MAN 6331 Exam 2

3 types of protection programs

- disability insurance - life insurance - retirement programs * until recently, health insurance benefits were offered on a discretionary basis but the Affordable Care Act made them mandatory

Job Analysis Units

- element - task - position - job - job family - occupation

Criteria for FMLA elgibility

- employed by a private employer or by a civilian unit of the federal government - employed for at least 12 months by give employer - Provided at least 1,250 hours of service during the 12 months prior to making a request for a leave

On what 2 factors do managers determine pay raise amounts?

- employees' performance ratings - position of employees' present base-pay rates within pay ranges

Criteria to consider when choosing in-house or outsourcing training

- expertise - timeliness - size of employee population to be trained - sensitivity or proprietary nature of the subject matter - certification and recertification

PPACA Penalties and taxes

- failure to provide health insurance to employees results in a penalty per employee (less than first 30 employees) each year - pay or play - penalty rate is subject to increase - cadillac tax - implementation in 2020 - applies to high-cost employer-sponsored health plans

Health insurance program design alternatives

- fee-for-service plans - managed care approaches - plans associated with the consumer-driven health are approach

3 company match approaches

- full match - fixed dollar match - variable dollar match

Requirements to receive old age benefits

- fully insured - at least 62 years old - 65 years old for being born after 1938

Common sales objectives

- improve sales productivity - improve sales coverage of current customers - grow sales overall

3 factors of a compensation mix

- influence of sales person on the buying decision - competitive pay standards within the industry - amount of non-sales activities required

What for sections do job descriptions normally contain?

- job title - job summary - job duties - worker specifications

Benefits and costs to legally required benefits

- legally required benefits are costly - HR professionals can take steps maximize benefits via implementing workplace safety programs, implementing health promotion that include inspections of the workplace to identify health risks, integrating workers compensation benefits into the rest of the benefits program, and contain costs for unemployment insurance

Eligibility criteria for unemployment insurance benefits

- not have left job voluntarily - be able and available for work - actively seeking work - not have refused an offer of suitable employment - not be unemployed because of labor dispute - not have had employment terminated because of gross violations of conduct within the workplace

13 minimum standards for qualified plans by ERISA

- participation reqs - coverage reqs - vesting rules - accrual rules - nondiscrimination rules: testing - key employee and top heavy provisions - minimum funding standards - social security integration - contribution and benefit limits - plan distribution rules - qualified survivor annuities - qualified domestics relations orders - plan termination rules and procedures

FSAs

- permit employees to pay for specified health care costs that are not covered by an employer's insurance plan - prior to each plan year, employees elect the amount of ay they wish ti allocated - advantage of ability to make contributions on a pretax basis - disadvantage use it or lose it provision

Sources of published compensation surveys

- professional associations - industry associations - consulting firms - federal government

Categories of discretionary benefits

- protection - paid time off - services to enhance work and life experience

6 objectives under Workers' compensation law

- provide income and medical benefits - reduce litigation - relieve charities' financial drain - eliminate legal fees and time - encourage employer interest in safety - promote accident study and avoidance

Origins of legally required benefits

- provided a form of social insurance - reasons for implementation included the rapid growth of industrialization and hardships caused by the Great Depression - Established to protected individuals from disability and unemployment

Patient Protection and Affordable Care Act of 2010 (PPACA)

- provides the basis for health care reform in the US - mandates health care coverage and sets minimum standards for insurance - companies with at least 50 employees

Merit increase amounts

- reflect prior job performance levels - needs to motivate - needs to be meaningful - influenced by COLA - indexed as a % of budget

Origins of employee benefits

- retirement plans: one of the first signs in the use of discretionary benefits - an alternative to pay hikes - welfare practices - unions contributed indirectly to the rise in discretionary benefits - increased diversity/flexible

Person-focused pay programs

- rewards employees based on learning new skills and knowledge - compensations on potential: the promise of future performance

Alternative sales compensation plans

- salary only plans - salary plus bonus plans - salary plus commission plans - commission plus draw plans - commission only plans (in order of risk (lowest to highest) for employees)

4 categories of legally required benefits

- social security programs - workers' compensation - unpaid family leave and medical leave - health insurance

3 kinds of life insurance

- term life insurance - whole life insurance - universal life insurance

Legislation pertinent to discretionary benefits

- the Internal Revenue Code - Employee Retirement Income Security Act of 1974 (ERISA) - Pension Protection Act of 2006

3 primary objectives of an effective communication program

- to create awareness of an appreciation for the way current benefits improve the financial security and the physical and mental well-being of employees - to provide a high level of understanding about available benefits - to encourage the wide use of benefits

Fundamental design issues regarding benefit programs

- who receives coverage - financing of benefits - employee choice - cost containment - communication

Quartiles

Allow compensation professionals to describe the distribution of data, usually annual base pay amount, based on four groupings

What is the benefit to companies of overlapping pay ranges?

Allows companies to promote employees to the next level without adding to their pay

Flexible benefits plan (Also called Cafeteria plan)

Allows employees to choose a portion of their discretionary benefits based on a company's discretionary benefits options

Flexible scheduling and leave

Allows employees to take time off during work hours to care for relatives or react to emergencies

6 year graduated schedule

Allows workers to become 20% vested after 2 years, and to vest at a rate of 20% per year thereafter until they are 100% vested after six years of service

Merit pay grid

Amount are determined by two factors jointly: performance ratings and position of employees' preset base pay rates within pay ranges

Job-content evaluation

An approach to evaluating job worth, takes skill, effort, responsibility, and working conditions into account Emphasizes the company's internal value system by establishing a hierarchy of internal job worth based on each job's function in company strategy Ex. The Point method

Market-based evaluation

An approach to market-competitive pay systems, uses market data to determine differences in job worth - keeps pay rates on par with the market

Short term disability

An inability to perform the duties of one's regular job usually for fewer than 6 months - recovery from injuries - recovery from surgery - treatment of illness requiring any hospitalization - pregnancy

Job Analysis Process: Direct job analyst orientation

Analyze the context in which employees perform their work to better understand influencing factors and obtain and review internal info (organizational charts, listing of job titles, classifications of each position to be analyzed, job incumbent names and pay rates, and any instructional booklets or handbooks for operating equipment)

How often should companies engage in market-competitive pay system steps?

