The Importance of Employee Benefits in the U.S.

As recruiters working for European clients, we are often being asked about employee benefits. While the U.S. and Europe have a lot in common, employee benefits and compensation conspicuously diverge.

In the U.S., the responsibility to provide these basic social benefits to workers falls to employers rather than the government and are negotiated during the hiring process between employer and employee. So, you think: “Hurray!! Finally free from government regulations!”- but not so fast!

Many European small-business owners in the U.S. mistakenly believe that they cannot (or should not) afford to offer good benefits, or any benefits at all. But while offering poor benefits may boost your bottom line in the short run, that thrifty philosophy could crush your business long-term. And we are telling you why further down!

But first, take a quick look at the main differences between the U.S. and Europe.

Parental LeavePTO,  Sick Pay, HolidaysHealthDental or VisionLife InsuranceRetirement 
USNot mandated (except in CA, NJ, RH). FMLA offers 12 weeks unpaidNo Paid Time Off mandated: negotiated in hiring process No Sick pay or Holidays mandatedNot mandated by ACA* (Except in CA, MA, NJ, VT, DC, CT, MD, HI, RI)Not mandatedNot mandatedNot mandated
Europe (Differs between countries)42-52 weeks paid at 90 to 100% of previous earnings20-25 days minimum – sick pay and paid holidays offeredFunded by government in most countries + collected taxesFunded by government in most countries + collected taxesFunded by government in most countries + collected taxesFunded by government in most countries + collected taxes

* Family Medical Leave Act (1993)
**Affordable Care Act

Why is it important to provide good benefits?

If your company is new to the U.S., you have to compete with established companies already known to the American workforce. A unique benefit package offering can help you differentiate your business from competitors.

Offering benefits to your employees is important because it shows them you are invested in not only their overall health, but their future. A solid employee benefits package can help to attract and retain talent. A U.S. government study shows that generous leave policies have a net positive effect on long-term productivity. These policies increase worker motivation and help with employee recruitment and retention.

Engaging employees to participate in wellbeing programs, for instance, can improve your company’s bottom line: healthier employees mean reduced healthcare costs for your organization. Employees with fewer health risks experience fewer sick days, fewer trips to the doctor, and spend more time working in your company, bringing their best selves to work every day.

How to build a competitive Employee Benefits Package?

In order to offer generous benefits, you must first practice careful financial planning. Most benefits package do not come cheap, and costs can rise exponentially as your company expands. That being said, if your company becomes known for offering good benefits, you will generally find it easier to recruit talented employees. Here is an overview on how to set up a solid employee-benefits package.

The basics:

  • Health Insurance
  • Dental & Vision Insurance
  • Flexible Spending Accounts
  • 401K Retirement Savings Plan
  • Vacation Time, Sick Pay, Holidays 
  • Family Medical Leave
  • Maternity Leave
  • Flextime

Where to seek help on getting this set up?

Unless you are determined to go with a particular insurer, you are best off comparison shopping with an independent agent. Insist that your agent show you not just a variety of plans from one insurer but also similar plans across carriers. Make sure to rely on a professional who meets the standard of the National Association of Health Underwriters.

Another option would be to turn to Professional Employer Organizations (PEO). They serve as outsourced HR departments that manage payroll, compliance, and benefits. You will generally pay anywhere from 3 to 10% of payroll for this service. It’s easy, convenient and great for small businesses.

Use Benefits as Leverage to your Recruitment Strategy

We understand how complex it is to navigate the differences between the U.S. and Europe. As mentioned, Employee benefits can be an effective resource in finding the best talent nationally and internationally. Employers should take note that more generous benefits packages offer talented employees a powerful incentive to work for you, which in turn, is an important advantage for every company.

For this reason, below are some of our recommendations to proactively deal with American talent:

  • Competitive offers must be made in a timely manner. If you find a contender, act quickly.
  • Consider offer letter items that make you unique in your offering: sign on bonuses, holidays, overtime rules, employee discounts, mentorship & training, tuition contribution, profit sharing, flexible hours or home office options, etc.
  • Tell your company’s story and why candidates should be part of it.
  • Make sure to implement good benefits to retain your workforce.  

Of note: the shortage for skilled labor was always an issue, but after 2020, it has been magnified due to the economy roaring back and many companies being in growth mode. Remaining attractive and retaining your talent has never been so crucial! 

We can help you find the best talent! Contact us today at