In the Trenches: Benefits
By now you’re probably familiar with my struggles to navigate a mess of rules in order to be ready to hire employees, but I haven’t said much about benefits. Then an issue cropped up last week that made me realize I needed to do a little more work in this area.
My first employee is doing well, but as a part-timer, the company isn't required to provide most benefits. But some rules, particularly those related to taking time off, do apply. At least, that's what my employment lawyer explained to me when crafting my employee handbook. For example, there are state rules around sick leave, bereavement leave, jury duty leave, taking time off to vote, military service, volunteer firefighter duty, witness and crime victims duty (if needed to testify in court), and school activities (time for you to deal with your child's school events or problems). These can all be unpaid time off for part-timers.
Thus, I maintain a general unwritten policy of trying to be flexible about unpaid time off. I don't want to deprive someone of handling an important task or even doing something that's fun.
The benefits issue that I ran into last week, however, was about retirement plans. Last year, I set up an SEP (Simple Employee Pension) plan for myself, so that I could stow money away for the future. What I just found out is that a SEP requires me to make contributions for each of my employees equal to those on a percentage basis as I make for myself. I simply can't afford to do that.
So, I'm now looking at a Simple IRA plan that would allow for matching contributions for employees. I like the idea of offering some retirement benefits, but this plan means it only happens if the employee wants to participate as well. That seems like a good, simpler way for me to offer something without getting into a full 401(k) plan. It also keeps me from breaking the bank.
It's really quite amazing how much you have to think about when it comes to employment.