Annually to ensure their systems remain competitive as market pay rates generally rise over time

Participation requirements

Apply to pension plans. Employees must specifically be allowed to participate in pension plans after they have reached the age of 21 and have completed 1 year of service (1000 hrs) Includes all paid time performing work and paid time off

Abilities

Are enduring attributes of the individual that influence performance Cognitive - Verbal (Oral comprehension, written comprehension, oral expression, written expression) Idea generation and reasoning abilities - fluency of ideas, originality, problem sensitivity Quantitative abilities - mathematical reasoning, number facility Memory - memorization Perceptual abilities - speed of closure, flexibility of closure, perceptual speed

Work styles

Are personal characteristics that describe important interpersonal and work style requirements in jobs and occupations

Commission-plus-draw plans

Awards sale professionals commissions and draws

Health savings accounts (HSAs)

Employers establish HSAs to help employees pay for medical expenses associated with high-deductible health insurance plans - portable - subject to inflation-adjusted funding limits - do not limit employee choice

What happens if employees do not choose max amount of benefits?

Employers may offer an option of trading extra benefit credits for cash

What is the effect of understated mean salaries?

Employers set salaries too low to attract the best-qualified job candidates

Cadillac Tax

Employers that offer health plans that exceed designated dollar amounts will be required to pay a tax equal to 40% of the amount that exceeds the designated dollar amounts. The tax was intended to be a disincentive for employers to provide overly rich health benefits, and the cost of the health plan is one way to asses the level of benefits

Financing workers' compensation prgroams

Employers typically subscribe to workers' compensation insurance through private carriers or in some instances, state funds

Integrated paid time off policies

Enable employees to schedule time off without justifying the reasons. Combine holiday, vacation, sick leave, and personal leave policies into a single paid time off policy

Cliff vesting

Enables employees to earn 100% vesting rights after no more than 3 years of service

Recertification

Ensures that employees periodically demonstrate mastery of all the jobs they have learned

Certification

Ensures that employees possess at least a minimally acceptable level of skill proficiency upon completion of a training unit. Certification methods can include work samples, oral questioning, and written tests.

Strategic analysis

Entails an examination of a company's external market context and internal factors. Example market factors = industry profile, information about competitors and long-term growth prospects Internal factors = financial condition and functional capabilities

Core plus option plans

Establish a set of benefits as mandatory for all employees who participate in flexible benefit plans

Social Security Act

Established - unemployment insurance - old age, survivor, and disability insurance - medicare

Employee Retirement Income Security Act of 1974 (ERISA)

Established to regulate the establishment and implementation of various fringe compensation programs. These include medical, life, and disability insurance programs, as well as pension programs. The essence of ERISA is the protection of employee benefit rights

Developing a pay structure: Deciding on number of pay structures

Exempt and nonexempt structures, pay structures based on job families, and pay structures based on geography

Exempt jobs

Exempt from overtime under FLSA. Typically salary

O*NET Content Model: Experience Requirements

Experience and training - related work experience, on site training, on the job training Licensing - licenses and certificates, formal education Additional education and training Organization and agency requirements - legal - employer - union, guild, and professionial association

Commission

Form of incentive compensation, based on the % of the product or service selling price and the number of units sold - spreads the risk of selling between company and employee - salary attracts good employees - commission serves as the employee's share in the gains they generated for the company

Job structures

Formally recognize the differences in job characteristics that enable compensation managers to set pay accordingly

Welfare practices

Generous endeavors undertaken by some employers, motivated to minimize employee's desire to seek union representation, to promote good management, and to enhance worker productivity

Absolute job evaluation points spreads

Grades are based on a set number of job evaluation points for each grade

Pay grades

Group jobs for pay policy application. HR professionals group jobs into pay grades based on similar compensable factors and value Wider pay grades -> minimize hierarchy and social distance between employees Narrower pay grades -> promote hierarchy and social distance

Defined benefit plans

Guarantee retirement benefits specified in the plan document. These benefits usually are expressed in terms of monthly sum equal to a percentage of a participant's preretirement pay by the number of years he or she has worked for the employer Employees typically forfeit their benefits if they leave their employer before meeting a minimum age and years of service requirement Increased longevity causing a decrease of popularity of this plan Series of payments

Health Insurance Portability and Accountability Act of 1996 (HIPPA)

Guarantees ready access to coverage under a subsequent employers health plan, regardless of health or claims experience limits the length of preexisting condition clauses (now unlawful under ACA) Protects the transfer, disclosure, and use of health care information

Who leads the job analysis process?

HR specialists

HMO

Health Maintenance Organization - provide prepaid medical services - copayments represent nominal payments - primary care physicians determine when patients need the care of specialists

Nongrandfathered plans

Health plans that were established after the implementation date of PPACA

Grandfathered plans

Health plans that were in effect prior to the implementation date of the PPACA Can lose status if there are substantial modifications

Employee Assistant Programs (EAPs)

Help employees cope with personal problems that may impair their job performance (alcohol/drug abuse, domestic violence, AIDS, depression, eating disorders)

Family Assistance Programs

Help employees provide elder care and child care. Elder care provides physical and emotional, or financial assistance for aging parents, spouses, or other relatives who are not fully self-sufficient because they are too frail or disabled, Child care programs focus on supervising preschool age dependent children whose parents work outside of the home

O*NET Content Model: Occupation-specific information requirements

Information describes the characteristics of a specific occupation. These particular requirements are occupational KSAs, tasks, duties, machines, tools, and equipment - tasks - tools and technology

Organizational context

Information indicates the characteristics of the organization that influence how people do their work

Long-term disability

Initially refers to illnesses or accidents that prevent an employee from performing his or her "own occupation" over a designated period. After the designated period elapses, the definition becomes more inclusive by adding the phrase "inability to perform any occupation or to engage in any paid employment" Preeligibility periods, elimination periods, tend to occur after short term disability has been exhausted

Carve-out plans

Insurance plans that offer specific kinds of benefits such as dental care, vision care, prescription drugs, mental health and substance abuse treatment, and maternity care

Medigap

Insurance supplements Medicare Part A and Part B and is available to Medicare recipients in most states from private insurance companies for an extra fee. Help cover the costs of coinsurance, copayments, and deductibles

Compensation surveys

Involve the collection and subsequent analysis of competitor's compensation data

Common review period

Is the designated period (e.g., the month of June) when all employees receive performance appraisals.

Compensable factors

Job attributes that compensation professionals use to determine the value of jobs

What is the fundamental principle for an internally consistent compensation system?

