APHR Compensation and Benefits

Straight Commission

-"Commission-only" bc they are the only pay employees receive -No regular wage or salary -All compensation is calculated as a percentage of total sales -Provides the least financial security but the highest level of incentive

Permissible Wage Differentials

-A bona fide seniority system, where wages or salaries are based on length of service -A merit pay system where pay is determined by legitimate performance measures -A system that measures earnings by quantity or quality of production -A differential based on any factor other than gender, such as differentials between regular and temporary employees or geographic differences

Salary

-A fixed amount of pay by regulation and practice -Paychecks will likely cover the work period through the date of the paycheck

Worker's Compensation

-A form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence -Pays hospital and medical expenses that are necessary to diagnose and treat the injury -Also provides disability payments while the employee is unable to work -The basis of workers' compensation laws is "liability without fault", that is, the injured employee is entitled to reasonable to compensation regardless of who causes the accident -Such compensation is part of the expense of production and, therefore, is chargeable to the employer

Job Environment

-A good job environment includes employee recognition -Employees who receive recognition for their work accomplishments tend to have increased morale and positive workplace attitudes -Employee recognition is used as an incentive to offer feedback and encouragement to employees -Employee recognition rewards include verbal praise, award ceremonies, and public announcements for a job well done

Group Health Cooperative

-A nonprofit healthcare organization based in Seattle, WA -Provides coverage and care for about 600,000 people in Washington and Idaho and is one of the largest private employers in WA -Patients who receive care at its medical centers are provided web access to their medical records, secure emailing with doctors and nurses, and the ability to fill prescriptions online that are mailed to homes without a shipping charge

Knowledge-Based Systems

-A person's pay is based on the level of knowledge he or she has in a particular field -Often used in the learned professions such as lawyers or doctors

Total Reward Statement

-A personalized summary of an organization's financial commitment to each employee, including compensation and all benefits programs -Includes compensation, healthcare benefits, insurance, vacation and leave, retirement, costs of employment, and additional benefits

Hay Job Evaluation

-A proprietary point-factor job evaluation methodology developed by the Hay Group and used by organizations to map out their job roles in the context of the organizational structure -General purpose for using this method is to enable organizations to map and align their roles/jobs -Carried out in a series of steps within any organization that chooses to use the method

Experience Rating

-A rating computed for each employer that is based on the number of accidents or the number of employees laid off -Used to adjust the unemployment compensation and workers' compensation tax rates for each employer

Social Security

-A social insurance program consisting of retirement, disability, and survivors' benefits -To qualify for most of these benefits, most workers pay Social Security taxes on their earnings; the claimant's benefits are based on the wage earner's contributions -The largest social welfare program in the U.S. -Administers the retirement, survivors, and disabled social insurance programs, which can provide monthly benefits to aged or disabled workers, to their spouses and children, and to the survivors of insured workers -Programs are primarily financed by taxes that employers, employees and the self-insured pay annually -SSA also administers the SSI program, which is needs based for the aged, blind, or disabled -SSI recipients are paid out of the general revenue of the U.S. -Includes old age or disability benefits, benefits for dependents of retired, disabled or deceased workers, lump-sum death benefits, and medicare

Flexible Spending Account (FSA)

-A special account you put money into that you use to pay for certain out-of-pocket healthcare costs -You do not pay taxes on this money -Limited to $2600 per year per employer -You can use these funds to pay for certain medical and dental expenses for you, your spouse, and dependents -You can spend these funds to pay deductibles and copayments, but not for insurance premiums -You can spend these funds on prescription medications as well as OTC medicines with a doctor's prescription -Can also be used to cover costs of medical equipment such as crutches, supplies like bandages, and diagnostic devices like blood sugar test kits -A savings plan that enables participants to pay healthcare and dependent care expenses with pretax dollars deducted from an employee's income by the employer rather than with after-tax dollars

Group Health Cooperatives

-A special kind of HMO consisting of a collection of physicians, hospitals, and clinics that combine to provide health care services for members -Members pay a capitated monthly fee and the HMO staff members are paid a fixed salary rather than an amount based on the number of patients they see

Compensation Survey

-A survey of the wages, salaries, and benefits offered by different organizations -The major tool used in making the wage-level decision

Gainsharing

-A system of management in which an organization seeks higher levels of performance through the involvement and participation of its people -Measures performance and through a predetermined formula shares the savings with all employees -reward based on improved productivity

Managed Healthcare Plans

-A type of health insurance -They have contracts with healthcare providers and medical facilities to provide care for members at reduced costs

Differential Pay

-Additional compensation paid to an employee as an incentive to accept what would normally be considered adverse working conditions usually based on time, location, or situational conditions -Paid to all employees under the same circumstances or conditions -Benefit the employer by incentivizing employees to accept work they might not otherwise accept

Health Reimbursement Account (HRA)

