aPHR certification: compensation and benefits

Raises may be awarded based on one or more of the following criteria:

- An annual raise, given across-the-board to all employees - An annual raise, with the amount each individual receives pegged to her performance - Individual raises, awarded as managers see appropriate to individuals demonstrating superior performance—known as "merit increases" - Periodic individual raises pegged to an employee's tenure with the company

simplified employee pension plan (SEP)

involves employers setting aside money in retirement accounts for employees. SEPs are relatively simple. Employees do not contribute to these funds and are completely vested so that they can leave the company with the allocated funds at any time. Employers may not put more than 25 percent or $57,000 (whichever is less) of the employee's income into the SEP, and they may adjust the amount put into the SEP annually. All employees must receive the same contribution.

To be effective, the rewards system needs to do two things:

1. clearly align overall company goals with employee goals 2. accurately match the company's performance against each individual's performance.

job pricing

Assigning a value to particular positions. assigned a pay range, allowing for some flexibility to determine a particular salary based on applicant skills, education, and experience, and the specific tasks done in that position.

Acme Corp. pays its computer programmers 12 percent less than programmers at other companies in the area. What sort of issue does this create?

lack of external equity

flextime and telecommuting are ______________ benefits

lifestyle

Dental Insurance

Dental insurance provides support for a certain amount of the costs an individual may incur for dental care. Typically there are restrictions for types of procedures and the total amount that can be collected in a year. Some dental insurance plans only provide preventative care—like cleanings—while others provide restorative care as well, which may include fillings, bridges, or orthodontia.

other benefits:

Other benefits commonly offered by employers include compensation for time not worked, health insurance, and some sort of pension plan Compensation for time not worked often includes holidays, vacations, personal days, days missed due to illness, maternity leave, and time missed due to a disability. Some companies choose to provide benefit options to employees that go above and beyond the options listed thus far, offering benefits like vision care, prescription drug coverage, legal and financial counseling, educational assistance, childcare assistance, wellness programs, and even concierge services that run errands for employees (like picking up dry cleaning).

personal days

Paid time off for any reason.

Economic Grown and Tax Relief Reconciliation Act (EGTRRA)

permits employees over the age of 50 to make greater contributions to 401(k) plans and to make catch-up contributions.

T/F- intermittent and reduced leave can be easier to keep track of, so it is essential to stay vigilant when documenting.

False - it is trickier to keep track of In both reduced and intermittent leave, only the amount of leave used is deducted from the employee's allotted 12 weeks. When designating intermittent leave, organizations can get more granular than days and credit leave time in increments of an hour or more.

what is a major difference between HMOs and PPOs?

HMOs generally have lower out-of-pocket costs.

payroll and HRIS

HRIS are often implemented to organize the information involved in calculating and keeping track of payroll-related issues. Payroll consists of the collection and synthesis of a great deal of information, and an HRIS can be an effective way to manage and organize that information. Generic HRIS software is able to meet the needs of many organizations, though companies with particular needs may need to alter or design their own. Payroll information is often sensitive. For this reason, it must be protected. Whoever is in charge of payroll and whatever system is employed to administer it, the system must be secure.

stock options

Right to purchase stock at a fixed price in the future. Stock options are a form of deferred payment that can be traded for shares of the company's stock at some point in the future

Green and Red Circles

If an employee's pay falls below the minimum of the compensation range, this is referred to as a green circle rate of pay. Employees may also be considered to be in green circle situations if their skills are insufficient relative to the requirements of the position. When employees receive compensation that is above the maximum compensation for their salary range, this is referred to as red circle pay.

union pay

In a unionized workplace, the union contract will govern all aspects of employee compensation. An important pay consideration for HR managers in a union environment is often maintaining pay equity between the unionized employees and those who are not unionized. With the union employees' pay set by contract, any equity adjustments need to be made to the non-unionized employees' pay.

What is the difference between incentives and benefits?

Incentives are meant to encourage performance; benefits are meant to enhance employees' participation in the workplace.

Why would companies choose to provide disability insurance for their employees?

