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Benefits

Common questions covered here
Do I have to keep track of benefits laws for every state where I employ someone?
Do I have to support FMLA laws for every state where I employ someone?
Do laws about benefits vary by state?

Benefits can vary significantly at state and local levels, so this is one area where it’s important to be aware of a host of differences (or ensure whatever third party or service you’re using is doing so adequately instead).

Parental Leave

The United States does not guarantee paid family leave, a fact that makes it unique among industrialized countries.* Instead, federal law provides unpaid family leave for approximately 60% of the workforce through the Family Medical Leave Act (FMLA) (see more on this in the following section).*

newAs of August 2019, eight states and the District of Columbia offered paid parental leave, which would cover eligible employees working from those locations.*

newLate in 2019, Congress passed a measure that will provide twelve weeks of paid parental leave to federal employees who have held their job for at least a year.* While this does not apply to private-sector employees, it may signal a shift towards increased parental leave coverage at the federal level.

Medical and Other Leave

The Family Medical Leave Act is a federal law that “entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave.”*

Eligible employees may take up to twelve weeks of FMLA leave in a twelve-month period for the following reasons:

  • The employee’s child being born, or a child being placed with the employee for adoption or foster care.

  • Caring for an immediate family member who has a serious health condition.

  • Having a serious health condition that “makes the employee unable to perform the essential functions of his or her job.”

Eligible employees may take up to 26 weeks of FMLA leave in a twelve-month period to care for an immediate family member who is a servicemember and incurred serious injury or illness while on active duty.

In order to be eligible for this leave, the FMLA specifies that an employee must be “employed at a worksite where 50 or more employees are employed by the employer within 75 miles of that worksite.”*

importantThis can lead to the mistaken impression that many remote employees aren’t covered. However, for FMLA purposes, an employee is included in a particular office’s headcount if they report to that site; or, if they don’t report to any particular site, their work is assigned from that site.*

Here’s a useful example:

Consider an employer who has an office in South Carolina with 40 employees, an office in Oklahoma with 20 employees, and has 15 employees who work from home and reside in New York, Mississippi, and California … If all 15 remote employees report to or have their work assigned from the South Carolina office, their worksite will be considered South Carolina under the FMLA. Therefore, all the employees in South Carolina and all the remote employees (despite how far away they are) would be eligible for FMLA leave.*

Many states also have their own medical-leave laws that expand on the FMLA. States can lower the eligibility requirements that:

For some state leave laws, an employee may only be eligible if they are not eligible for FMLA leave. For others, an eligible employee may be able to take both federal and state leave.*

Similarly, state laws differ in exactly who they cover. A remote employee who lives in a state will be covered by whatever leave laws that state has if they otherwise meet eligibility requirements. However, some leave laws may also cover remote employees who live outside the state if the employer has its primary office in the state.*

importantTo get an overview of laws in each state where you have or are considering hiring remote employees, you can check out aggregated resources like these:

Because there are so many laws to keep track of and they can change on different schedules, we always recommend consulting an attorney for current advice.

Health Insurance

Federal law is the primary source of health insurance requirements for employees, so this is one area where you don’t have to worry about differences between on-site and remote workers within the United States.

If a company has at least 50 full-time employees in the United States, the Affordable Care Act requires that it provide at least 95% of its employees and their dependents with healthcare insurance that pays for at least 60% of covered services.*

While not required to provide health insurance, some smaller companies do qualify for a tax credit—the Small Business Health Care Tax Credit—if they provide health insurance. To qualify, a company must:

  • Have fewer than 25 full-time employees

  • Pay average wages below a certain amount*

  • Offer a qualified health-care plan to its employees

  • Pay at least 50% of the cost of the employee’s health-care coverage (but not family members or dependents)

Recently terminated employees may also qualify for health insurance for a certain period after they leave the company.