-An IRS-approved, employer-funded, tax-advantaged employer health benefit plan that reimburses employees for out-of-pocket medical expenses and individual health insurance premiums -Employer-provided reimbursements for medical expenses that are excluded from taxable income, but subject to maximum dollar limits for a coverage period -Unused funds at the end of the period can be carried forward to subsequent periods -Not health insurance -Allows the employer to make contributions to an employee's account and provide reimbursement for eligible expenses -Notional arrangements; employers reimburse employees directly only after the employees incur approved medical expenses -There is a limit to the amount of money an employer can contribute to certain HRAs -May reimburse any expense considered to be a qualified medical expense under IRS Section 213 of the Internal Revenue code

On-Call Pay

-An employee who is required to remain on his or her employer's premises or so close to the employee's work location that he or she cannot use the time effectively for his or her own purposes -These situations vary

Jury Duty

-Any action or other proceeding of a judicial nature, but does not include an administrative proceeding (a summons or subpoena to serve as a witness from an administrative law judge) -Service is mandatory and the person summoned must attend -Employers cannot fire an employee for being called, but they are not typically required to pay wages during this time

Direct Compensation (Cash)

-Applies to a variety of pay programs that are cash based -Base pay (wages and salary) (mandatory) -Commissions -Bonuses (certain are discretionary) -Merit Pay -Piece Rate -Differential Pay (discretionary) -Cash Awards (discretionary) -Profit Sharing -Gainsharing

The Davis-Bacon Act

-Applies to contractors and subcontractors working on federally funded or assisted contracts in excess of $2000 for the construction, alteration, or repair (including painting and decorating) of public buildings or public works -Contractors and subcontractors must pay their laborers and mechanics employed under the contract no less than the locally prevailing wages and must pay fringe benefits for corresponding work on similar projects in the area

Indirect Compensation (Benefits)

-Applies to programs primarily designed to provide recognition and benefits and therefore are indirectly cash based -Social Security (mandatory) -Unemployment Insurance (mandatory) -Disability Insurance -Pensions (discretionary) -401(k) and other similar programs (discretionary) -Healthcare -Vacations (discretionary) -Sick Leave -PTO

Callback Pay

-Applies when employees are "called back" to perform work beyond regularly scheduled hours -FLSA does not guarantee employees a minimum number of hours of work when they are called back -Require that the hours they do work must be paid for at the employees' base rate or at the applicable overtime rate -Applies to any situation where the employee performs work outside his or her regular working hours, is guaranteed pay for a minimum number of hours, and doesn't work the number hours covered by the guarantee

Discretionary Bonuses (Performance Bonus)

-Awarded at the sole discretion of the employer -Timing, amount, and criteria for receiving a bonus are not known or determined in advance

Performance-Based Merit Pay System

-Based on an employee's individual job performance -Often referred to as merit pay or pay for performance -Employees are typically hired at or near the minimum for the applicable pay range -Pay increases are normally awarded on an annual basis (or annualized if awarded on other than an annual basis) and influenced by the individual's overall job performance -Must be understood by employees affected by the system in order to be effective

Nondiscretionary Bonus (Performance Bonus)

-Based on specific pre-determined criteria -May be tied to either individual performance levels, performance of the work group, or success of the entire company

Time-Based Step Rate Systems

-Bases the employee's pay rate on the length of time in the job -Pay increases are published in advance on the basis of time and occur on a predetermined schedule

Compensation Ethics

-Being ethical is essential to fixing problems and improving processes -It is needed to est. baseline measures and increase efficiencies -Essential to having strong working relationships with people -Covering up unethical behavior does the opposite of these important workplace practices and impedes the individual's ability to grow as a worker or as a leader

Steps of Factor Comparison Method

-Breaks down a job into a small number of key factors, such as skills, effort, knowledge, and responsibilities -Next stage is to identify benchmark jobs -Each job is then assigned a salary

Broadbanding

-Combines several pay grades or job classifications that have narrow range spreads with a single band that has a wider spread -Organizations usually adopt this as a way to simplify their pay levels and reduce management oversight requirements -Typically is more popular in large organizations than smaller ones -Does not work well with the organization's compensation philosophy -Reduction of pay grades as a result of this reduces the number of opportunities for promotion -Can be used against an organization in equal pay analysis -Should be used with care, particularly in an organization that is a federal contractor -Creating wide labor grades so that there are fewer labor grades with more jobs in each one

Wage-Level Decision

-Compares the wages paid in one organization with the pay in other organizations for employees performing similar work -Concerns the overall level of an organization's compensation

Summary Annual Report (SAR)

-Contains financial information about the plan -Distribution is required within 7 months after the end of the plan year

Summary Plan Description (SPD)

-Contains information on what the plan provides in layperson terms -A legal document required by ERISA for each welfare benefit plan offered by an employer -Document includes a description of the plan's eligibility requirements, a summary of the benefits provided, the procedures for claiming benefits and appealing claim denials, circumstances that could result in a loss of benefits, and the participants' rights under ERISA -Distribution is required within 120 days after the plan's est. or 90 days after eligibility -Must be updated no less frequently than every 5 years