It can help in recruiting and retaining high-quality employees.

life insurance

Life insurance protects an employee's family if the employee dies. Life insurance provides health and welfare support for the employee's survivors. Often there are limits on how much money can be collected and in which circumstances. For example, life insurance may only provide support if an employee dies in certain ways but not others. Insurance companies may offer life insurance in addition to medical insurance for an additional fee.

four part of Medicare

Medicare Part A- hospital insurance Medicare Part B- medical insurance Medicare Part C- medicare advantage (alt. to Part A and B) Medicare Part D- prescription drug costs See photo/graphic

childcare options

On-site childcare is regarded as one of the best employee benefits for parents. Not only is the childcare free or discounted, but parents are comforted knowing their children are nearby.

the government mandates some benefits including:

Social Security, unemployment compensation, and workers' compensation. Under the Patient Protection and Affordable Care Act of 2010 (popularly known as Obamacare), most employers either have to offer health insurance benefits to employees or else pay a fine. Many other benefits are not legally mandated but have become so institutionalized that many employees expect to receive them.

Fee-for-Service Plans

place no restrictions on the doctors and hospitals a patient may use for services. Employees with fee-for-service plans must pay for health services out of pocket and then submit claims to be reimbursed for those expenses. These plans are typically more expensive for both employers and employees than alternative plans.

vesting

The point at which employees are entitled to these funds. the amount of a benefit or that an employee is entitled to at a given time. vesting occurs on a gradual schedule to incentive employee's to stay with their employers for a long period of time. According to ERISA guidelines, employer contributions are 20 percent vested after three years of service, and vesting increases incrementally until seven years of service, where contributions are 100 percent vested. Employee contributions are always 100 percent vested, meaning employees are always entitled to the contribution they make to their pension plans.

incentives

This form of compensation is often, though not always, used to motivate achievement of specific goals. There are various incentive programs in the form of cash bonuses, stock shares, and stock options, etc. In addition to base pay, employers often offer a range of incentives to their employees to encourage higher performance levels. Such incentives include: - Commissions (a percentage of the sale) for salespeople - Annual bonuses for those who accomplish specified goals - Stock options (the right to purchase company stock in the future for a set price pegged to today's stock price) to encourage long-term thinking that will benefit the company's future performance

Time-off Allowances

Time-off comes in two varieties: paid and unpaid. Time-off usually comes from a bank of hours that an employee can use for different reasons, such as sickness, vacation, or just a personal day. The bank of hours is variable and often changes with the position of the employee and the amount of time worked at an organization. Generally, the longer an employee works for an organization, the more time off the employee is allotted. Tracking used time-off is typically straightforward and done through digital databases. Time-off banks usually reset every year, but they may also roll-over depending on the organization's policies. Some organizations offer unlimited time-off and work on a policy of "as long as work is getting done."

The main objectives of a compensation program are:

To retain employees and motivate them To offer fair reward for their achievements To create incentives for future efforts

Flextime

plans in which employees usually must still work 40 hours per week and typically 5 days a week but in which they have control over the starting and ending times for work on each day

Brenda has an hour-and-a-half commute back and forth to work each day. She asks her boss why she isn't compensated for this work-related time. Which federal stature does her boss cite?

portal-to-portal act

sabbatical

a paid rest or break from work. are usually a year-long and are given at some regular interval of years worked. The purpose of taking a sabbatical is often for conducting research, in-depth study of a given topic, or traveling. While sabbaticals are most commonly associated with academia, they can be incorporated in other sectors as well.

A system designed to standardize the pay process, so that people doing the same work get paid similarly, is known as ______________.

a pay scale

Severence package

a payment and benefits for employees who leave a company. This differs from a pension plan in the sense that it is not an amount that either the employee or employer pay into for the duration of the time the employee is working; rather, it could be a percentage of wages, time off that remains, stock options, and other means of compensation that must be paid out.

