Legal Requirements for Employees benefits
As we discussed earlier in this chapter, some benefits are required by law. This requirement adds to the cost of compensating employees. Organizations looking for
ways to control staffing costs may look for ways to structure the workforce so as
to minimize the expense of benefits. They may require overtime rather than adding new employees, hire part-time rather than full-time workers (because part-time
employees generally receive much smaller benefits packages), and use independent
contractors rather than hire employees. Some of these choices are limited by legal
requirements, however. For example, the Fair Labor Standards Act requires overtime
pay for non-exempt workers, as discussed in Chapter 12. Also, the Internal Revenue
Service strictly limits the definition of "independent contractors," so that employers cannot avoid legal obligations by classifying workers as self-employed when the
organization receives the benefits of a permanent employee. Other legal requirements involve tax treatment of benefits, anti-discrimination laws, and accounting for
benefits.