FLSA Overtime

-Covered non-exempt employees must receive overtime pay for hours worked over 40 per workweek at a rate not less than one-and-a-half times the regular rate of pay -FLSA does not require overtime pay for work on weekends, holidays, or regular days of rest, unless overtime is worked on such days

Employee Benefits

-Designed to promote organizational loyalty, reward continued employment, enable employees to live healthy lives, help them care for their families, and help provide for retirement benefits -Help employers by: attracting and retaining talent, increasing an employee's loyalty and commitment to the organization, providing tax-advantaged health and welfare benefits to employees

The Factor Evaluation System (FES)

-Determines levels of duties and responsibilities using a point rating system to evaluate selected position -Uses weighted factors to address the major position characteristics of responsibility, education/experience, job conditions, physical requirements, supervision, training, and so on

Geographic Differentials

-Differences in pay for similar or identical jobs that are based on variations in costs of living in labor markets in particular geographic regions -Employees who live in or are transferred to locations with a high cost of living may receive this to offset the high cost of living

Bonus

-Do not raise base pay levels year after year; must be re-earned each year -Provide greater discretion than formal merit pay plans for executives to reward employees

Single or Flat-Rate System

-Each worker in the same job has the same rate of pay regardless of their seniority or job performance -Most commonly found in elected public-sector jobs or in a union setting -Usually is directly linked to an applicable market survey -Also used as a training rate under circumstances when the worker is being trained for a job

Base Pay Systems

-Either an hourly wage or as a salary -Include single or flat-rate systems, time-based step rate systems, performance-based merit pay systems, productivity-based systems, and person-based systems -Each system is designed to best achieve the objectives of attracting, motivating, and retaining employees under a different set of circumstances

Differential Piece-Rate System

-Employee receives one rate of pay up to the production standard and a higher rate of pay when the standard is exceeded -Focus on quantity rather than quality

Skill and Knowledge Based Pay

-Employees are paid according to the skills or knowledge they have demonstrated -New employees are paid the entry level wage rate and receive pay increases as they acquire additional skills or knowledge -Significantly improve workforce flexibility and the capacity to respond to changing demands and schedules

Union Activities

-Employees covered by the National Labor Relations Act (NLRA) are afforded certain rights to join together to improve their wages and working conditions, with or without a union -Employees have the right to attempt to form a union where none currently exists or de-certify a union that has lost the support of employees -Employees who are not represented by a union also have rights under the NLRA

Tiered Healthcare Plans

-Employees have three options that vary in cost and coverage -All three tiers are typically similar in their coverage of preventative care and catastrophic services, but vary greatly in coverage for routine or scheduled services

Combination Step Rate and Performance

-Employees receive step rate increases up to the established job rate -Above this level, increases are granted only for superior job performance -This system requires a supporting performance appraisal program, as well as good communication and understanding by the workers paid under this system

Record Keeping

-Employers must display an official poster outlining the requirements of the FLSA -Employers must also keep employee time and pay records

The Fair Labor Standards Act (FSLA) (1938)

-Est. minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in federal, state, and local governments -Overtime pay at a rate not less than one-and-a-half times the regular rate of pay is required after 40 hours of work in a workweek

Pay Range

-Est. the upper and lower boundaries of each pay grade -Market data for a benchmark job (ideally a "key" job that will link to market value) in each pay range helps to determine the range midpoint -Range spread reflects the equal dispersion of pay on either side of the midpoint to the lower and upper range boundary -The range of pay associated with each pay grade, which indicates how much individual incentive is associate with the job

Wage-Structure Decision

-Examines how much money is paid for different jobs within the same organization -Concerns the pay awarded to different jobs within an organization

Bonus Commission

-Given to employees in addition to their regular wages or salary -Usually based on meeting est. sales quotas -Provides the most security because employees receive their full regular pay regardless of performance -Provides incentive to the employees to reach the sales volume required to receive the bonus

Profit Sharing

-Gives employees a share in the profits of a company -An employee receives a percentage of company's profits based on its quarterly or annual earnings -Reward based on a percentage of profits -A program that allows employees to share in the profits of a company based upon the profitability of the company and an allocation formula determining each employee's share

Point of Service (POS)

-Has some of the qualities of both HMO and PPO plans with benefit levels varying depending on whether a member receives care in or out of the health insurance company's network of providers -Like an HMO plan, members may be required to designate a primary-care physician who will then make referrals to network specialists when needed -Like a PPO plan, members may receive care from non-network providers but with greater out-of-pocket costs and the presence of a gatekeeper who monitors the services rendered