Co-payment

a specific amount of money a patient pays for a medical visit or prescription

managed care

a system designed to control healthcare costs by restricting patients' access to certain doctors and hospitals, limiting treatment options, and using a management company to hold down costs. Managed care options vary in whether they prioritize saving money for employees or giving employees the freedom to determine where and when they receive medical procedures.

defined benefit pension plan

a traditional pension plan, funded by the employer. the amount an employee receives after retirement is based on years of service and earning level during employment. Defined-benefit plans insulate employees from many of the risks that they might face with other plans, but are ultimately more costly for employers.

Workers Compensation

a type of insurance that is allotted to employees who are injured at or get an illness from their workplace. The money for workers' compensation typically comes from state-sponsored workers' compensation funds or a private insurance agency. If an employee is awarded workers' compensation, they give up their right to sue the organization for negligence. Workers' compensation can cover medical expenses, wage recovery, reimbursement for medical-related expenses, and even benefits to the dependents of employees killed on the job.

skill pay

a way of rewarding employees who acquire new skills.

describes company pay scales that don't change quickly

sticky

defined contributed pension plan

such as a 401k in which the money saved for retirement is placed in investments controlled by the employee. Since this shift away from defined-benefit plans has occurred, defined-contribution plans have become more popular. Defined-contribution plans transfer much of the risk of retirement investment off the employer and on to the employee. For defined-contribution plans, an employee authorizes his or her employer to deduct some specified amount from his or her paycheck before taxes and to invest that sum in a specified bundle of investments (often mutual stock funds or bond investments).

Aging factors

the average percentage increase in salaries per year multiplied by the number of years since the data was collected.

external equity

the comparison of pay levels of a company to other companies to ensure that the levels are comparable. The internal pay levels are then compared to the pay levels of other companies to ensure external equity.

Work-Life Balance

the concept of working an equal amount on professional duties and those activities that provide personal fulfillment work-life integration; trying to find a middle ground (most companies doing this now). i.e. telecommuting, working remotely, flextime

Davis-Bacon Act of 1931

the first federal legislation to mandate that laborers and mechanics be paid the prevailing wage on public works projects. intended to protect employees in the construction industry, by preventing employers from hiring out-of-town or out-of-state workers, and paying them less than they would have to pay local workers.

tenure

the length of time an employee has been at a company

decreasing-rate increase

the more you make, the smaller your pay increases become. organizations raise the wages for lower pay grades or for jobs that receive less compensation at a faster rate than the wages for jobs that pay a higher salary. most likely to happen if minimum wage legislation changes or as a result of collective bargaining.

Perquisites (perks)

the nonfinancial benefits that come from a job and may include a nice office, company car, or parking space, as well as special memberships to desirable clubs and conveniences like an expense account. Higher-ranking executives tend to have the most perks.

total rewards

the sum of all compensation and benefits paid to an employee, including pay; benefits; incentives; and non-monetary compensation such as professional development, career opportunities, camaraderie, personal satisfaction, flextime, and telecommuting. includes both monetary and non-monetary

Broadbanding

the use of a job grading structure with extremely wide salary bands. When broadbanding is employed, all jobs fall into one of these limited pay levels. One advantage of broadbanding is that it creates a sense of fairness as it related to compensation, limiting perceptions that some employees earn more for comparable work.

prevailing wage

the usual wage, benefits, and overtime that are paid in the largest city in each county to the majority of workers on public works projects

Imputed income

the value of a service or benefit received by the employee that must be treated as income for taxes and reporting earnings to the Internal Revenue Service. Employers must report imputed income on an employee's W-2 form, and employees must, in most cases, pay taxes on that income. Imputed income is important in the context of group life insurance. Group life insurance over $50,000 is an imputed income. The IRS provides calculations for imputed income for group life insurance exceeding $50,000.

the sum of all compensation and benefits to be paid to an employee

total rewards

A framework for distributing both monetary and non-monetary compensation is known as a _____________.

total rewards strategy

T/F- Some benefits must be treated as income for tax purposes

true

T/F- When issuing raises, it is important to keep the wage curve, pay grades, and pay ranges in mind.

true

Many employees tend to ________________ the value of their work-related benefits.

underestimate

a voluntary deduction paid by members of a labor union

union dues

benefits

various non-wage forms of compensation provided to employees in addition to their normal wages or salaries. focuses on improving employees' economic security and their work-life balance to enhance their participation in the workplace. examples of employee benefits are vacation, sick leave, group insurance (health, dental, life, etc.), disability protection, retirement plan. Benefits can create loyalty and reduce employee turnover, but they are expensive. Human resource managers need to consider benefits as part of their strategy for attracting and retaining skilled workers at their company, but they also need to ensure that the cost of the benefits does not become excessive.