Jobs that require higher qualifications and encompass more responsibilities and more complex job duties should be paid more than jobs that require lower qualifications and encompass fewer responsibilities and less-complex job duties

Inadequate pay

Leads to dysfunctional turnover

Medicare Prescription Drug, Improvement and Modernization Act of 2003

Led to changes in the Medicare program by adding prescription drug coverage and recognizing health savings accounts

National Labor Relations Act of 1935 (NRLA)

Legitimized bargaining for employee benefits. Union workers tend to have more discretionary benefits than non-union workers

Coverage requirements

Limit an employer's freedom to exclude employees from qualified plans. Tests to determine whether coverage requirements are met include the ratio percentage test and the average benefits test Employers may not exclude employees after participation criteria is met and employers may not disproportionately favor highly compensated employees

Taxable wage base

Limits the amount of annual wages or payroll cost per employee subject to taxation to fund OASDI programs

Merit pay increase budget

Limits the amount of pay raises that can be awarded to employees for a specified time period. A merit pay increase budget is expressed as a percentage of the sum of the employee's current base pay

Job titles

Listed in job descriptions, indicate job designations

Nonrecurring merit pay increases or merit bonuses

Lump sum monetary awards based on employee's past job performances. Employees do not continue to receive nonrecurring merit increase every year. Employees must instead earn them each time.

Pay compression

Occurs whenever a company's pay spread between newly hired or less qualified employees and more qualified job incumbents is small Can threaten companies' competitive advantage via dysfunctional turnover

Preferred Provider Organization (PPO)

One of select group of health care providers that provides health care services to a given population at higher level of reimbursement that under commercial insurance plans - select group of health care providers so employees choose from a list. financial incentives to sue this list - physicians must meet quality standards, abide by the PPO cost containment, accept PPO fee structure - does not provide prepaid benefits

Task

One or more elements, aka keyboarding text into memo format

Prescription card program

Operates like HMOs by providing prepaid benefits with nominal copayments for prescription drugs

Sabbatical leaves

Paid time off for professional development activities such as professional certification, conducting research and curriculum development

Classification plan

Particular methods of job evaluation places jobs into categories based on compensable factors Mostly used by public sector organizations

Weight control and nutrition programs

Particular type of wellness program designed to educate employees about proper nutrition and weight loss, both of which are critical to good health

Profit sharing plans

Pay a portion of company profits to employees, separate from base pay, COLA, or permanent merit pay increases. Two kinds widely sued today - current profit sharing - deferred profit sharing

Disability benefits

Pay benefits to seriously disabled workers and family members. Pays only for total disability. Disability must last for at least one year or to result in death. Must meet two criteria: accumulated 40 credits and earned at least 20 of the credits of the last 40 calendar quarters in the last 10 years ending with the year of disablement Younger workers need fewer quarters of coverage

Broadbanding

Pay structure form that leads to the consolidation of existing pay grades and pay rangers into fewer, wider pay grades - reduces management layers and promotes quicker decision-making cycles - may lead to higher compensation expenses because managers have greater latitude in assigning pay to their employees - flattens corporate hierarchies - emphasizes teamwork

Deferred profit sharing plans

Plans place cash awards in trust accounts for employees. These trust accounts are set aside on employee's behalf as a source of retirement income Employees do not pay taxes until they are with-drawled

What is the most popular job-content method?

Point method

Paid time off banks

Policies that compensate employees when they are not performing their primary work duties. Companies offer most paid time off as a matter of custom, particularly paid holidays, vacations, and sick leave Do not incorporate bereavement and funeral leave because these are unanticipated events beyond the employee's control Jury duty, witness leave, military leave and non production time are influenced by law Sabbatical leaves not included because these are extended leaves provided as a reward to valued, long service employees

Long-term disability insurance

Provides benefits fro extended periods of time anywhere between 6 months and life Considers disability as an inability to engage in any occupation for which the individual is qualified because of training, education or experience Most plans pay 50-70% of pretax pay

National Compensation Data (NCS)

Provides comprehensive measures of occupational earnings; compensation cost rends, benefit incidence, and detailed plan provisions

O*NET User's guide

Provides detailed information about the O*NET job content model, its applications, and how to use the system

Consoidated Omnibus Budget Reconciliation Act (COBRA) of 1985

Provides employees opportunity to continue receiving employee-sponsored medical care insurance temporarily if their coverage otherwise ceases due to termination, layoff, other change in employment status - up to 18 moths for individuals and their spouses/dependents - may extend to 36 months for spouses and dependents facing a loss of employer-provided coverage because of an employee's death, divorce, legal separation, other (termination, retirement, layoff)

Pension plan

Provides income to individuals and beneficiaries throughout their retirement

Fee-for-service plans

Provides protection for 3 types of medical expenses: hospital expenses, surgical expenses, and physicians' charges Cash benefit

Universal life insurance

Provides protection to employee's beneficiaries based on the insurance feature of term life insurance and a more flexible savings or cash accumulation plan that is found in whole life insurance plans

Whole life insurance

Provides protection to employee's beneficiaries during employee's employment and into retirement years Tend to be more expensive because they do not expire

Out-of-pocket maximum

Provisions in medical insurance plans limit the total dollar expenditure a beneficiary must pay during any plan year. These provisions are most common in commercial medical insurance plans

401(k)

Qualified retirement plans named after the section of the IRC that created them. These plans permit employees to defer part of their compensation to the trust of a qualified defined contribution plan. Only private sector or tax-exempt employers are eligible to sponsor these plans

What are the most common methods of a job analysis study?

Questionnaires and observation

What are the typical methods for collecting job analysis information?

Questionnaires, interviews, observation, and participation

Job Analysis Process: Determining a job analysis program

Develop in house to tailor to specific requirements or use an established system to save administrative costs Depends on applicability and cost Consulting firms, O*Net

Why is it better to use multiple sources of published compensation surveys?

Differences in survey methodology can lead to differences in results. Should give compensation professionals a more accurate picture of market prices

Mail order prescription drug program

Dispenses expensive medications used to treat chronic health conditions

Market lag policy

Distinguishes companies from the competition by compensating employees less than most competitors. Lagging the market indicates that pay levels fall below the market pay line 1st quartile (25th percentile) Most appropriate for businesses with lowest cost strategy Companies that use this policy make experience difficulties in recruiting and retaining highly qualified employees. Turnover can undercut company's ability to operate efficiently and to market goods/services on a timely basis

Market lead policy

Distinguishes companies from the competition by compensating employees more highly than most competitors. Leading the market denotes pay levels above the market pay line 3rd quartile (75th percentile) Most appropriate for businesses with differentiation strategies

Employee-financed benefits

Do not require the employer to finance discretionary benefits because employees will bear the entire cost

Pet insurance

Recruits and retains talent by recognizing the strong bond between people and their pets

Yearly limit

Refer to max amount plan would cover each year. Not permitted since Affordable Care Act

Pay mix policies

Refer to the combination of core compensation and employee benefits components that make up an employer's total compensation package May be expressed in dollars or as a percentage of total dollars allocated for an employee's total compensations

Indemnity plans

Refer to traditional health insurance plans in which the insurance company agrees to pay a designated percentage of the costs for health insurance procedures and the insured agrees to pay a designated percentage

Insurance policy

Refers to a contractual relationship between the insurance company and the beneficiary. It specifies the amount of money that the insurance company will pay for such particular services as physical examinations

Point factor leveling

Refers to a particular method of job evaluation

Medicare Part C AKA Medicare Advantage

Refers to a variety of health insurance coverage options for individuals eligible for Medicare protection who choose not to participate in Parts A and B.

