal level. Enforced by the Wage and Hour Division (WHD) of the U.S. Department of Labor (DOL), it sets national standards for minimum wage, overtime pay, recordkeeping, and employee working hours.
While the US does not currently have any comprehensive laws specifically governing remote work, it does have the Telework Enhancement Act of 2010, which was implemented under the Obama Administration to establish policy requirements for agencies that allow employees to work outside the office. The rules outline basic expectations in terms of work arrangement terms, technology infrastructure, and security protocols, but again, only apply to federal agencies, i.e. branches of government.
Beyond that, remote employers of all kinds should be aware of their potential responsibilities under the Americans with Disabilities Act (ADA). This is a federal civil rights law that was enacted in 1990 to prohibit discrimination against individuals with disabilities in all areas of public life. The law applies to employers with 15 or more employees and requires that they make reasonable accommodations that allow disabled employees to work outside the office as effectively as those who are not disabled.
Building a Benefits Package for Employees Working Remotely From the US
Remember the Fair Labor Standards Act (FLSA) we mentioned earlier? If you've been taking notes, you'll remember that it sets out basic rights for most working individuals in the United States, whether they work remotely or not. This includes compensation and benefits; Americans who work from home are just as entitled to federally provisioned benefits such as overtime, minimum wage, and sick leave as anyone else.
The federal Family Medical Leave Act (FMLA) requires companies that employ 50 or more qualifying staff to provide up to 12 weeks of unpaid family or medical leave. While the details vary depending on the company, generally speaking, an employee who works remotely from home is eligible for FMLA benefits if they have worked enough hours over a certain period of time.
Other national standards, such as those for pay, must be followed as well. As of 2023, the federal minimum wage for all US workers is $7.25 per hour—and this includes remote employees too. However, some states like California have higher state-level minimum wages that employers must comply with if they employ people based in those locations.
Mandatory payroll deductions for Medicare and Social Security, as well as employer contributions to worker's compensation insurance, fund these other federally-required benefits that remote workers receive.
It's important to remember that the abovementioned benefits entitlements are only the bare minimum for what's expected across the country. Several states have implemented regional laws and programs that guarantee employees more.
Paid Family Leave (PFL) is a great example; although it's not required on the federal level, California, Delaware, Maryland, Massachusetts, New Jersey, New York, Colorado, Connecticut, Oregon, Rhode Island, Washington, and the District of Columbia all provide it and paid pregnancy leave to qualifying workers in different allowances. This can have knock-on implications on payroll too, as most US PFL programs are funded either fully or in part by an additional wage tax.
This ties back to the importance of dissecting the specific laws that apply to each of your American employees on each level of government. What's mandatory for remote workers in California is likely to be different from what is for remote workers in Florida. Handle every benefits package on a case-by-case basis.
Statutory Employee Benefits vs. Supplementary Benefits in the US
The benefits for remote workers we just went through, such as protected leave, overtime pay, and state PFL programs, are just the tip of the iceberg with respect to what you can - or better said, must - put into an American employee's benefits package. Because each and every one of those is mandatory. Sometimes, employers get so caught up thinking about legally required benefits that they forget there's an entirely other kind: supplementary benefits.
Supplementary benefits are employee benefits that go beyond the standard benefits that are legally required of employers in the United States. They are a standard part of international employee benefits when you hire remote workers anywhere. Both are usually reserved for full-time employees.
They may include sought-after employee benefits such as healthcare benefits, retirement plans, paid vacation and sick leave, tuition reimbursement programs, life and disability insurance coverage, child care assistance, wellness programs, or other financial perks such as employee discounts.
The key difference here is the fact that supplementary benefits are additional - something an employee wouldn't necessarily get if they worked for another business. Many employers leverage supplementary benefits as a tool to attract job candidates and increase employee retention.
What a Benefits Package for Employees Typically Includes
So, what does a benefits package for employees typically include in the United States? And more importantly, how can you make yours stand out? The following sections will outline the standard and supplementary offerings you might consider when building a benefits plan.
Statutory Benefits
We should all be clear on what statutory benefits are by now, but we'll mention them again because they are in fact a necessity of any benefits package in the United States. Federally guaranteed minimum wage, overtime pay, and sick leave must be included within the scope of a benefits package, as mandated by law. Some US states have additional statutory benefits, so it's important to do research on the local regulations related to employee benefits prior to designing your own.