Fee for Service

-Healthcare insurance plans that allow employees to decide what services they want and health care providers to charge a fee for the services they render -Charges are paid by the employee and/or the employee's benefit plan -Four approaches to cost reduction: increasing the deductible amount, requiring employees to pay an increasing share of the insurance premiums, changing the coinsurance percentage so that employees pay a larger part of the costs, and holding the total coverage constant and adding new benefits only if others are deleted

Health Purchasing Cooperatives (HPCs)

-Healthcare plans that contract with healthcare providers to purchase services at a discounted rate -Can negotiate for less expensive services and large cooperatives can exert considerable pressure to reduce costs -Only have limited success in controlling costs because they do not control the use of services

Quantitative Job Evaluation Methods

-Include point-factor and factor comparison methods -Evaluate factors on a defined measurable scale and provide as core as a result that is a measurable comparison of one job to another

Merit Pay

-Increases in an employee's basic wage level based on performance levels -Can be treated as either an addition to base pay or a one-time individual bonus -Relevant to all jobs paid in a fixed wage or salary

Employee Self-Service (ESS) Technologies

-Increases the accuracy of employee data -Improves the timeliness of employee transactions -Reduces HR costs associated with the handling of traditional delivery channels

Compa-Ratio

-Indicators of how wages match, lead, or lag the midpoint and are normally an indicator of market value -A number that compares a person's pay rate with the midpoint of the pay range -Pay rate/midpoint -Can be used for budgetary controls as well as to investigate discrimination in that a difference between one group and another can indicate the possibility of discrimination -Compa-ratios less than 100% (1.00) mean the worker is paid less than the midpoint range -Compa-ratios greater than 100% (1.00) mean that wages exceed the midpoint

Tiered Commission

-Involves graduated percentages tied to higher levels of sales volume -Provides substantial incentive for high performers

Year-end or Holiday Bonus

-Many employers distribute bonuses at the end of the calendar year and refer to them as holiday bonuses -Typically not tied to individual performance

Financial Incentives

-Monetary benefit offered to organizations, employees, and consumers to encourage behavior or actions that otherwise wouldn't take place -Motivates actions that otherwise might not occur without the monetary benefit

Factor Comparison Method

-More complex and is only occasionally used -Involves ranking each job by each compensable factor and then, as an additional step, identifying dollar values for each level of each factor to develop an actual pay rate for the evaluated job -Most often used in union negotiations as part of a labor contract and in limited cases where wages are steady over a period of time and the organization uses a flat rate for each job -Advantages: its broad application; it can be applied to a wide range of job roles and industries and can also be applied to new roles in order to compare them to similar positions -Disadvantages: someone has to make a decision on the relative worth of each factor

Salary plus Commission

-Most common sales commission structure -Employees have a base salary but also receive commissions based on a percentage of their total sales -Provides the most security and incentive

Preferred Provider Organization (PPO)

-Most popular types of plans -Allow members to visit any in-network physician or healthcare provider without first requiring a referral from a primary-care physician -In-network healthcare services will be covered at a higher benefit level than out-of-network services -Members usually have an annual deductible to pay before the insurance company starts covering their medical bills -Healthcare plans that consist of contractual arrangements between healthcare providers and an employer or insurance company to provide fee-for-service healthcare, usually at a discount

Green Circle Rates

-Occur when a new employee is hired at a pay rate lower than the minimum rate for the applicable grade -Can also happen when a "fast track" employee is promoted to a new job in a high pay grade under circumstances where the percentage pay increase needed to reach the new grade is excessive and might create an unwanted precedent -Situations such as this should be avoided whenever possible and be allowed only as a last resort because they can create serious morale issues and may create an arguable case of pay discrimination

Hazard Pay

-Occurs when employees are called to work under adverse conditions either caused by the environment or due to the circumstances -Work generally considered putting an employee at risk for safety or health purposes would typically qualify

Health Maintenance Organization (HMO)

-Offer a wide range of healthcare services through a network of providers who agree to supply services to members -Members will likely have coverage for a broader range of preventive healthcare services than they would through any other type of plan -Members are required to choose a primary-care physician -Typically enable members to have lower out-of-pocket healthcare expenses and they may not be required to pay a deductible before coverage starts and copayments will likely be minimal -Members also typically won't have to submit any of their own claims to the insurance company -Members will likely have no coverage for services rendered by out-of-network providers or for services rendered without a proper referral from the PCP -Provides healthcare services emphasizing preventive medicine at a fixed monthly rate

Job-Ranking Method

-Often called whole-job comparison because it is a comparison of the whole job compared to another whole job rather than a comparison based on each job's measurable factors -Quick and easy, but not very precise -Easy to explain but leaves unanswered why one job is worth more than another, as well as how much of a "gap" exists between jobs -Jobs are arranged in order of their value or merit to the organization -Jobs at the top of the list provide more value to the organization, and the relative importance keeps decreasing as you move down -Worth of a job is based on: skill, effort (physical and mental), responsibility, and working conditions -A procedure for developing a wage structure that involves ranking the various jobs in a hierarchy of job worth and then assigning monetary values to them