All the graphic designers at MegaCorp earn about $50,000 a year. But when the company needs to hire two more graphic designers, the hiring manager discovers that these skills are now highly sought-after, and she has to offer the new hires $75,000 apiece. This scenario is an example of what?

wage compression

Four kinds of compensation and benefits claims:

workers' compensation wage and hour claims disability benefits Family and Medical Leave Act (FMLA) violations

Which of the following statements about healthcare benefits is true? a. The cost of healthcare coverage is not a significant factor in overall compensation costs.. b. More generous healthcare benefits may help attract high-quality recruits.. c. Most companies offer healthcare benefits to both full-time and part-time employees.. d. Healthcare benefits are an essential element of any benefits package.

b. More generous healthcare benefits may help attract high-quality recruits.

external market rate

compare compensation packages for employees with particular skills and responsibilities to compensation packages offered to comparable employees at other organizations

wages and other financial benefits earned from labor

compensation

a _____________ system can be used to promote an organization's objectives

compensation First, it can serve as the ultimate management tool for attracting, capturing, and retaining top talent. Second, it can be a powerful way to shape this talent and to promote constant learning and growth from within

commissions

earning based on the amount of the total sale. A commission system awards salespeople a percentage of every sale. see photo/print out on commission: - commission is capped as a percentage of salary - commission as a percentage of sales - commission and team commission

compensation

employee and management wages and other financial benefits earned from labor

defined contribution coverage

employees are expected to contribute a fixed amount to their health coverage costs each year. Any unused amount of this sum remains in the employee's account for future health costs. In circumstances where that account is depleted, the employer agrees to cover the remainder of the healthcare expenses, and in catastrophic circumstances where the expense is substantial, insurance covering the employee and employer pays the costs. Such plans shift some of the financial burdens of health costs away from employers and back to employees, while still providing some of the assurance and support of traditional health benefit options.

adverse selection

employees who are low-risk, frequently opting out of benefits, whereas higher-risk employees may frequently opt-in. costly because low-risk employees are not contributing to buffer the costs of care for their high-risk colleagues.

Variable pay

encourages employees to work more effectively. For example, incentive programs offer employees additional compensation for completing goals set by the organization. Gainsharing programs are used to encourage employees to meet financial goals by offering a share or percentage of the money gained or saved by meeting those goals. Another common example of variable pay is a profit-sharing program, which offers employees a certain percentage of profits made from meeting goals established by the organization.

internal equity

ensuring that the pay levels within an organization correspond to the level of responsibilities and skills required for the job. once a job evaluation is completed, managers set up a system of internal equity that rewards jobs that require higher skills and greater responsibility with more pay than those jobs that do not.

Medicare

established in 1965 as an amendment to the Social Security Act. The Medicare program exists to provide certain citizens with healthcare, regardless of their income. You are eligible for Medicare if you meet any one of the following conditions: - You are 65 or older - You have end-stage renal disease (meaning you are on dialysis or need a kidney transplant) - You have been collecting Social Security Disability Insurance for more than two years

fixed-rate increase

everyone gets the same wage increase as everyone else

federal law that requires employers to keep detail employee records

fair labor standards act FLSA

Employee Retirement Income Security Act (ERISA)

federal law that establishes minimum standards for retirement and health plans.

4 common retirement plans

flat dollar approach- a particular dollar amount is paid for each year of employment. often this dollar amount is determined during collective bargaining and is used to support hourly wages. career average- uses information spanning the length of employees career to determine the amount distributed at the time of retirement. based on a career average approach, employees earn a percentage of pay they received during each year they were participants in the plan. in another, employee benefits are computed by taking an average of yearly earnings. the total benefit is a percentage of that average pay multiplied by years of service. final pay approach- the approach bases benefits on the employee's average annual earnings during a specified time at the end of a career. cash balance plans- an employees total benefits are updated annual with a credit based on their earnings for the year, interest at the fixed or variable rate, or both.

