Benefits

As a result of the employment relationship, employees are entitled to certain benefits as a matter of law, such as retirement and disability compensation. In addition, once an employer offers a pension or health insurance, federal law requires the employer to provide the benefits offered, without interference.

Federal and state law do not require employers to pay employees for time away from work, such as vacation, holiday or sick time off. When employers offer paid time off from work, state law typically answers questions of employee entitlement to paid time off benefits. Similarly, certain compensation benefits, such as incentive plans and stock option plans, are primarily creatures of state contract law and depend on what the employer chooses or agrees to offer. Incentive and stock option plans may, however, have serious federal tax consequences.

Statutory Benefits

Statutory benefits, meaning benefits required by law, include:

retirement and disability benefits, like social security;
unemployment compensation benefits; and
workers compensation benefits.

Employers are not required to provide retirement and disability benefits. However, federal law requires private employers, and state law requires public employers, to collect, match and remit a certain percentage an employee's payroll to the federal or state treasury to fund the retirement and disability benefits.

Welfare Benefit Plans- ERISA

Employers may, but do not have to, provide pension, health insurance, disability insurance and severance benefits. Employers who provide benefits under a plan are free to modify or terminate the plan. However, under the Employee Retirement Income Security Act of 1976 (ERISA), employers who provide such plans must provide the designated benefit to the covered participant upon the happening of the specified event. For example, once a covered employee becomes seriously ill, an employer cannot refuse to provide health insurance coverage. Similarly, ERISA prohibits an employer from terminating an employee for the specific purpose of preventing or interfering with the employee's use of the plan. ERISA also imposes fiduciary obligations on certain administrators and sponsors of ERISA plans.

Vacation, Holiday and Paid or Sick Time Off

Employers likewise have no obligation to provide paid time off from work. For those that do, state law answers questions about vacation, holiday or paid or sick time off, such as:

when and how an employee accrues paid time off; and
whether an employee is entitled to accrued but unused time off at termination; and

In Ohio, for example, courts do not impose vacation, holiday or paid or sick time obligations on employers. However, if an employer has a policy of providing time off, Ohio courts will hold the employer to it, even if the employer did not include the paid time off policy in an employment agreement.

Compensation Benefits

Employers may also offer employee incentive plans, stock option plans or other forms of non-wage compensation. State contract laws govern most compensation benefits and the employer's plan, or an agreement between the employer and employees, controls the timing, amount and conditions of payment of compensation benefits.

Stock option plans are subject to federal tax laws that discourage stock option awards at strike prices below the underlying stock's fair market value at the time of the stock option award. See Guidance Under § 409A of the Internal Revenue Code.

Relationship between Employee Benefits and Leave Rights

Employee benefits such as disability insurance, vacation or other paid time off, provide an employee with compensation or other valuable benefit when he or she is away from work. A related but different employee right is to restoration to his or her job when he or she is ready to return to work. An employee's restoration rights are found primarily in the Family and Medical Leave Act, the USERRA Military Leave Act and similar state laws.

As a result, an employee's absence from work often implicates two separate sets of law. Specifically, one set of laws will determine what, if any, benefit the employee may receive while he or she is on a leave of absence. The other set of law determines what rights, if any, an employee has upon his or her return to work. Benefit and restoration questions arising out of an employee's absence from work while on leave are thus some of the thorniest and confusing questions faced by employees and employment lawyers.

Articles (69)

Employee Benefits Overview
As a result of the employment relationship, employees are entitled to certain benefits, such as retirement and disability compensation, as a matter of law. In addition, once an employer decides to off... applies to All States

Severance Package
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Who should have to pay back overpaid Unemployment Benefits in North Carolina?
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Overview of the Constructive Discharge Doctrine
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Severance Pay can reduce Ohio Unemployment Compensation Benefits
Severance pay in Ohio can reduce or eliminate an employee's unemployment compensation benefits for the weeks that the severance pay is received. If an employer pays severance pay in a lump sum, the Oh... applies to Ohio

