Government influence on non-salary employee benefits, also called "fringe benefits," comes, in large part, through the tax code. The Internal Revenue Service (IRS) issues publications on the tax treatment of certain non-salary employee benefits, many of which are deductible to the employer. Certain benefits, such as unemployment insurance, are required by law.

Historically, many fringe benefits were the unintentional result of government regulation. For example, regulations during World War II made it illegal for many companies to increase the wages of their workers. This meant companies had to find alternative means of attracting and retaining skilled labor. They accomplished this by offering types of non-salary compensation that had previously not existed or that had been very uncommon.

Mandatory benefits, which are required by law, include Medicaid, Medicare, Social Security retirement and disability, Supplemental Security Income (SSI), workers' compensation and unemployment insurance. Some economists contend that the regulations requiring these benefits do not actually help workers, since employers likely just lower their employees' salaries to pay for them.

The most regulated types of optional fringe benefits are health insurance and retirement savings plans. Employers and plan providers are required to give a minimum level of information and protection for their employees for any such plan. These plans are also subject to IRS regulations and qualifications, or they may have optional regulations tied to tax-preferred or tax-exempt incentives.

Not all kinds of companies are regulated equally. Large corporations are often differentiated from small businesses or sole proprietorships in the types of requirements imposed for any tax benefits. The regulatory environment around fringe benefits changes frequently. A notable change came in 2010 from the Affordable Care Act (ACA), which created a host of new regulations on health insurance for providers, employers and individuals.