Common Work-Life Balance Benefits

flexible scheduling compressed worksheet schedules telecommuting childcare options sabbatical

mandatory deductions from the paycheck of an employee who has unpaid debts or taxes

garnishment

preferred provider organizations (PPOs)

groups of healthcare providers that employers and insurance companies enter into contracts with, to receive health services at reduced fees. Employees are then required to use health services provided by the PPOs to reap the benefits of the health coverage provided by an employer.

Patient Protection and Affordable Care Act (PPACA) of 2010

has many employer implications, including requiring accommodation for breast-feeding. Most importantly, though, it ensures that Americans have access to affordable health care. While employers are not required to provide healthcare insurance, the law penalizes large organizations that do not provide access to affordable "minimal essential coverage." Large organizations are characterized as having employed an average of at least 50 full-time employees during the previous calendar year. An employee working 30 hours a week counts as one full-time worker.

The rising cost of __________________ is the principal driver of the increasing cost of employee benefits.

healthcare

in addition to payroll records, companies must keep records relating to ________ __________.

hiring efforts

used to motivate achievement of specific goals

incentive

Nonmonetary Compensation

includes both intrinsic rewards (i.e., those that involve the worker's own self-esteem, such as the satisfaction of completing a challenging task) and extrinsic rewards (i.e., those in which positive feelings come from others, such as a positive relationship with co-workers). Nonmonetary compensation can include being recognized for good performance or having career advancement opportunities. It can also include lifestyle benefits such as flextime and telecommuting.

monetary compensation

includes everything the organization incurs a cost for or pays out to its employees including cash compensation, pension benefits, 401K matching payments, health-insurance premiums, paid time off, stock options, incentive plans, and ESOPs.

traditional IRA's

income put aside for the account is not taxed at the outset, but the funds are taxed when money is withdrawn, and an additional 10 percent tax penalty is applied if contributors withdraw funds before they are eligible. Workers are allowed to invest up to $6,000 in an IRA if they are under 50 $7,000 if they are over 50. Funds are eligible for withdrawal when the contributor turns 59.5 or when they are to be used to cover expenses related to higher education or the purchase of a first home.

Roth IRA's

individual retirement plans. Contributions to Roth IRAs are made after taxes have been paid, and therefore when those funds are withdrawn, they are not subject to federal income tax. Contributors are free to withdraw funds from these accounts after they are 59.5 years of age or become disabled, and after at least five years have passed since the first year they contributed to the plan. If withdrawals are made in other circumstances, they are subject to fines.

taking satisfaction in a job well done is an _______________________ reward

intrinsic

five types of incentive pay:

commission merit pay group incentive pay profit sharing skill pay

merit pay

pay based on exceeding objectives or performance standards. types:

The escalating cost of health insurance poses a host of related issues for employers:

- If only full-time employees are eligible for health insurance (as is usually the case), is there a significant financial incentive in having fewer full-time workers and more part-time and contract workers? - Can costs be contained by shifting to a "cafeteria-style" benefits package in which an employee who doesn't need health insurance (generally because of insurance obtained through a spouse's employer) could opt instead for more paid time off or a greater retirement plan contribution? - Perhaps most importantly, at what point do cost-containment measures make a company's health plan uncompetitive in the market for talented employees?

three most common wage and hour claims can stem from:

- misclassifying independent contractors or exempt/nonexempt employees - falsifying timesheets to avoid paying overtime - failing to provide adequate rest and meal periods

pension act of 2006

- protects employees when they are entitled to pension plans, but those plans do not have the funds necessary to provide the promised benefits. - requires employers to make additional contributions to pension plans that are determined to be underfunded. Employers who do not comply with the Act face steep tax penalties that started in 2015. - requires that employers who offer stock options as a benefit must provide at least three additional options from which employees may choose - employers are permitted to enroll employees in 401(k) plans automatically, which means employees who don't want to participate in such plans must now opt-out of them.

filing disability benefits process:

- starts with filling out forms and submitting - insurance company will investigate the severity of the disability and either approve or deny disability benefits.

