Do you communicate company benefits to your employees? Life, health, 401K, dental, paid vacations, days off or holidays? You should communicate, in writing, these benefits to your employees at least annually so they understand the cost of these benefits.
Many companies already explain costs and benefits to employees. For guidance on framing those communications, see Communications insurance.
How about these benefits?
Employer-paid benefits to communicate
- Company share of Social Security and Medicare.
- Unemployment insurance.
- Workers' compensation and employee safety costs.
- Company automobile insurance.
- Company general liability insurance.
The first two points concern government insurance programs. Include these benefits because employees tend to be dismissive of the company expense involved.
Workers' compensation insurance covers on-the-job injuries and illnesses for employees. It is a benefit. A simple way to show the cost is to multiply the individual's payroll by the applicable rate; explain why this is a benefit and how much it costs. Most employees do not give workers' compensation a second thought, but largely because they are never told.
Company automobile insurance is a benefit for drivers or employees who ride in company transportation. Drivers benefit from the company assuming liability for accidents and covering the individual driver; this protection is often overlooked as an employee benefit.
Consider common carriers: you pay for a driver and their insurance. You can reduce the risk of a trucking accident by using contracted carriers rather than employees, or by requiring employees to provide their own insurance. When you choose to provide the insurance, you pay for your employee's liability as well — and that is a benefit.
General liability insurance has similar impacts on employee liabilities as the company automobile policy. The company assumes responsibility for employee errors in maintaining premises or manufacturing products.
Absent company risk management programs, employees might be held responsible for some liabilities. The independent contracting driver and the employee both face risks of road travel, but the employee has the benefit of company‑supplied insurance when the company provides it.
Communicate these benefits every year for two reasons
- Inform the employee of the costs of these benefits.
- Remind the employee of these risks, and their responsibility to operate safely.
Provide a concise, written summary at least annually so employees understand both value and responsibility. For additional tips on employee benefit communication, see The Importance of Communicating Employee Benefits.
If you need help preparing a written summary or reviewing your coverage while you update employee communications, talk to an agent.
Frequently Asked Questions
What benefits should be included in an annual written summary?
Include employer-paid health and retirement contributions, employer shares of payroll taxes, unemployment, workers' compensation, and liability and auto coverage that affect employees.
How detailed should cost information be?
Provide clear, high-level cost examples—such as employer payroll multipliers for workers' compensation—so employees understand relative employer expense without revealing sensitive payroll data.
Is workers' compensation always paid by the employer?
In most cases employers purchase workers' compensation insurance for employees; the policy and requirements vary by jurisdiction and industry.
How often should benefit communications be updated?
Update communications at least annually and whenever there is a material change to coverage, eligibility, or employer contributions.