what are the minimum benefits an employer needs to provide? — Ask a Manager

A reader writes:

What do you think are the absolute minimum benefits an employer should provide? I’m a business development consultant, and work with a lot of start-ups assisting in total compensation development. I, of course, try to work with my clients to develop the most competitive benefits package they can afford. However, I’ve often run into the situation where the client believes they absolutely can’t afford even the most basic of benefits. As in, won’t even consider providing PTO or paid holidays until employees have been at their company for 12 months or longer.

I understand my clients’ perspectives to a point — most are in the medical field, and associated at practices prior to opening their own where they were classified as contractors and didn’t receive benefits. So their logic is often, “Well, I’ve never had paid time off. Why should I give my employees any unless they’re working 38 hours a week and have been here more than a year?” Alternatively, they say they want to provide benefits but are so nervous about the cost of starting their own practice they just truly feel they can’t afford it.

I’m of the mind that there should be a basic benefits package factored into total compensation … not just an hourly rate and payroll taxes. I completely understand if they can’t afford to provide 100% paid medical coverage, unlimited PTO, 10 paid holidays, a significant match on a 401k, catered lunches, etc. But some of my clients are completely resistant to even paying for a couple of holidays during the first year, which baffles me … especially when they complain about the cost of employees, but keep hiring as if they can afford to. I look at it like some people look at eating out: if you can’t afford to tip, you can’t afford to eat out … and if you can’t afford any PTO, you can’t afford to hire.

Am I off-base? Is it acceptable or expected that new businesses only offer an hourly rate and nothing else? Or is there a basic employee benefits package that start-up companies should plan to implement when hiring?

I answer this question over at Inc. today, where I’m revisiting letters that have been buried in the archives here from years ago (and sometimes updating/expanding my answers to them). You can read it here.