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11 Oct 2022

What US Employee Benefits Should Your Startup Offer?

Employee benefits are now required as part of any competitive compensation package. From legally required insurance to complimentary snacks and company trips, benefits and incentives…

Employee benefits are now required as part of any competitive compensation package. From legally required insurance to complimentary snacks and company trips, benefits and incentives can have a significant impact on attracting and retaining top talent.

Building the right benefits package is heavily dependent on the location in which your company operates. Whether you’re looking to build your employee benefits package from scratch, or aiming to improve your current benefits, we’ve got you covered. This article will delve into the basics of employee benefits in the US, such as the different types of benefits, mandatory versus voluntary benefits, and insights into what candidates and employees truly want.

What Are Employee Benefits?

Simply put, employee benefits are any type of tangible or intangible compensation provided to employees in addition to their base wages or salaries.

Typical examples can include retirement plans, health insurance, life insurance, disability insurance, paid time off, and stock options. However, employee benefits can also range from training courses to ‘startup perks’ ( yes, probably free breakfast and a pingpong table).

Benefits are forms of value that are provided to employees in exchange for their contribution to the organisation. Some benefits, such as unemployment and worker’s compensation, are mandated by the federal government.

Seeing as benefits are becoming more expensive for businesses to provide to employees, the range and options of benefits are rapidly changing to include, for example, flexible benefit plans.

The Importance Of Benefits To Employees

A competitive employee benefits package is one of the most essential employee engagement and retention strategies, and it also helps with talent attraction.

Offering a competitive salary is no longer sufficient. Employees today have much higher expectations. Some of the key benefits of a strong employee benefits package include:

  • Increased employee retention and reduced staff turnover
  • Higher morale
  • Boosted productivity
  • Lower stress and sickness absence

Employee benefits allow startups, in particular, to retain high-performing employees without continually investing in excessive pay raises. Employees should, of course, be paid enough to cover their bills and live comfortably, but they may be willing to accept a lower salary if they have good health insurance, paid time off, and other benefits that they value. This can help a RetailTech startup compete against larger platforms.

Salary packaging is a practice in which employees give up a portion of their salary in exchange for benefits, which may result in tax deductions or other gains for either party. When weighing the opportunity to work for a large corporation versus a startup, potential hires may be more enticed by such benefits.

The numbers speak for themselves about the importance of employee benefits. Extensive research by the Society of Human Resource Management (SHRM) found that 92% of employees consider employment benefits as important for their overall job satisfaction (in itself, a great element of retention and productivity).

The Main Types Of Employee Benefits

The major types of benefits are those categories of benefits that are more commonly met in companies across countries. Many cite these benefits as health insurance, life insurance, disability insurance and retirement plans. However, this view is focused on the different types of insurance and neglects other equally major benefits. In an effort to expand our scope, we’ve grouped insurance benefits together and listed three other major types of benefits offered by employers:

The main types of benefits are those that are standardised across most RetailTech companies. Most people would recognise these benefits as medical insurance, retirement plans and stock options. It’s easy to just focus on the various types of insurance and overlook other equally important benefits. In order to broaden our scope, we’ve combined insurance benefits and listed three other major types of benefits provided by employers:

  • Insurance
  • Retirement plans
  • Paid Time off
  • Stock Options


1.     Health Insurance

Insurance can span across health insurance (dental, medical, vision), life insurance, and disability insurance. Offering health insurance or some kind of medical plan is not mandatory in the US (unless you have over 50 employees), but it is a highly valued benefit that most employees expect, so the majority of businesses provide it. Research shows that 88% of employees consider health-related benefits to be very or extremely important.

Since there are numerous costs associated with maintaining a functional healthcare system, and low-cost medical insurance is becoming increasingly rare in the United States, it is essential to choose a health plan for your employees that is both affordable and functional. Telehealth options are becoming increasingly popular as it allows patients to meet with a physician without visiting a physical office, saving time and allowing employees to seek treatment during off hours.

2.     Life Insurance

Life insurance is a type of insurance policy that pays money to beneficiaries upon the death of the insured. Whilst some people purchase individual plans from a third party, many organisations include life insurance as part of their benefits package.  This shows that the company cares not only about the employee, but also about their family.

Before looking into third-party providers, check to see if your current health plan includes supplemental life insurance. Many insurers bundle these services to save money for businesses. If you do choose a third-party option, be sure to read the terms and conditions to ensure that the plan is cost-effective.

Within some RetailTech organizations. life insurance is also complemented by Accidental Death and Dismemberment (AD&D) policies which pay a sum to employees who either die or sustain injuries which render them unable to work.