Individual Wage Decision

-One of the major decisions that must be considered in the development of a compensation system. This decision considers the issue of whether individuals performing the same job should all receive the same rate of pay or whether individuals who have more seniority, experience, or higher productivity should receive higher pay. -Concerns individual incentives and merit pay

Skill-Based Systems

-Paid for the number and depth of skills that they have that are applicable to their job -Heavy-equipment operators are typically paid in this system

Productivity-Based System

-Pay is determined by the employee's output -Mostly used on an assembly line in a manufacturing environment -Two types: straight piece-rate system and differential piece-rate system

Factors that Determine Individual Pay Rate

-Performance -Experience -Seniority -Potential

Wage

-Primarily associated with employee compensation based on the number of hours worked multiplied by an hourly rate of pay -Primarily associated with the employer's assessment of job worth; that is the value of the job to the organization

Nonquantitative Job Evaluation Methods

-Primary objective is to est. a relative hierarchy of jobs based on each job's relative worth -Often referred to as whole-job methods because they rank jobs as a whole based on their perceived worth without placing a numerical value on each job

Unemployment Compensation

-Provides workers whose jobs have been terminated through no fault of their own monetary payments for a given period of time or until they find a new job -Intended to provide an unemployed worker with time to find a new job equivalent to the one lost without financial distress -Also justified by sustaining consumer spending during periods of economic adjustment

Healthcare Benefits

-Refers to healthcare items or services covered under a health insurance plan -Covered benefits and excluded services are defined in the health insurance plan's coverage documents

Equal Pay Act (EPA)

-Requires that men and women be given equal pay for equal work in the same establishment -Jobs need not be identical, but they must be substantially equal -Job content, not job titles determine whether jobs are substantially equal -Require substantially equal skill, effort and responsibility and that are performed under similar working conditions within the same establishment

Shift Pay

-Rewards the employee who works hours normally considered undesirable such as a night shift or hours that are in addition to the employee's regular work schedule (i.e. overtime) -May be a specified amount per hour or a percentage of the employee's regular rate of pay -Federal law does not legally require employers to pay a differential rate of pay, although state requirements differ

The Copeland Act

-Section 1: applies to all construction contracts irrespective of amount and it's a criminal statute prohibiting anyone from inducing by any means any person employed on construction, prosecution, completion, or repair of a federally assisted building or work to give up any part of his or her compensation to which he or she is otherwise entitled -Section 2: a civil statute requiring certain employment records to be maintained and is administered by the U.S. Department of Labor and applies to construction contracts exceeding $2000

Referral Bonus

-Some employers offer this to employees for referring friends or former coworkers who are hired to fill job openings -Paid after the new employee has been with the organization for a specified period of time, usually several months or up to a year

Signing Bonus

-Sometimes called sign-on bonuses -Often used to attract star performers and to staff hard-to-fill positions -Sometimes used to make a compensation system appear more attractive -Often include agreements that require new employees to stay with the organization for a certain amount of time, or they must return the bonus

ERISA Communication Requirements

-Summary Plan Description (SPD) -Summary Annual Report (SAR) -Summary of Material Modifications (SMM)

Health Savings Account (HSA)

-Tax-advantaged medical savings account you can contribute to and draw money from for certain medical expenses tax-free -Can be used for out-of-pocket medical, dental, and vision -Can't be used to pay health insurance premiums -Can only be used with high-deductible health plans that count as minimum essential coverage (MEC) -Funds roll over and accumulate year to year if not spent -Owned by the individual

Team and Group Incentives

-Team-based incentive plans are initiatives designed to encourage and reward exceptional levels of professional achievement -Objective is to encourage group goal setting, collaboration, and teamwork

Overtime Pay

-The FLSA requires employers to pay nonexempt employees one-and-a-half times their regular rate of pay when they work 40+ hours in a single work week -FLSA allows employers, at their discretion, to pay more than the FLSA requires; they may not pay less

Range Spread

-The dispersion of pay from the lowest boundary to the highest boundary of a pay range -Maximum - minimum / minimum -Expressed as a percentage -Generally lower-level jobs have a narrow range between minimum and maximum pay ranges -Ranges should overlap so that progression is steady within a pay grade; as a worker's pay increases with movement to a higher-range quartile, so opportunity for managed movement is possible in a measured way -There should also be a large enough distance between range midpoints so that pay compression between a lower pay grade and a high pay grade doesn't occur

Compensable Factors

-The factors associated with the different jobs that justify paying one job more than another -Responsibility, education, and skill are usually considered the most important compensable factors

Point-Factor Method

-The most commonly used job evaluation method -Uses specific compensable factors as its reference points to measure relative job worth -Compensable factors are significant job characteristics that contribute to the value of the work and the organization as a whole -The compensable factors of key jobs are used to develop the wage curve -Points are assigned to each factor, and the total points are associated with a specific pay level