Federal law, through the Consolidated Omnibus Budget Reconciliation Act (COBRA), requires employers who have more than twenty employees and provide private-sector group health plans to give certain employees who would otherwise lose their coverage the option to temporarily extend. Employees who qualify for COBRA benefits include those who lost their job for reasons other than gross misconduct or had a reduction in hours.* COBRA has a few notable requirements:

  • If COBRA applies to your company and you fire an employee, you must notify the group health plan within 30 days.*

  • If your company is administering the health plan, then you are also responsible for notifying the employee of their eligibility.**

  • COBRA requires health plans to offer continuation coverage to terminated employees for 18 months or, if the employee became entitled to Medicare less than 18 months before they were fired, for 36 months.*

For more information on employers’ obligations under COBRA, we recommend the Employee Benefits Security Administration’s “An Employer’s Guide to Group Health Continuation Coverage Under COBRA.”

importantMost states offer state continuation coverage, sometimes referred to as “mini-COBRA,” that applies to employers with fewer employees and/or expands the coverage offered.

For example, Texas offers a mini-COBRA plan that offers continuation coverage to employees in companies with between two and fifty employees. If the employee does not qualify for federal COBRA, Texas offers nine months of continuation coverage; if the employee does qualify for federal COBRA, Texas offers an additional six months on top of the federal continuation coverage.*

In addition to offering different coverage, states that offer mini-COBRAs may have different ways of administering the program or different notice requirements,* so it’s important to be familiar with the rules in the states where your employees receive coverage.

importantThe states that currently do not offer COBRA continuation are Alabama, Alaska, Hawaii, Idaho, Indiana, Michigan, Montana, and Nevada.*

Fringe Benefits

Certain locations require employers to provide employees with commuter benefits, which generally allow employees to pay for certain commuting costs using pre-tax money, but may also include further benefits like offering a subsidy for commuting or an actual transit service.

importantSome of these laws do apply to at least certain remote employees:

  • New York City. This law applies to all employees who worked an average of 30 hours or more per week in the most recent four weeks if any portion of that time was in New York City and their employer has 20 or more full-time employees.*

  • Washington D.C. This law requires companies with 20 or more full-time employees to offer commuter benefits, and applies to employees who perform the majority of their work in the district.*

  • Seattle. This law applies to remote employees who work an average of ten or more hours per week in Seattle.*

But other commuter laws do not apply to remote workers:

  • New Jersey only covers employees “who [report] to the employer’s work location.”*

  • San Francisco does not include “employees who always work remotely, and do not commute to a physical office or work on-site in the San Francisco Bay Area” among the “covered employees” or “full-time employees” for the purposes of the Bay Area Commuter Benefits Program.*

Benefits Checklist

You’ll want to include the following on your benefits checklist:

Leave

  • If you have a remote employee in one of the eight states that offer paid parental leave, or Washington D.C., ensure you offer leave that complies with the relevant law(s).

  • If an employee needs to take another kind of leave that is covered by either FMLA or a state protected leave law, ensure that they are able to take the leave to which they are entitled and that their position is available upon their return.

Health insurance

  • If your company has at least 50 employees, provide health insurance that pays for at least 60% of covered services to at least 95% of your employees and their dependents.

  • If your company has fewer than 25 employees, consider whether you might qualify for Small Business Health Care Tax Credit if you provide your employees with health insurance.

  • If your company provides a group health plan, notify the plan that the employee has been terminated; and if your company administers the plan, notify the employee of their COBRA eligibility.

Fringe benefits

  • Determine whether the location(s) where your remote employees work requires your company to provide commuter benefits.

importantAlso be sure to establish and enforce a policy for how you will handle differences in benefits across states (and countries, if applicable) for different remote employees.

Policies and Miscellaneous HR

This section covers a collection of concerns that would largely be covered in a company’s employee handbook. For state-based variations on these categories, pay attention to New York and California, which have the most unique laws about these kinds of issues.

Equipment Grants

Many states, notably California, require companies to reimburse employees for any equipment or other things they are required to purchase in order to do their job.* This can range from office equipment to even something like the cost of opening a bank account in order to receive direct deposits.

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