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Not all perks are optional. Learn what wages, leave, and benefits your practice might be required to offer.
If you run a small but growing private healthcare practice, it’s easy to overlook the federal and state requirements that come with hiring staff. We recommend carefully assessing your staffing needs, determining what compensation and benefits you’ll offer, and identifying whether federal or state law imposes any specific obligations.
The frustrating reality is that it’s not always clear to employers how to navigate all of the requirements. Failing to understand the obligations can cost your practice significantly, and in some cases, result in legal action.
We’ll walk you through major federal requirements and highlight key rules in states like California and Illinois. As always, we encourage you to speak with a licensed attorney to understand how these rules apply to your practice.
Federal Requirements
Many federal laws apply based on the total number of employees. For example, the Family and Medical Leave Act (FMLA) applies to employers with 50 or more employees, including healthcare practices. Similarly, the Affordable Care Act requires employers with 50 or more full-time employees to offer a minimum level of health insurance coverage.
See our related article, “Understanding the Impact of the FMLA on Your Healthcare Practice.”
Other requirements apply regardless of practice size. For example, all employers must pay Social Security and Medicare taxes, known as FICA taxes, with limited exceptions. Likewise, employers are typically required to contribute to unemployment insurance programs through payroll taxes, funded in part by a federal tax (FUTA) and in part by state systems (SUTA).
State-Based Considerations
Workers’ Compensation
State-level requirements vary widely, and it’s important to review the rules where your practice is located. For instance, most states require employers to carry workers’ compensation insurance. In contrast, Texas allows employers to opt out.
Illinois takes a notably strict approach to enforcement. Employers face steep penalties if they don’t carry workers’ compensation coverage. The state can fine practices $500 for each day of noncompliance, with a minimum penalty of $10,000.
Workers’ compensation insurance policies can have a heavy financial impact on your practice, so it is essential to discuss your options with insurance providers and legal counsel.
Paid Leave
Some healthcare practices hesitate to offer paid leave to their employees because of the cost or scheduling constraints. However, depending on the state, it may not be optional.
Both Illinois and California require employers to offer paid leave. These state laws regulate how paid leave accrues, whether employees must provide a reason for using it, and whether unused leave must carry over from year to year.
See our related article, “New Paid Leave Laws in Illinois: What Practice and Business Owners Should Know.”
In some states, paid leave programs are funded through payroll deductions rather than direct employer contributions. In California, for example, employees pay into the state disability insurance program, which supports several benefits, including paid family leave for bonding with a new child. While employers don’t contribute directly, they are responsible for collecting and sending payments to the state, as well as notifying employees of their rights and the availability of these benefits.
Wages and Pay Standards
While the federal government establishes a minimum wage, many states set their own, often at much higher rates. These rates may depend on the nature of the work or the employee’s location. Here’s how minimum wages compare between California and Illinois:
| WAGE TYPE | CALIFORNIA | ILLINOIS |
| Statewide Minimum Wage | $16.50 per hour | $15.00 per hour |
| Fast Food Workers | $20.00 per hour | No special regulation |
| County Minimums | Los Angeles: $17.81/hr San Mateo: $17.46/hr |
Cook County: $15.00/hr, $9.00/hr if tipped |
| City Minimums | San Diego: $17.25/hr San Jose: $17.95/hr |
Chicago: $16.60/hr if employer has 4+ employees |
Even if your practice pays above minimum wage, compliance doesn’t end there. Some states have pay parity laws that require equal pay for similar work, regardless of job title. Others, like California and New York, have wage transparency laws that require employers to include salary ranges in job postings or disclose pay upon request. These laws are designed to close pay gaps, but they can create legal risk if your compensation practices aren’t well documented or consistently applied.
What’s Legally Required? A Quick Recap
Most small and medium practices (under 50 employees) are required to:
- Pay Social Security, Medicare, and unemployment taxes.
- Comply with minimum wage laws (federal, state, and local).
- Carry workers’ compensation insurance (in most states).
Depending on your state, you may also need to:
- Follow state-mandated paid leave laws (currently active in fewer than 20 states).
- Comply with benefit notice requirements, such as disability insurance in California or paid leave programs in Illinois.
- Follow salary-related rules, such as pay parity or wage transparency laws.
Balancing Legal Minimums with Competitive Expectations
Legal compliance is just the starting point. To attract and retain qualified staff, especially in a competitive healthcare labor market, your compensation package should reflect what’s standard for the role and region, even if you’re not legally required to offer certain benefits.
Many small healthcare practices can’t afford to offer group health insurance, matching retirement plans, or generous paid time off. That’s understandable. However, offering only the bare minimum—especially when competitors are offering more—may lead to high turnover, low morale, or trouble filling key positions.
We encourage you to research what’s typical for your area and specialty. For example, do peer practices offer paid continuing education, flexible schedules, wellness stipends, or signing bonuses? Even modest perks, like professional development funds or mental health days, can make a difference.
Voluntary Benefits Also Come with Rules
Offering benefits like health insurance or paid time off can help you attract top candidates, but even optional perks may come with requirements.
Take health insurance, for example. If you buy a small-group health plan, most insurers require that you cover at least one W-2 employee who is neither an owner nor an owner’s spouse. And although employers with fewer than 50 full-time employees aren’t required to offer health insurance, most insurers won’t allow you to extend coverage to only a select few. Group plans typically must be offered to all eligible employees within a defined class, such as full-time staff. Offering health benefits to select individuals on a case-by-case basis may violate plan terms or raise discrimination concerns.
These kinds of details can catch small practices off guard, especially when trying to build attractive compensation packages on a tight budget. A conversation with your healthcare attorney can help you clarify what’s permitted under state and federal law.
Get Legal Help
Hiring reliable, qualified employees will always be a priority, and offering the right benefits can make your practice stand out. If you’re considering providing perks like paid time off, disability insurance, or healthcare coverage, it’s wise to confirm whether they trigger additional legal obligations under state or federal law. A conversation with legal counsel can help ensure your benefits align with applicable requirements and won’t unintentionally create new liabilities.
If you operate in one of the states where we practice, set up a free consultation call to discuss how we can help.
This blog is made for educational purposes and is not intended to be specific legal advice to any particular person. It does not create an attorney-client relationship between our firm and the reader. It should not be used as a substitute for competent legal advice from a licensed attorney in your jurisdiction.
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