Automatic Step Rate System

-The pay range is divided into several steps, each a predetermined range apart -At the prescribed time interval, each employee with the required seniority receives a one-step pay increase -Common in public-sector jobs and in a union environment

General Schedule (GS)

-The predominant pay scale for federal employees, especially employees in professional, technical, administrative, and clerical positions -System consists of 15 grades -Grade level assigned to a position determines the pay level for that job

Beneficiary loses COBRA coverage when:

-The premium for coverage is not paid -The employer terminates group health coverage -The beneficiary becomes covered under another group health plan -The qualified beneficiary is entitled to Medicare benefits

Employee Benefit Account Administration

-The process of est., maintaining, and managing benefits for the employees of an organization -A good program creates and maintains an enrollment profile for each employee -Program offers flexibility -Can function in tandem with tax preparation software, ensuring that all allowable deductions are taken and maintaining detailed records for reference in case of an audit

Job Classification Method

-The result of grouping jobs into a predetermined number of grades or classifications -Each classification has a class description -Nonquantitative job evaluation method -A job may be compared to a similar job or to other jobs in the General Schedule to determine its relative ranking -A good method when evaluating a large number of jobs and are understandable by employees, but may not be effective when jobs overlap, as they look only at whole jobs -Most frequently formally performed in large companies, civil service and government employment, nonprofit agencies, and colleges and universities -The results of a job classification analysis are designed to create parity in job levels within the organization hierarchy, and salary ranges that are determined by identified factors -A procedure used to develop a wage structure in which the job descriptions for each job are compared with a classification scheme that ranks the jobs in a hierarchy of job worth

Job Evaluation

-The systematic process for assessing the relative worth of jobs within an organization -Can be nonquantitative or quantitative -A procedure for developing a wage structure that is based on an evaluation of the job

Pay Grade

-The way an organization organizes jobs of similar values -Jobs of the same or comparatively the same value, even though dissimilar in function, are paid within the same pay grade -No fixed rules that apply -A cluster of jobs along the hierarchy of job worth that are all paid the same rate of pay

Organization-Based Pay (Pay-for-Performance Plans)

-These plans tie compensation directly to specific business goals and management objectives -Employees' compensation is composed of a fixed base salary and a variable component

Improshare

-Tied directly to measures of productivity rather than the dollar value of the product -Basic idea is that a firm sets a base level of performance, tracks improvements in performance, and then pays bonuses proportionate to the amount of time saved either to all workers or just to those in the group being measured -Advantage: can be used in a broader variety of situations where a physical product is not produced

Wage Survey

-To determine the prevailing rate for a job, a company can "benchmark" jobs against compensation surveys that are detailed and specific to the company's industries and regions -A good compensation survey uses standard, proven methods of data gathering and statistical analysis to determine how much companies pay fro a specific job in a specific industry

FMLA Eligible Employees are entitled to the following:

-Twelve workweeks of leave in a 12-month period for any if the following reasons: -The birth of a child and to care for the newborn child within one year of birth -The placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement -To care for the employee's spouse, child, or parent who has a serious health condition -A serious health condition that makes the employee unable to perform the essential functions of his or her job -Any qualifying exigency arising out of the fact that the employee's spouse, son, daughter, or parent is a covered military member on "covered active duty" -26 workweeks of leave during a single 12-month period to care for a covered service member with a serious injury or illness if the eligible employee is the service member's spouse, son, daughter, parent, or next of kin (military caregiver leave)

Job-Point Accrual Model

-Typically used when there are many different skills or ideas employees may acquire and they are not equally valuable -Point values are assigned to each skill or knowledge area and employees accumulate points as they master them

Red Circle Rates

-Used as a method to increase an employee's pay to a new rate higher than the maximum for the assigned pay range -Jobs that are either overpaid or underpaid relative to the amount the wage curve indicates ought to be paid for them -Occurs more often in smaller organizations where promotional opportunities may be limited -An employee's next pay raise indicated by the organization's merit guidelines might place the new pay level above the maximum for the applicable pay range

Project Bonus

-Used to reward an employee, or a group of employees for completing an important project -May be tied to a particular timeline and have specific quality requirements

Paired-Comparison Method

-Used when there are a large number of jobs to evaluate -Enables each job to be compared with every other job -Jobs are methodically compared to the next job and depending on the perceived worth moved up or below the next job

"Topped Out"

-When employees receive pay increases to the point that their salaries are at the top of their pay ranges -No longer eligible for pay increases based on performance and receive higher salaries only as the entire wage curve is increased

Halsey Premium Plan

-Workers receive a guaranteed hourly wage plus a percentage (33 percent was recommended) of the wage for any time saved. -The actual production standards are determined by past performance rather than by time-and-motion studies.