3.     Disability Insurance

Both long-term and temporary illness or disability may be covered by disability insurance. For instance, if an employee gets ill, can be paid for the duration of their illness. Some employers in the United States may use short-term disability policies to fund paid maternity leave for female employees.

Currently, disability insurance is only mandatory in New York, New Jersey, Rhode Island, California and Hawaii.


Retirement plans typically consist of contributions from employees, employers, and the federal. Since employers frequently match contributions, these programmes are appealing to employees because they allow them to save money more quickly. Even though retirement is important for all employees, programmes are especially important employee benefits for older workers who are nearing retirement.

401(k) plans are the most popular employer-based retirement options in the United States. Employers and employees both contribute a portion of their pre-tax payroll to the fund. A portion of this money is invested in stocks and bonds, with the hope of earning a return and speeding up the savings process. At retirement, employees receive the balance in their account.

There’s also the defined retirement plan, which is entirely funded by the employer and provides employees with a fixed monthly benefit upon retirement. The amount may be determined by retirement age and length of service with the company.

You should take the contribution amounts, potential returns, and management costs into account when choosing a retirement plan for your organization. You should also research the timelines and costs associated with withdrawals. Before settling on one, you should compare several options.

Paid Time off (PTO)

One of the most important benefits to consider is time off. Vacation time is becoming increasingly important as workers prioritise work-life balance. Workers use PTO not only to take a break from work, but also to attend to outside responsibilities such as medical treatment, celebrating non-traditional holidays or family commitments. Employees need to rest and recharge to avoid burnout, so employers should provide enough PTO to accommodate a variety of needs.

Vacation in the US is generally two workweeks, though some companies offer more or less. Some firms have even implemented unlimited PTO, which has actually proven to result in less vacation being taken. Regardless of the number of days provided, businesses should foster a culture that encourages rather than punishes employees for taking time off, as breaks can help boost productivity and satisfaction.

Paid time off can fall into the following categories:

  1. Vacation
  2. Sick leave
  3. Personal time
  4. National holidays

Even though time off is not mandated in the US, employers that offer it voluntarily can get a competitive advantage in talent attraction and retention – 82% of employees selected leave benefits as very important to their overall job satisfaction.

Stock Options

Companies frequently provide stock options as a supplement to salaries. This benefit is usually reserved for executives and upper management, but some organisations extend it across multiple ranks.

Stock options can make modest salaries appear more appealing while also providing employees with a greater sense of ownership in the company. Employees who own stock are more interested in improving the company’s performance because higher profits for the company mean higher personal profits. Despite funding constraints, RetailTech and E-Commerce startups prefer this model to attract top talent.

Employees can participate in stock programmes by purchasing company stock at a low cost and potentially selling it at a higher cost. Employees can usually buy during a certain time period. Stock options are a compelling employee retention benefit because employees must wait until the stock “vests” or reaches maturity before cashing in or selling.

If you are considering this benefit, you should outline the vesting schedule for your employees as well as differentiate between stock levels, as not all stocks have the same value.

Extra Employee Perks

Many of these unique employee benefits are on the rise, and they can help boost morale while also avoiding indirect costs such as missed work and associated productivity.

Apart from the major categories, there are several other types of benefits that appear frequently in company benefits plans. Not every benefit has to create heavy financial burdens for the company. You can try your hand by introducing cost-effective benefits and perks, such as:

  1. Bonuses
  2. Free meals/snacks
  3. Remote work / Flexible hours
  4. Company-sponsored discounts (gyms, restaurants, daycares)
  5. Company retreats
  6. Development opportunities
  7. Wellness resources
  8. Childcare assistance
  9. Travel reimbursement
  10. Housing and relocation benefits for new hires (where applicable)

Many of these unique employee benefits are on the rise, and they can help boost morale while also avoiding indirect costs such as missed work and associated productivity.

Key Takeaway

There is no such thing as a one-size-fits-all benefits package that would suit each company. This is why it is vital to concentrate on your industry, your values, and the culture you wish to establish. This article, along with our What Employee Benefits Should You Be Offering In Europe?, investigates the most popular employee benefits in the United States and Europe, serving as a useful starting point when developing your own benefits package.

Building a benefits package necessitates some critical decisions. As budgets are limited, startups must strike a balance between attracting the right employees and being financially smart. The best approach is to start slowly, make incremental improvements, and consider the cash flow, taxation, and accounting implications of your decisions.

If you have just launched your startup and would like tips on attracting and retaining top talent, please get in touch with us!

We’ve helped some of the most successful RetailTech startups grow.

— now it’s your turn.