Non-Statutory Benefits
Non-statutory benefits are much more variable, as they depend largely upon the generosity of an employer and what kind of benefits they are willing to provide their staff members.
In the United States, companies most commonly offer their workers one or more of the following:
Health Insurance
The most common form of non-statutory benefits revolves around health insurance. This type of coverage typically includes a variety of plans and options, depending on the company in question, but it generally covers doctor visits, hospital stays, preventive care, and prescription medications.
Private healthcare insurance serves as an added layer of peace of mind for American employees who would otherwise receive limited protection from government-sponsored programs.
Premiums for things like life insurance and health benefits may be fully covered by the company or paid for through post-tax payroll deductions.
Retirement Plans
401(k)s, 403(b)s, and other types of retirement plans are popular non-statutory benefits offered by companies that want to retain their staff for the long term. These plans are often tax-advantaged, meaning that employees can set aside pre-tax dollars and potentially reduce their taxable income for the year. There are usually some conditions associated with such plans, including vesting periods and eligibility criteria.
Vacation Days
Reading through the United States mandatory employee benefits earlier, you may have noticed that vacation days were not included. While vacation time is often assumed to be a given for most employers, it is important to note that there are no federal laws requiring employers to provide paid leave. That said, many companies offer some form of vacation days as an added benefit to their employees. Some are now even going as far as to offer unlimited paid time off.
Vision Care
Some companies provide their employees with coverage for routine eye exams and contact lenses or glasses, as well as options for laser surgery treatments. Vision plans don't necessarily appeal to everyone, but they can be a major draw for prospective employees who need regular vision care or corrective lenses.
Dental Care
Many employment benefits packages include coverage for basic dental care, such as cleanings, fillings, and X-rays. Some employers will also provide additional coverage for major dental procedures, such as root canals and braces.
Flexible Spending Accounts
Flexible spending accounts (FSAs) allow employees to set aside pre-tax dollars for specific healthcare and childcare expenses. The money in these accounts can only be used for predetermined purposes, but they provide an invaluable financial cushion when it comes to covering expenses such as hospital bills, copayments, and childcare.
Gym Memberships
Some employers might argue that unnecessary trips to the doctor can be avoided altogether with the right lifestyle choices. To that end memberships for gyms and health clubs, along with other wellness benefits, have become increasingly popular benefits employed by companies that want to create an environment of health and wellness among staff.
Home Office Stipends
This is a particularly common benefit among companies that employ remote workers. Home office stipends can help cover the costs of computers, printers, and other office-related expenses. This can be a really helpful benefit for employees who would have to otherwise purchase their own equipment out of pocket.
Professional Development
Professional development is an invaluable tool for helping employees stay abreast of the latest industry trends and best practices. It can also help them to develop critical skills that will be useful in their current role or even open up new career opportunities. Although most people would likely pick vacation days, this is still an incredibly valuable thing to add to a remote worker's benefit package.
Flexible Hours
Here's another big draw for remote employees: flexible hours. This kind of benefit allows employees to create their own schedules that best suit their lifestyles. Whether it's taking the day off for a doctor's appointment or simply logging in later than usual one morning, this freedom can make all the difference in the world for some.
Mental Health Support
More and more companies are beginning to understand the importance of mental health support for their employees, especially those who work remotely. This can include things like access to therapy sessions, mental health coaches, or even meditation apps and other resources for stress management.
In Closing
Building a benefit package for remote workers is tricky, but it's also an opportunity for employers to create workable solutions that benefit both their company and its international hires. Developing flexible work arrangements, establishing supplemental benefits such as telehealth services and virtual coaching, and providing training on how to manage stress can all go a long way in helping to reduce employee burnout rates. By creating the right types of policies, companies can demonstrate their commitment to investing in remote workers while bolstering their global talent retention.
Hiring remote workers in the US? We can help. Borderless is a global remote work platform that helps companies pay and manage talent from around the world. From visas and payroll to taxes, and benefits - we take care of all the complexities so you don’t have to. Get started by reaching out to our team today.
Disclaimer: Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
