If you ask most workers about benefits and perks they get through their jobs, you may get different answers about what makes up each. There’s also the issue of whether “employee benefits” are the same as “fringe benefits” or whether there’s a distinction between the two.

Let’s look at each and discuss the advantages and differences of employee benefits and employee perks.

What Are Employee Benefits?

For two decades, MetLife has produced an annual U.S. Employee Benefits Trends Study examining what workers want. In 2022, MetLife found the study “confirms that today’s workers, to a greater extent than in the past, expect employers to recognize the importance of their lives inside and outside of work.”

Workers today have rising expectations for everything. That includes purposeful work, expanded leave, flexible working hours, financial planning support, and even pet insurance.

If you’re considering employee benefits for your business, you may want to look at those listed below. Some are “standards” in workplaces across America. Others may be more unique to California or “big city” employers. Some may vary by industry or work environment (office vs. warehouse vs. manufacturer).

• Health/medical insurance (which may, or may not, include wellness programs)
• Prescription drug coverage
• Life insurance
• Ancillary insurance (Dental, Vision, Disability, Accident, Hospital Indemnity, Critical Illness, Cancer, Long Term Care, or other coverage)
• 401(k) or other retirement planning program – sometimes with an employer contribution or percentage match based on employees’ contributions
• Employee Assistance Program (EAP) – employee counseling, referrals to other services, etc.
• Health Savings Account (for employees enrolled in High Deductible Health Plans)
• Premium Only Plan (allowing employees to pay their portion of insurance premiums with pre-tax dollars, while also reducing the employer’s tax liability)
• Flexible Spending Accounts (to help workers set aside money on a pre-tax basis to pay for qualifying out-of-pocket costs related to their health plans)
• Pet insurance
• Commuter benefits (transit passes for use of public transportation)
• Referral bonus (if a referred candidate is hired by the employer)

A broad benefits mix is what employees want. Nearly three-quarters (73%) told MetLife a wider array of benefits would make them continue working longer at their employer. So, making the right benefit choices helps employees and drives higher retention, too.

As far as benefits vs. perks, benefits are things available to most or all employees joining an organization. There are not usually eligibility guidelines beyond working a certain number of hours. Typically, 30 or more hours weekly makes an employee benefit eligible. Commuter benefits are usually limited to those who use public transportation to get to their jobs.

What Are Employee Perks?

Employee “perks” are different from benefits and often include things like:

• Unlimited paid time off
• Gym memberships (on-site or sponsoring a membership away from work)
• Extended parental leave (following birth or adoption of a child)
• A flexible work hours schedule
• Health and wellness access like an on site gym, in office yoga or massage therapy
• Onsite childcare services 
• Onsite company kitchen or a stocked fridge or pantry (or occasional free lunch delivery)
• Company-sponsored events (holiday parties, happy hour, team lunches, etc.)
• Paid volunteer days (supporting a local non-profit)
• Educational opportunities (seminars, training, tuition reimbursement)
• Remote work options/telecommuting
• Employee recognition and reward programs
• Cell phone stipend
• Home expenses stipend ( contributing to rent or mortgage costs)
• Work stipend (to pay for internet access or supplies used by those working remotely)

Your employee handbook, if you have one, is where you might outline how employees can – and cannot – use perks. For example, your handbook might list approvals on scheduling time off, work hours, paid volunteer time, and reimbursement for qualifying education. Your handbook can also be employees’ reference on company benefits

Wrapping Things Up

Benefits are often described as necessary to recruit and retain employees. Perks are “nice to have” or “icing on the cake” that can help a candidate decide about coming aboard (or staying after becoming an employee). Finding the right balance can be a challenge. Your insurance agent or broker is a good resource in helping you sort out your options. If you don’t already have a broker, we make it easy to search for one.

A note about taxes: Unless excluded under state or federal law, benefits and perks offered may be taxable and reportable to tax authorities. Talk with your accountant or refer to Publication 15-B, the Employer’s Tax Guide to Fringe Benefits, for details.