HR's Worker Comp report should consist of the following information:

- the type of injury and where the injury is on the body - the date, time, and place where the injury happened whether there were other employees involved and - interviewing witnesses - description of the events before, during, and after the incident - the extent of medical treatment received thus far whether other laws apply from the American's with Disabilities Act (ADA), FMLA, etc. the claim will be filed to both the organization's insurance company and the state's workers' compensation agency office. It is crucial to meet the state's deadlines for reporting and filing a workers' compensation claim, which varies from state to state. If the employee's organization refuses to file the claim, the employee can file the claim directly to the state's agency office

Functional Area 3 tests knowledge of:

1. Applicable laws and regulations related to compensation and benefits, such as monetary and non-monetary entitlement, wage and hour, and privacy (for example: ERISA, COBRA, FLSA, USERRA, HIPAA, PPACA, tax treatment) 2. Pay structures and programs (for example: variable, merit, bonus, incentives, non-cash compensation, pay scales/grades) 3. Total rewards statements 4. Benefit programs (for example: health care plans, flexible benefits, retirement plans, wellness programs) 5. Payroll processes (for example: pay schedule, leave and time-off allowances) 6. Uses for salary and benefits survey 7. Claims processing requirements (for example: workers' compensation, disability benefits) 8. Work-life balance practices (for example: flexibility of hours, telecommuting, sabbatical)

employee must meet all three of the following criteria or "tests" to be considered exempt from FSLA:

1. The employee must earn more than $684 per week 2. The employee must be salaried—that is, not paid on an hourly basis 3. The employee must perform certain exempt duties as part of his or her job exceptions to each of these rules: for instance, employees who are paid by the hour can still be exempt if they earn more than $100,000 per year.

In deciding how much—and how—to pay employees, an organization has three primary concerns:

1. competitive pay (the compensation provided is similar to that which is being provided to similarly skilled people doing similar work in the same geographic region) 2. pay equity (People with similar skills, tenure, and work records should expect to earn the same amount of money in the same organization. For instance, an entry-level payroll clerk should make about the same as an entry-level finance clerk- however, can be different with explainable reason) 3. legal aspects (the pay level and structure comply with state and federal laws)

five ways that an organization can help to ensure wage equity:

1. identify your hiring practices and take a look at that. 2. look at your company's culture. 3. do assessments on wages. 4. identify the inequalities. and 5. you have to fix it.

four key provisions of the FLSA:

1. minimum wage ($7.25 federal minimum wage or $2.13 for $30 with tip per hour i.e. watresses) 2. overtime (x1.5 per hour over 40 hrs) 3. child labor (farm vs nonagricultural jobs differ) 4. record keeping (keep records of wages paid, hours worked, and other relevant data for each nonexempt employee; different record-keeping requirements for exempt employees and other workers employed under special circumstances) NOT covered: Vacation, holiday, severance, or sick pay Meal or rest periods, holidays off, or vacations Premium pay for weekend or holiday work Pay raises or fringe benefits Procedures for discharging an employee, or immediate payment of final wages to terminated employees

seven types of differential pay:

1. overtime 2. shift pay (compensate workers who work on less desirable shifts more money) 3. on-call pay (additional money paid to an employee while they are "on-call"; not actively working but called in when needed) 4. call-back pay (called back to work after their regular hours, as in the case of a workplace emergency. Call-back pay is often calculated as a multiple of the base rate (e.g., "double time" or "triple time")) 5. reporting pay (situation typically arises when an employer closes early because of bad weather or a similar circumstance; in such cases, all employees who have reported to work are entitled to receive some minimum compensation for showing up. Reporting pay is not required under the federal FLSA*, and most states do not mandate it, either. But it is the law in eight states (California, Connecticut, Massachusetts, New Hampshire, New Jersey, New York, Oregon, and Rhode Island) and the District of Columbia.) 6. hazard pay (compensate them for the physical and psychological risks they encounter on the job. Hazard pay is usually awarded as an additional hourly "hazard rate," though some employers choose to pay a lump-sum bonus after the hazardous duty.) 7. geographic pay (differentials to account for economic differences between different locations. While some companies base geographic pay on variations in the cost of living, it is much more common for companies to base differential pay on the cost of labor; These companies use salary surveys to determine the prevailing salary levels for different jobs in each location and adjust their pay scales accordingly.)