Job content

Refers to actual activities that employees must perform in the job. Job content descriptions may be broad, general statements or detailed descriptions of duties and tasks performed on the job

Vesting

Refers to an employee's acquisition of nonforfeitable rights to pension benefits

Fully insured

Refers to an employee's status in the retirement income program under the Social Security Act of 1935. Forty quarters of coverage lead to fully insured status.

Consumer drive health care plan

Refers to an employer-sponsored program that shifts a great amount of the responsibility to employees for selecting health care providers

Outplacement assistance

Refers to company-sponsored technical and emotional support to employees who are being laid off or terminated best for - layoffs due to economic hardship - mergers and acquisitions - company reorganizations - changes in management - plant closings/relocation - elimination of specific positions, often the result of changes in technology Services like personal counseling, career assessments/evaluations, training in job search techniques, resume and cover letter preparation, interviewing techniques, and training in the use of such basic workplace tech

Medicare Part A

Refers to compulsory hospitalization insurance that covers both inpatient and outpatient hospital care and services. Payroll taxes of 1.45% of all earnings fund this

Job leveling

Refers to corrections that companies can make for differences between their jobs and external benchmark jobs. These corrections are based on subjective judgement rather than on objective criteria

Quarters of coverage

Refers to each 3-month period of employment during which an employee contributes to the retirement income program under the Social Security Act of 1935

Volunteerism

Refers to giving of one's time to support a meaningful cause. More and more companies are providing employees with paid time off to contribute to cause of their choice - allows employees to balance work and life demands - shows a company commitment to social responsibility - promotes retention

Prepaid plans

Refers to most benefits offered by HMOs because fixed periodic enrollment fees cover HMO members for all medically necessary services only if the services are delivered or approved by the HMO

Vacation

Refers to paid time off for reasons other than illness, holidays, parental leave, or formally designated paid-time off

Company match

Refers to the amount of money an employer may choose to contribute to a defined contribution plan for an employee's contribution

Lifetime limit

Refers to the max amount a plan would include if a person receives coverage. Not permitted since Affordable Care Act

Standard deviation

Refers to the mean distance of each salary figure from the mean

Elimination period

Refers to the minimum amount of time an employee must wait after becoming disabled before disability insurance payments begin. Elimination periods follow the completion of the preeligibility period Exclude insignificant illnesses or injuries that limit a person's ability work for just a few days

O*NET Content Model: Workforce characteristics

Refers to variables that define and describe the general characteristics of occupations that may influence occupational requirements - labor market information - occupational outlook

Medical reimbursement plans

Reimburse employees for some or all of the cost of prescription drugs. These plans pay benefits after an employee has met an annual deduction for he plan

Disability insurance

Replaces income for employees who become unable to work because of sicknesses or accidents

Transportation services

Represent energy-efficient ways to transport employees to and from the workplace. Employers cover part or all of the transportation costs

Copayments

Represent nominal payments individuals make for office visits to their doctors or for prescription drugs

Pay structures

Represent pay rate differentials for jobs of unequal worth and the framework for recognizing differences in employee contributions

Red circle rates

Represent pay rates that are higher than the designated pay rate max Help retain valued employees who have lucrative job offers from other companies Could be for exemplary performance Could also apply to demotions

Relevant labor markets

Represent the fields of potentially qualified candidates for particular jobs Based on occupational classification, geography, market competitors, product/service

Interests

Represent the individuals' liking or preference for performing specific jobs

Compensation plan

Represent the selection and implementation of pay level and pay ix policies over a specified period of time, usually one year

Pay ranges

Represent the span of possible pay rates for each pay grade. Pay ranges include midpoint, minimum, and max pay rates. The min and max values denote the acceptable lower and upper bounds of pay for the jobs within particular pay grades

Market pay line

Representative of typical market pay rates relative to a company's job structure. The best-fitting line in the regression analysis

Point method

Represents a job-content evaluation technique that uses quantitative methodology. Quantitative methods assign numerical values to compensable factors that describes jobs, and these values are summed as an indicator of the overall value for the job

Market-competitive pay system

Represents companies' compensation policies that fit the imperatives of competitive advantage. Compensation professionals build market-competitive compensation systems based on the results of compensation surveys

Green circle pay rates

Represents pay rates for jobs that fall below the designated minimums Should be brought to a normal level ASAP Typically due to deficiencies in skill or experience

Variation

Represents the amount of spread or dispersion in a set of data

Employee's anniversary date

Represents the date an employee began working for his or her present employer. Employees often receive performance appraisals on their anniversary dates. Can be burdensome because reviews must be conducted regularly throughout the year

Central tendency

Represents the fact that a set of data clusters around or centers on a central point. A number that represents the typical numerical value in a data set

Defined contribution plans

Require that employers and employees make annual contributions to separate retirement fund accounts established for each participating employee, based on a formula contained in the plan document Employers invest funds on behalf of the employee. Do not guarantee benefit amounts like defined benefit plans Contributions are not subject to income tax Single lump sum distribution at any time

Family and Medical Leave Act of 1993 (FMLA)

Requires employers to provide employees 12 weeks of unpaid leave per year in cases of family or medical emergency Retention of seniority, health insurance coverage, credit for previous service, and accrued retirement beenfits

Self-Employment Contributions Act (SECA)

Requires self-employed individuals to contribute to the OASDI and Medicare programs but at a higher tax rate than required for non self-employed individuals

High-deductible health insurance plans

Requires substantial deductibles and low out of pocket maximums

Hybrid plans

Retirement plans that combine features of defined benefit and defined contribution plans

Two-tier pay structure

Reward newly hired employees less than established employees on either a temporary or permanent basis - more present in unionized companies - allows companies to reward long-service employees while keeping costs down - can restrict company's ability to recruit and retain highly qualified individuals - Conflict among tiers can lead to excessive turnover - new employees paid less

Workers' Compensation insurance programs

Run by states individually, are designed to cover expenses incurred in employee's work-related accidents