Child Labor Provisions

-Youths 18 years of age or older may perform any job, hazardous or not, for unlimited hours -Youths between the ages of 16-18 may perform any nonhazardous job for unlimited hours, but are not allowed to work in hazardous occupations, such as mining, meat-cutting, or logging -Youths 14 and 15 may work outside school hours in various manufacturing, nonmining, nonhazardous jobs under the following conditions: no more than three hours on a school day, 8 hours on a nonschool day, or 40 hours in a nonschool week, and work may not begin before 7a.m. nor end after 7p.m., except from June 1 through Labor Day, when evening hours are extended to 9pm -Youths 12 and 13 may work on farm jobs out side of school hours in nonhazardous jobs -Youths under 12 may perform nonhazardous jobs on farms with parent's written consent outside school hours -Youths of any age may be employed by their parents at any time in any job on a farm owned or operated by their parents

Point-Factor Method Steps

1. Identify key jobs 2. Identify the compensable factors; 6-8 are generally sufficient; experience, responsibility, and education are most often used 3. Weigh the factors according to their overall worth 4. Divide each job factor into degrees that range from high to low; assign points to each degree; the number of points assigned to each degree should correspond with the weighting of the factors 5. The final result will be a table that gives a complete range of points from 50 (the least number, column 1) to 200 (the most, column 5)

Conditions that must be met for an effective merit pay program

1. Individual differences in job performance must be large enough to be worth the time and effort for management to measure such differences and to relate them to pay 2. The pay range should be sufficiently wide (15-20% above and below the midpoint of the pay range) to allow for adequate differentiation of pay based on performance 3. Differences in individual job performance should be measurable 4. Supervisors and managers must have the competence to evaluate employee performance and provide meaningful feedback 5. Management must be committed, and employees must be receptive to making distinctions among employees based on performance

Four conditions that do-it-yourself wage surveys must meet

1. Reciprocity: Organizations conducting surveys must be willing to share their wage information in exchange for the information they collect from others 2. Anonymity: The information should be reported in a way that does not identify the wages of individual organizations 3. Low Cost: The method used to collect and analyze the data must be efficient and inexpensive 4. Timeliness: The information must be current, especially in times of high inflation

Three Kinds of Wage Surveys

1. Surveys conducted by government agencies (BLS) 2. Surveys conducted by professional organizations 3. Surveys conducted by individual companies

Four-Factor Test to Determine whether De Minimis Rule Applies

1. The amount of daily time spent on the additional work 2. The practical administrative difficulty of recording the added time 3. The total amount of compensable time 4. The regularity of the additional work

Six Factors that Determine Economic Dependence

1. The nature and degree of the potential employer's control 2. The permanency of the worker's relationship with the potential employer 3. The amount of the worker's investment in facilities, equipment, or helpers 4. The amount of skill, initiative, judgement, or foresight required for the worker's services 5. The worker's opportunities for profit or loss 6. The extent of integration of the worker's services into the potential employer's business

Wage-Level Objectives

1. To attract an adequate supply of labor 2. To keep present employees reasonably satisfied with their compensation 3. To avoid costly turnover

Hay Job Evaluation steps

1. Train representatives from major departments and HR functions in the use of the method 2. Revise all job descriptions across the organization with HR assistance 3. Create job evaluation boards, which includes a mix of line management, HR, and experts deciding on the plotting of jobs 4. HR works with senior management to put together a banding proposal expressed in Hay points by grading staff and describing the benefits that will be attracted by each band 5. Once the jobs are all rated and mapping is completed, the company board of directors (or equivalent) reviews the summary, the banding proposals, and cost (if any) with the company and recommends for the activities to go live. If approved, the project manager then moves to implement the changes

Rucker Share-of-Production Plan

A company-wide incentive plan in which compensation is based on a ratio of income to value added by the employees in the production process

Scanlon Plan

A company-wide incentive plan that combines profit sharing with a suggestion system

Comparable-Worth Controversy

A controversy that centers on the issue of whether organizations should be required to est. a common set of criteria for evaluating the worth of jobs and to provide equal pay for jobs of comparable worth

Managed Health Care

A health plan that focuses on reducing health care costs, often through negotiated cost reductions, also called managed competition

Wage-Structure

A major decision in the design of a compensation system that examines how much money is paid for different jobs within the same organization

Pay-for-Performance

A pay system that ties pay to performance levels

Fee-for-Service Plans

A payment model where no services are unbundled and paid for separately

Differential Piece-Rate Plan

A piece-rate incentive plan that provides a low piece rate for individuals who produce less than the standard and a high piece rate for individuals who meet or exceed the standard

Compensation and Benefits

Also known as "total rewards" are management functions that are valuable to owners of a business, helpful to managers, and significantly important to employees, all collectively identified as stakeholders

Patient Protection and Affordable Care Act (PPACA)

Also known as Obamacare, this is the landmark health reform legislation passed by the 111th Congress and signed into law by President Barack Obama in March 2010