Military Employment Leave: Uniformed Services Employment and Reemployment Rights
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Closing the Severance Pay Negotiation with Non-economic Terms
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Can I still be fired if I already resigned.
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Overview of American At-will Employment
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The Role of Seniority in Employment Law
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USERRA Overview
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Families First Coronavirus Response Act - An analysis of House Bill 6201
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Overview of COBRA Health Insurance Continuation Rights
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Lilly Ledbetter Fair Pay Act
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Negotiating Severance Agreements
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Guide to Employer FMLA Notices with DOL Approved FMLA Forms
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American Public Policy Exception to Employment at-will
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Promissory estoppel exception to at-will employment
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Family and Care Giver Discrimination, Harassment and Discharge
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Florida Whistleblower's Act Protects Employees of the Government and Companies that Contract with Florida Governments
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Rights of an Ohio Employee who is a Minority Shareholder
A special exception to employment at-will doctrine applies to employees who are minority shareholders of close corporations. In their case, majority shareholders cannot terminate their employment with... applies to Ohio

Overview of Unlawful Employment Discrimination
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How to Value Claims for Severance Negotiations
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Illinois State Overtime Law
This page is article is devoted to Illinois law. It presumes you have a basic knowledge of the Federal Law. But for more information on the Federal Overtime Law please visit our FLSA page at http://ww... applies to Illinois

New York Non-competition Law
New York state courts enforce post-employment non-competition agreements under certain circumstances, but their examination of restrictive covenants is rigorous. New York courts adhere to a strict app... applies to New York

Executive Orders affecting Unions issued by the Obama Administration.
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WARN Act Requires 60 Days Notice for Plant Closings and Mass Layoffs
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Preliminary Injunctions in Non-competition Cases
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The Role of Contracts in Employment Law
Contracts play a central role in employment law. The most basic employment arrangement, at-will employment, is purely contractual in nature. Floyd v. DuBois Soap Co. (1942), 139 Ohio St. 520, 530-531,... applies to All States

Family and Medical Leave Act 2008 Rule Changes.
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Tortious Interference Involving Non-Competition Agreements
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Injunctions Barring Enforcement of Invalid Non-competes
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Trade Secrets Overview
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How to Find and Select Good Employment Lawyers
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Ohio Minimum Wage with Treble Damages and Attorneys Fees
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Enforcability of Texas Non-competition Agreements.
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Defamation in the Illinois Workplace
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Arbitration of Employment Disputes
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Fortune: Annual 100 Best Companies to Work For
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benefit plan appeals
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Appealing Denial of COBRA Subsidy
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What is the ADA?
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2 Ways Employers Sometimes Illegally Discriminate Against Veterans
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How to Get the Best Virginia Workers Compensation Settlement
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Dont Let Your Employer Misclassify You As An Independent Contractor
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8 Main Disability Discrimination Questions
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Genetic Discrimination Under GINA
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Is an Intern Supposed to Get Paid?
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5 Ways Employers Can Discriminate Against Workers
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What Are My Employment Rights if I am or Become Pregnant?
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New York Sexual Harassment Protections
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3 Ways You May be a Victim of the Retaliation and Constrictive Discharge Hybrid
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10 Signs You might be a Victim of Sexual Harassment at Work
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7 Things You Didn’t Know About Medical Leave Of Absence From Work
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9 Things Job Hunters With a Disability Should Know
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5 Employees who are Targets of Discrimination and/or Wrongful Termination
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5 Important Questions Asked about Disability Discrimination and Wrongful Termination
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3 Ways Sexual Harassment Claims May Lead to Other Claims
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5 Ways an Employer May Be Liable For Disability Discrimination
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4 Ways You May Become a Victim of Wrongful Termination
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4 Situations Where an Employer May Retaliate
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Applicants and Temporary Employees are afforded the Same Rights as Regular Employees Under FEHA
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Employment Law Topics

Employment Law FAQs

Benefits

Statutory Benefits

Vacation, Holiday and Paid or Sick Time Off

Compensation Benefits