Best type of sale plan for differentiation strategies

Salary

Medicare

Serves nearly all US citizens age 65 or older by providing insurance coverage for hospitalization, convalescent care, and major doctor bills - Medicare Part A - hospital insurance - Medicare Part B - medical insurance - Medigap - voluntary supplemental insurance to pay for services not cover in A or B - Medicare Part C: Medicare Advantage - choices in health care providers, such as through HMOs and PPOs - Medicare Part D: Medicare Prescription Drug Benefit - Prescription drug coverage Can receive coverage under medicare plan or medicare advantage plans

Internal Revenue Code (IRC)

Set of federal government regulations pertaining to taxation in the USA

Skill (knowledge) blocks

Set of skills (knowledge) necessary to perform a specific job or group of similar jobs

Roth 401(k)

Similar to 401(k) plans but differ in 2 ways: employee contributions are taxed at the individual's income tax rate and upon retirement, withdrawals are not taxed Helps manage uncertainty of future tax rates

Unemployment insurance

The Social Security Act founded a national federal-state unemployment insurance program for individuals who became unemployed through no fault of their own States pay into a central unemployment tax fund administered by the federal government, the fed gov invests these payments and disburses them to states as needed to pay benefits Applies to all US employees except agricultural and domestic workers

The federal government as a compensation survey source

The US Bureau of Labor Stats provides free salary survey results to the public. Highly qualified survey takers and statisticians are responsible for producing these surveys Grouped into 7 categories: employment cost trends, national compensation data, wages by area and compensation, earnings by demographics, earnings by industry, county wages, employee benefits

Premium

The amount of money an individual or company pays to maintain insurance coverage

Annual addition

The annual maximum allowable contribution to a participants account in a defined contribution plan, including employer contribution allocated to the participant's account, employee contributions, and forfeitures to the participant's account

Range spread

The difference between the max and min pay rates of a given pay grade

Nominal compensation

The face value of a dollar

Midpoint pay value

The halfway mark between the range min and max. Midpoints represent the competitive market rate determined by the analysis of compensation survey data

Probationary period

The initial term of employment (usually less than 6 months) during which companies attempt to ensure that they have made sound hiring decisions. Employees are often not entitled to participate in discretionary benefit programs during their probationary periods

Median

The middle value in an ordered sequence of numerical data

Base period

The min period of time an individual must be employed before becoming eligible to receive unemployment insurance under the Social Security Act of 1935

Worker requirements

The minimum qualification and the knowledge, skills, and abilities (KSAs) that people must have to perform a job i.e. education, experience, licenses, permits, and special abilities

Term life insurance

The most common type of life insurance offered by companies. Provides protection to an employee's benficiaries only during a limited period based on a specified number of years or maximum age. After that, insurance automatically expires.

Exclusion provisions

The particular conditions that are ineligible for coverage. For example, most insurance plans do not cover self-inflicted injuries. Often exclude mental illnesses, disabilities due to drugs/alcohol.

Element

The smallest step, aka connecting a flash drive to a USB port

Working conditions

The social context or physical environment in which work will be performed

How do compensation professionals balance internal and market considerations with point method results?

They covert point values into the market value of jobs through regression analysis

Why were initial social insurance programs designed?

To minimize the possibility that individuals who become unemployed or severely injured while working would become destitute

pay structures based on job families

executive, managerial, professional, technical, clerical, and craft represent job families

job

group of positions with similar tasks

Noncontributory financing

implies that the company assumes total costs for discretionary benefitsq

Experience and training

information describes specific preparation required for entry into a job plus past work experience contributing to qualifications for an occupation

Cross-functional skills

information indicates developed capacities that facilitate performance of activities that occur across jobs Social skills - social perceptiveness, coordination, persuasion Complex problem-solving skills - problem identification, information gathering, information organization

Basic skills

information that describes capacities that facilitate learning or the more rapid acquisition of knowledge Content - reading comprehension, active listening, writing Process - critical thinking, active learning, learning strategies

What are the most common sources of data in a job analysis study?

job incumbents, supervisors, and job analysts

Supervisors

offer extensive and detailed information from a different focus, and familiar with interrelationships among departments

Job incumbents

offer the most details and insights in a job analysis study

deductible

out of pocket expense that employees must pay before dental, medical, or vision insurance benefits become active

Short-term disability insurance

provides income benefits for limited periods of time, usually less than 6 months Usually consider disability as an inability to perform any and every duty of the disabled persons' occupation Most plans pay 60-70% of pretax salary on a monthly or weekly basis Preexisting condition, two waiting periods, and exclusions of health conditions features

Compensation policies

refers to choices that compensation professionals make to promote competitive advantage

Day care

refers to programs that supervise and care for young children and elderly relatives when their regular caretakers are at work

coinsurance

refers to the % of covered expenses paid by the insured. Most commercial plans stipulate 20% coinsurance. This means that the insured will pay 20% of covered expenses, where the insurance company pays the remaining 80%

Common review date

the designated date when all employees receive performance appraisals Reduce administrative burden of the plan by concentrating staff members' efforts to limited periods

Labor market information

current labor force characteristics of occupations

Occupational outlook

describes the future labor force characteristics of occupations

Work context

Information describes physical and social factors that influence the nature of work

Two essential strategic considerations to compensation surveys

- defining the relevant job market - choosing benchmark jobs

Nonrecoverable draws

Act as salary because sales employees are not obligated to repay the loans if they do not sell enough

Retirement programs

Provide income to individuals and beneficiaries throughout their retirement. Also called pension plans

Pay mix

% of employer compensation costs applied to components of core compensation

Features of health care plans

- deductible - coinsurance - out of pocket maximum - preexisting condition clauses - lifetime and yearly limits

HRAs

- Employees do not contribute to HRAs - Permit employees to carry over unused balances form year to year - employees may offer HRAS as well as FSAs and use of these accounts is not limited to participation in high deductible health care plans

Legal considerations in job analysis

- Equal pay act: must justify pay differences between men and women performing equal work - FLSA: determine exemption status - ADA: determine essential job functions

2015 FMLA Revisions

- Expanded the definition of spouse to include individuals in legal same-sex marriage

Most common defined contributions plans

- 401(k) plans - Roth 401(k) - Deferred profit sharing plans

O*NET Content Model: Worker characteristics

- Abilities - Interests - Work values - Work styles

Two ways Hr professional can develop pay grade widths

- Absolute job evaluation point spreads - Percentage based job evaluation point spreads

Pay level policies

- Market lead - Market lag - Market match

Job Evaluation Techniques

- Market-based evaluation - Job-content evaluation

Limitations of internally consistent compensation systems

- May reduce a company flexibility to respond to changes in competitor's pay practices because job analyses leads to structured job descriptions and job structures - Resultant bureaucracy -aka job hierarchies tend to create narrowly defined jobs that lead to a greater number of jobs and staffing levels

Standard Occupational Classification System (SOC)

- Published by the Office of Management and Budget - Lists 23 major occupational groups - Relevant for making compensation decisions

State and Local Paid Leave Laws

- Some states mandate leave - Paid sick leave has become a requirement in some states

What are two important preliminary considerations compensation professionals should take into account before investing time and money into compensation surveys?