The Final Rule

Amends the definition of spouse so that eligible employees in legal same-sex marriages will be able to take FMLA leave to care for their spouse or family member, regardless of where they live

Qualifying Event

An event that triggers the beginning of COBRA coverage

Straight Piecework

An individual incentive plan that provides a fixed rate of incentive pay for each item produced

Standard Hour Plan

An individual or group incentive plan that pays a fixed rate per hour where the hour is measured by an hour's worth of work rather than by a standard 60min

Qualified Beneficiary

An individual who is eligible for continuation of benefits coverage under COBRA, which could be an employee, an employee's spouse, or an employee's dependent children

Stair-Step Model

Assumes that the requisite knowledge and skills can be arranged hierarchically, such that more complex skills or knowledge builds on earlier skills or knowledge

Building Blocks Model

Assumes that the various skills and knowledge are discrete and can be acquired in any order

Person-Based System

Employee capabilities, rather than how the job is performed, determine the employee's pay

Variable Commission

Employees are compensated different percentages for different types of sales

Cafeteria Benefits

Employees choose the benefits they desire, subject to certain limitations and total cost constraints

Flexible Benefits

Employees choose the benefits they desire, subject to certain limitations and total cost constraints

Compensation Maxim

Employees should be compensated primarily according to the requirements of the jobs they perform and how well they perform them, and secondarily, by labor market conditions (supply and demand) and the organization's ability to pay

Family and Medical Leave Act (FMLA)

Entitles eligible employees of covered employers to take unpaid, job-protected leave for specified family and medical reasons with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave

Employee Retirement Income Security Act (ERISA)

Est. minimum standards for pension plans in private industry and provides for extensive rules on the federal income tax effects of transactions associated with employee benefit plans

The Walsh-Healey Public Contracts Act

Est. minimum wage, maximum hours, and safety and health standards for work on contracts in excess of $10,000 for the manufacturing or furnishing of materials, supplies, articles, or equipment to the U.S. government or District of Columbia

Child Labor

FLSA provisions are designed to protect the educational opportunities of minors and prohibit their employment in jobs and under conditions detrimental to their health or well-being

Health Insurance Portability and Accountability Act (HIPAA)

Federal legislation that provides data privacy and security provisions for safe-guarding medical information

Title IV of HIPAA

Further defines health insurance reform

Title V of HIPAA

Includes provisions on company-owned life insurance and treatment of those who lose their U.S. citizenship for income tax purposes

Title III of HIPAA

Includes tax-related provisions and guidelines for medical care

Total Rewards

Includes the financial inducements and rewards (direct pay, cash-based incentives, and benefits), as well as nonfinancial inducements and rewards such as the value of good job content as well as good working environment

Pay-for-Knowledge Programs

Job families are grouped according to knowledge requirements

Skill-Based Pay Program

Jobs are grouped into job families according to the kinds of related skills required to perform them

Hours Worked

Ordinarily include all the time during which an employee is required to be on the employer's premise, on duty, or at a prescribed workplace

Sabbaticals

Paid leave of absence as a way to complete a course of study, do research, or engage in other learned pursuits

Competency-Based Systems

Pay is linked to the level at which an employee can perform in a recognized competency

Title I of HIPAA

Protects health insurance coverage for individuals who lose or change jobs

Consolidated Omnibus Budget Reconciliation Act (COBRA)

Provides continuing coverage of group health benefits to employers and their families upon the occurrence of certain qualifying events where such coverage would otherwise be terminated

Consumer-Driven Healthcare

Refers to third-tier health insurance plans that allow members to use health savings accounts (HSAs), health reimbursement accounts (HRAs), or similar medical payment products to pay routine healthcare expenses directly, but a high-deductible health plan protects them from catastrophic medical expenses

Summary of Material Modifications (SMM)

Required whenever any of the plan's features have been significantly changed or within 201 days after the end of the plan year

Title II of HIPAA

Requires the U.S. Department of Health and Human Services to est. national standards for processing electronic healthcare transactions

Step Rate with Performance Considerations

Similar to the automatic system except that performance can influence the size or timing of the pay increase

Retention Bonus

Sometimes offered to give certain employees incentive to stay with the company because of special circumstances

Piece-Rate

The amount of money that an employee receives for performing a particular unit of work

Straight Piece-Rate System

The employee receives a base rate of pay and its awarded additional compensation for the amount of output produced

Allocation Formula

The formula used in profit sharing plans that determines how the profit is allocated to individuals; it is normally based on seniority and performance

Job Pricing

The process of deciding how much each job should be paid by determining which labor grade the job falls within and the pay range for that labor grade

The Hay Plan

Uses a standard criteria comprising three compensable factors: know-how, problem solving, and accountability

Concerted Activity

When two or more employees take action for their mutual aid of protection regarding terms and conditions of employment

Pregnancy Discrimination Act

Women affected by pregnancy or related conditions must be treated in the same manner as other applicants or employees who are similar in their ability or inability to work