FAQs about Employees and Employee Benefits

This primer is an introduction to the basic laws of employee benefits. It is often assumed that there are legal impediments to employers providing benefits to phased retirees, part-time workers and the contingent workforce. From a benefits law perspective, this is really not true. By statute, self-employed workers are sometimes excluded from plans required to be employee-only but employers face few other prohibitions when designing their plans. From an employer’s perspective, there are far more impediments to excluding these workers from their benefit plans than including them. Tax law provides incentives to employers who sponsor plans and to workers who participate in them. But tax law also insists that this special treatment should not be available only to high-paid workers. So today’s regulatory structure is intended to compel employers to include a substantial number of rank-and-file and lower-paid workers in their plans in exchange for favorable tax treatment for high-paid workers. This primer illustrates this regulatory structure by focusing on the basic rules for eligibility and participation in the most common plans. It is in part an exercise in mapping the employee benefits universe. It is written from the perspective of an employer and highlights questions that an employer must answer when designing a particular plan. Those questions range from “who is an employee” to “how many low-paid workers must I include” to “what benefits may I offer and to whom?