- What does the company hope to gain from these compensation surveys? - Custom development vs use of an existing compensation survey

10 essential benefits

- ambulatory patient services - emergency services - hospitalization - maternity and newborn care - mental health and substance use disorder services, including behavioral health treatment - prescription drugs - rehabilitative services and devices - laboratory services - preventive and wellness services and chronic disease management - pediatric services, including oral and vision care

O*NET Content Model: Worker Requirements

- basic skills - cross-functional skills - knowledge - education

2009 FMLA Revisions

- changes created leave opportunities for the military and require employees to adhere to stricter guidelines for taking leave - relatives of seriously injured members of the military may take up to 26 weeks off to care for the injured military family member - relatives of members of the National Guard or reserves who are called to active duty may receive up to 12 weeks of leave to attend military programs, arrange child care, or make financial arrangements

Two approaches to timing of pay increases

- common review date/common review period - employee's anniversary date

Considerations in merit pay systems

- communicate link between pay and performance - use effective appraisal methods - establish increase amounts and types - settle on base pay level

What two situations result in pay compression?

- company's failure to raise pay range min and max - scarcity of qualified candidates for the job

What four activities do compensation professionals created market-competitive pay systems based on?

- conducting strategic analyses - assessing competitor's pay practices with compensation surveys - Integrating the internal job structure with the external market pay rates - determining compensation policies

4 characteristics of benchmark jobs

- contents are well known, relatively stable over time, and agreed upon by the employees involved - the jobs are common across many different employers - the jobs represent the entire range of jobs that are being evaluated within a company - the jobs are generally accepted int the labor market for the purposes of setting pay levels

Why should the job evaluation plan be documented?

1) Allow employees to understand clearly how their jobs are evaluated and the outcome of the process 2) Provide guidelines for clearing ambiguities in the event of employee appeals or legal challenges

Steps for setting the merit increase pay grid within the estimated merit increase pay budget

1) Comp professionals ask managers and supervisors to indicate the % of employees who they expect will fall in each performance category in the performance appraisal instrument 2) Comp professionals rely on the position in the pay range to determine he % of employees whose pay falls into each pay quartile 3) Comp professionals combine both sets of info to determine the % of employees who fall into each cell 4) Comp professionals calculate the expected number of employees who fall into cell 5) Comp professionals distribute the merit increase budget amount to each cell based on this formula (Expected number of employees in cell x desired pay increase for cell % x current median pay level for the current quartile) 6) Comp professionals check whether the expected merit increase total fits within the actual budgeted amount

5 steps to developing a pay structure

1) Deciding on number of pay structures 2) determining a market pay line 3) defining pay grades 4) calculating pay ranges for each pay grade 5) evaluating the results

On what 2 considerations should compensation professionals choose compensable factors?

1) Factors must be job related 2) Selected compensable factors that further a company's strategies

Job-Content evaluation plans

1) Point method (quantitative) 2) Simple ranking plans (qualitative) 3) Paired comparisons (qualitative) 4) Alternation ranking (qualitative) 5) Classification plans (qualitative)

Point method steps

1) Select benchmark jobs 2) Choose compensable factors based on benchmark jobs 3) Define factor degrees 4) Determine the weight of each factor 5) Determine the point value for each compensable factor 6) Verify Factor degrees and point values 7) Evaluate all jobs

6 Categories in the O*Net Content Model

1) Worker characteristics 2) Worker requirements 3) Experiences requirements 4) Occupational requirements 5) Workforce characteristics 6) Occupation-specific Information

3 configurations of retirement plans

1) defined benefit plan (pension plan) 2) defined contribution plan 3) hybrid plans

6 steps of the job evaluation process

1) determine single versus multiple job evaluation techniques 2) choose the job evaluation committee 3) training employees to conduct job evaluations 4) documenting the job evaluation plan 5) communicating with employees 6) setting up the appeals process

5 main activities in the job analysis process

1) determining a job analysis program 2) selecting and training analysts 3) directing job analyst orientation 4) conducting the study: data collection methods and sources of data 5) summarizing the results: writing job descriptions

Limitations of ranking plans

1) ranking results rely on purely subjective data so the process lacks objective standards guidelines, and principles that would aid in resolving differences in opinion among committee members 2) uses neither job analyses nor job descriptions, which makes this method difficult to defend legally 3) Do not incorporate objective scales that indicate how different in value one job is from another

Two important considerations to published compensation survey data

1) survey focus: core compensation or employee benefits? 2) Sources of published compensation surveys

3 compensation survey data characteristics

1) they contain immense amounts of information 2) compensation survey data are outdated because there is a lag between when the data was collected and when employers implement the compensation planned based on survey data 3) compensation professionals must use statistical analyses to integrate their internal job structures with the external market based on the survey data

Why did the US department of labor create O*NET?

1) to describe jobs in relatively new service sector of the economy and to more accurately describe jobs that evolved as a result of technological advances

Referral services

Designed to help workers identify and take advantage of available community resources, conveyed through such media as educational workshops, videos, employee newsletters, magazines, and EAPs

R^2

Tells us how well the variation in the company's valuation of jobs based on job evaluation points explains the variation in market pay rates from the compensation survey Between 0 and 1

Compa-ratios

Index the relative competitiveness of internal pay rates based on pay range midpoints = employee's pay rate / pay rate midpoint 1 = employee's rate is at midpoint <1 = below competitive pay rate for the job >1= above competitive pay rate for the job

Consumer Price Index (CPI)

Indexes monthly price changes of goods and services that people buy for day-to-day living and used to update salary survey data

Current profit sharing

awards employees with a share of company's profits, usually on an annual basis

Education

based on Equal Employment Opportunity Commission guidelines, refers to formal training

Graduated commissions

Increase percentage pay rates for progressively higher sales volume in a given period

Multiple-tiered commissions

Increases percentage pay rates for progressively higher sales volume in a given period only if sales exceeds a predetermined level

Position

A collection of tasks

Excessive pay

A cost burden to the company that can ultimately undermine its competitive position

