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Learn2 Choose Employee Benefits (continued)
Step 2: Provide the legal minimum

Since labor laws vary by location (and business type), you'll need to check locally to make sure you're meeting the legal minimum. Here's a rundown of what it may include:

Workers' compensation insurance. Every state requires employers to purchase workers' compensation insurance or else pay into a state system through employer payroll taxes. Very small businesses are sometimes exempt, as are employees in certain professions (such as domestic workers). Be sure you know the rules in the state(s) where you're doing business, or you could leave your business open to potentially huge liabilities if a worker is injured on the job.

Time off. While no state mandates regular vacation time, employers are obligated to give workers time off--sometimes paid time off--for special circumstances such as voting, jury duty, and military service.

Disability insurance. Several states, including California, Hawaii, New Jersey, New York, and Rhode Island (and Puerto Rico, too), require employers to contribute to a fund for employees who are unable to work due to a non-work-related illness or injury. The fund then helps replace the disabled worker's lost salary.

Family leave. Though very small businesses (under 15 people) may be exempt, many states require employers to offer unpaid leave to pregnant women and parents (father or mother) with a newborn or recently adopted child. Federal law requires that businesses with more than 50 employees provide up to 12 weeks of unpaid leave per year to care for newborn or recently adopted children, or for immediate family members with a severe illness.

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Step 1: Assess the competition
Step 2: Provide the legal minimum
Step 3: Cover the basics
Step 4: Consider a more complete plan
Step 5: Check out inexpensive extras
Step 6: Shop around for the best options