O*Net (Occupational Information Network)

A database designed to describe jobs in the relatively new service sector of the economy and to more accurately describe the jobs that evolved as the result of technological advances. O*Net replaces the Revised Handbook for Analyzing Jobs

Educational assistance

A discretionary benefit that includes advance payments for tuition, fees, and similar expenses like books, supplies, and equipment

Equal Employment Opportunity Commission (EEOC)

A federal government agency, oversees and enforces various employment laws that guard against illegal discrimination including title VII of the Civil Rights Act of 1964

Occupation

A group of jobs

Job family

A group of two or more jobs with similar characteristics

Mean

A measure of central tendency calculated as the sum of numbers divided by the number of salaries

O*NET Content Model

A model of 6 categories of job and worker information. Job information contains the components that relate to the actual work activities of a job. Worker information represents the characteristics of employees that contribute to successful job performance

Smoking cessation

A particular type of wellness program that stresses the negative effects of smoking and can include incentive programs directed at helping individuals to stop smoking

Open-access HMO

A prepaid plan that requires the use of network health-care providers with once exception. In open-access HMO plans, emergency care outside the network is covered, which is not the case for traditional HMO plans

Job duties

A section in job descriptions, describe the major work activities and ,if pertinent, supervisory responsibilities

Worker specifictions

A section in job descriptions, lists the educations, KSAs, another qualifications individuals must possess to perform the job adequately

Draw

A subsistence pay component in sales compensation plans. Companies usually charge draws against commissions that sales professionals are expected to earn

Job analaysis

A systematic process for gathering, documenting, and analyzing information in order to describe jobs. Purely descriptive

Exclusive Provider Organization (EPO)

A variation of a PPO. More restrictive. Does not require a primary care physician

Paired comparison

A variation of simple ranking job evaluation plans, orders all jobs from lowest to highest based on comparing the worth of each job in all possible pairs

Alternation ranking

A variation of simple ranking job evaluation plans, which orders all jobs from lowest to highest, based on alternately identifying the jobs of lowest and highest worth

Valid job analysis method

Accurately assesses each job's duties or content

Recoverable draw

Act as company loans to employees that are carried forward indefinitely until employees sell enough to repay their draws

Knowledge

Based on EEOC guidelines, refers to a body of information applied directly to the performance of a function. Similarly, according to ONET, knowledge refers to organized sets of principles and facts applying in general domains

Skill

Based on EEOC guidelines, refers to a observable competence to perform a learned psychomotor act

Ability

Based on EEOC guidelines, refers to a present competence to perform an observable behavior or a behavior that results in an observable product

Straight commission

Based on a fixed percentage of the sales price of the product or service

Universal compensable factors

Based on the Equal Pay Act of 1963, includes skill, effort, responsibility, and working conditions

Survivor benefits

Based on the insureds' employment status and the survivors' relationship to the deceased. Dependent, unmarried children and a spouse caring for a child may receive support Also widow or widower at least of age 60 or a parent at least age 62 who was dependent on deceased employee

Sick leave

Benefits compensate employees for a specified number of days absent due to personal illness

Compensation budgets

Blueprints that describe the allocation of monetary resources to fund pay structures

Internally Consistent Compensation System

Clearly defines the relative value of each job among all jobs in the company. This ordered set of jobs represents the job structure or hierarchy.

Point-of-service plan (POS)

Combines features of fee-for-service systems and health maintenance organizations. Employees pay a nominal copayment for each visit to a designated network of physicians. They may receive treatment from providers outside the network but they pay more for this choice

Best type of sales plan for lowest cost strategies

Commission

Pay structures based on geography

Companies with multiple geographically dispersed locations such as sales offices, manufacturing plants, service centers, and corporate offices

Old Age benefits

Individuals may receive various benefit levels upon retirement, or under survivor's and disability programs, based on how much credit they have earned through eligible payroll contributions

Prescription drug plans

Cover the costs of drugs that state or federal laws require to be dispensed by licensed pharmacists

Health insurance

Covers the costs of a variety of services that promotes sound physical and mental health, including physical examinations, diagnostic testing, surgery, hospitalization, psychotherapy, dental treatments, and corrective prescription lenses for vision deficiencies. 4 types - fee-for-service plans - managed care plans - point-of-service plans - consumer-driven health care

Parental leave

compensates new parent employees following birth, adoption, or foster placement of a child

Section 403(b) plans

Defined contribution plans that apply to employees of public educational institutions and private tax-exempt organizations

Section 457 plans

Defined contribution plans that apply to state government workers

Percentiles

Describe the dispersion by indicating the percentage of figures that fall below certain points. There are 100 percentiles ranging from the 1st percentile to the 100th

Regression analysis

Describes the linear relationship between two variables or between the linear composite of multiple variables and one other variable Finds the best fitting line between two variables (internal and market factors)

Primary care physicians

Designated by HMOs to determine whether patients require the care of a medical specialist. This functions to control costs by reducing the number of medically unnecessary visits to expensive specialists

Generalized work activities

Information describes general types of job behaviors occurring on multiple jobs

Job Analysis Process: Writing job descriptions

Effective job descriptions typically - explain what the employee must do to perform the job, how the employee performs the job - why the employee performs the job in terms of its contribution to the functioning of the company - supervisory responsibilities, if any - contacts (and purpose of these contacts) with other employees inside or outside the company - The KSAs the employees should have or must have to perform job duties The physical and social conditions under which the employee must perform the job

Managed-care approach

Emphasize cost control by limiting an employee's choice of doctors and hospitals. These plans also provide protection against health care expense in the form of prepayment to health care providers - health maintenance organizations (HMOs) - exclusive provider organizations (EPOs) - Preferred provider organizations (PPOs) - Point-of-service plans (POS)

How do compensation experts and HR professionals create internally consistent job structures?

First by job analysis followed by job evaluation

Licensing

Information describes licenses, certificates, and registrations that are used to identify levels of skill or performance relevant to occupations

Major types of paid time off

Holidays, vacation, sick leave, personal leave, jury duty,. funeral leave, military leave, clean up/prep/travel time, rest period/breaks, lunch, integrate time off policies, parental leave, sabbatical leave, volunteerism

Contributory financing

Implies that the company and its employees share the costs for discretionary benefits

What can happen in a failure to accurately match compensable factors to jobs?

Inadequate or excessive pay rates

O*NET Content Model: Occupational Requirements

Include information about typical activities across occupations. Identifying generalized work activities and detailed work activities summarizes the broad and more specific types of job behaviors and tasks that may be performed within multiple occupations - generalized work activities - detailed work activities - organizational content - work context

Why is there stagnant growth in compensation budgets in the US?

Increase in compensation budgets have been about the same as the increase in COLAs

Federal Unemployment Tax Act (FUTA)

Mandates employer contributions to fund state unemployment insurance programs

Federal Employees' Compensation Act

Mandates workers' compensation insurance protection for federal civilian employees

Longshore and Harborworker's Compensation Act

Mandates workers' compensation insurance protection for maritime workers

Consulting firms as a compensation survey source

May provide survey data from recently completed surveys. The firms may literally conduct surveys from scratch exclusively for a client's use.

Employer Cost Index (ECI)

Measures change in labor costs

Real compensation

Measures the purchasing power of a dollar

Medicare Select Plans

Medigap policies that offer lower premiums in exchange for limiting the choice of health care providers

Preexisting condition

Mental or physical disability for which medical advice, diagnosis, are, or treatment was received during a designated period preceding the beginning of the disability or health insurance coverage

Market match policy

Most closely follows the typical market pay rates because companies pay according to the market pay line. Thus, results fall along market pay lines 2nd quartile (50th percentile) Fits better with differentiation strategies. Safe approach

Cash-balance plan

Most common type of hybrid plan. Represents a cross between traditional defined benefits and defined contributions retirement plans. The rate of monetary accumulation slows as the employee's years of service increase Less costly to employers, pay benefits in a lump sum

Job Analysis Process: Conduct the study

Must be reliable and valid job analysis methods.

Job Analysis Process: Select and train analysts

Need to collect job-related info through various methods, relate to a wide variety of employees, analyze the info, and write clearly and sufficiently. Ideally a task force of representatives from throughout the company that HR staff members coordinate

Benchmark jobs

Positions found outside the company that provide reference points against which the values of the jobs within the company are judged

Nondiscrimination rules

Prohibits employers from discriminating in favor of highly compensated employees in contributions or benefits, availability of benefits, rights or plan features. Also, employers may not amend pension plans to favor highly compensated employees

Tuition reimbursement programs

Promote employee's education. An employer fully or partially reimburses an employee for expenses incurred for education or training

Wellness programs

Promote employees' physical and psychological health

Student loan repayment assistance

Promotes recruitment and retention of recent college graduates as well as reduces stress levels

What is the effect of overstated mean salaries?

Promotes recruitment efforts but creates a cost burden to companies

Pros/cons of customized compensation surveys

Pros - Can tailor the questions the survey asks and select respondent companies to provide the most useful and informative information - Enables employers to monitor quality of the survey developer's methodologies Cons - Companies lack employees qualified to undertake this task - Rival companies are understandably reluctant to surrender info about their compensation packages to competitors because compensation systems are instrumental to competitive advantage (they could report inaccurate info) - Can be costly

Pros and cons to discretionary benefits

Pros - contribute to competitive advantage - can be used to promote employees behaviors with strategic value - can be used to distinguish themselves from the competition - meets needs of a diverse workforce - tax advantage Cons - Can undermine the imperatives of strategic compensation

Life insurance

Protects employee's families by paying a specified amount to employee's beneficiaries upon employee's death. Most policies pay some multiple of the employee's salaries may also include accidental death or dismemberment benefits

Financial education programs

Provide employees with resources for managing personal budgets and long term savings

preeligibility period

Spans from the initial date of hire to eligibility for coverage in a disability insurance program

Network

Specific group of doctors, hospitals, suppliers, and clinics who have contracted to provide services for an agreed rate

Stress management

Specific kind of wellness program designed to help employees cope with many factors inside and outside of work that contribute to stress

Simple ranking plans

Specific methods of job evaluation, orders all jobs from lowest to highest according to a single criterion

Salary-plus-commission

Specific type of sales compensation plan. Sales professionals receive fixed base compensation and commission

Salary-plus-bonus plans

Specific type of sales compensation plan. Sales professionals receive fixed base compensation, coupled with a bonus. Bonuses re usually single payments that reward employees for achievement of specific, exceptional goals.

Salary-only plans

Specific type of sales compensation plan. Sales professionals received fixed-base compensation, which does not vary with the level of units sold, increases in market share, or any other indicator of sales performance - risk free for employee - burdensome for company because must compensate regardless of performance

Commission-only plans

Specific type of sales compensation plan. Some salespeople derive their entire income through commissions Suite well when - salesperson has substantial influence over sales - low to moderate training or expertise is required - sales cycle is short Employee holds all the risk

Job summary

Statement contained in job descriptions, summarizes the job based on two or four descriptive statements

Nonexempt jobs

Subject to overtime provision. Typically an hourly pay rate

Equity theory

Suggests that an employee must regard his or her own ratio of merit-increase pay to performance, as similar to the ratio for other comparably performing people in the company

Job descriptions

Summarizes a job's purpose and list its tasks, duties, and responsibilities, as well as the skills, knowledge, and abilities necessary to perform the job at the minimum level

Medicare tax or Hospital Insurance Tax

Supports the Medicare Part A program

Pension Protection Act (PPA)

Supposed to help shore up the financial solvency of defined benefit plans in private sector companies and to permit employers to automatically enroll employees in defined contribution plans

Job evaluation

Systematically recognizes differences in the relative worth among a set of jobs and establishes pay differentials accordingly

Federal Insurance Contributions Act (FICA)

Taxes employees and employers to finance the Social Security Old-Age Survivor and Disability insurance program (OASDI)

Professional/industry associations as a compensation survey source

Typically survey member's salaries, compile the info in summary form, and disseminate the results to members. Tends to be accurate because participants benefit from survey results. In addition, membership fees often entitle members to the info at no additional cost

Best approach to producing valid job descriptions

Use multiple sources of data and multiple methods of data collection

Medicare Part B

Voluntary supplementary medical insurance that covers 80% of medical services and supplies. Part B also provides ambulance services when other modes of transportation may endanger the patient's life Medical care such as doctors' services ,outpatient care, clinical laboratory services, and some preventive health services

Nonqualified plans

Welfare and pension plans that do not meet various requirements set forth by the Employee Retirement Income Security Act of 1974; disallowing favorable tax treatment for employee and employer contributions

Qualified plans

Welfare and pension plans that meet various requirements set forth by the Employee Retirement Income Security Act of 1974; these plans entitle employees and employers to favorable tax treatment by deducting these contributions from taxable income. Qualified plans do not disproportionately favor highly compensated employees

Reliable job analysis method

Yields consistent results under similar conditions

Pensions benefit Guaranty Corporation (PBGC)

a self-financed corporation established by ERISA to insure private-sector defined benefit plans