Federal law requires employers to provide full-time employees with up to _________________ of unpaid family or medical leave.

12 weeks

Larger Employee Contributions

As with co-payments, this cuts costs in two ways: 1. Employers pay less in premiums 2. Employees are more amenable to "stripped down" health plans that cost less up-front.

an HRIS is a type of _____________ that allows companies to manage payroll, accounting, and related HR functions

software

Fair Labor Standards Act (FLSA)

1938, erected the framework for federal regulation of both private-sector and federal, state, and local government pay, and that framework remains in place today. FLSA is often referred to as the "Wage and Hour Act" because it is principally concerned with regulating the wages of workers who are paid on an hourly basis. the law requires employers to classify each of their workers as either nonexempt employees or exempt employees. The law requires that nonexempt employees be paid at least the minimum wage and that they also are paid overtime when they are required to work more than 40 hours in a given week.

Jerry's base pay is $40,000. The salary range for his position runs from $25,000 to $55,000. What is Jerry's compa-ratio?

25,000 + 55,000 = 80,000 / 2= 40,000 40,000/40,000 = 1%

higher co-payment

A co-payment, also commonly referred to as a co-pay, is the amount a patient must pay for a medical visit or prescription, in addition to whatever an insurer pays. The requirement that the patient assumes a larger percentage of the cost for any medical care saves insurers—and thus, those who pay premiums—money in two ways: 1. The insurer pays less for any given doctor's visit or treatment 2. Patients tend to ration their use of the healthcare system.

Medical/Flexible Spending Account

A company may sometimes offer medical, also known as flexible, spending accounts. In this case, an employee puts money aside, tax-free, to cover all but catastrophic health costs. The employer pays only for catastrophic health insurance.

total reward strategy

A framework for the distribution of these rewards. elements must be taken into consideration when developing a total rewards strategy, including legal issues, environmental factors, the competitiveness of the organization, and the labor market.

profit sharing

A system in which employees receive a share of the net profits of the business. encourages employees to contribute to the company's performance because employees are paid a portion of the company's profits. It can also help improve relationships between managers and production workers. Profit-sharing programs give employees a share of profits earned by the company. How these profits are divided is determined by an allocation formula. Usually, the formula takes into consideration how much responsibility the employee has, seniority, and base pay.

Why might some companies decide to provide employees with a flexible benefits package?

Because different employees at different times in their lives have varying needs and wants.

FMLA Violations

Claims for FMLA violations are a possibility every time an organization denies leave to an employee. Medical or family leave will usually be legitimate requests from employees, but sometimes the requests seem unjustified and are denied. There are many reasons that an employee may not be eligible for FMLA, so it is essential to carefully relay this information to the employee to avoid violation claims. Employees filing these types of claims are advised to immediately seek legal counsel to file the claim with the Department of Labor or to settle in or out of court. For FMLA violation claims, it is crucial to understand FMLA requirements and seek legal counsel if there is knowledge of a potential claim. Also, not all insurance companies cover claims from FMLA violations, so it is best to check with insurance providers about coverage for actual or potential claims.

________________ consists of base pay, incentive pay, and benefits or indirect, nonfinancial compensation.

Compensation

___________________-agreements tied to the consumer price index are often included in labor agreements to ensure salaries change to reflect increases in the cost of living.

Cost-of-labor

short and long term disability insurence

Employees are protected from financial loss during periods of illness by disability insurance. Typically employees who are ill for only a few days or a few weeks will use sick leave, which is provided directly by the employer. However, more prolonged absences may be covered by insurance. When an employee is disabled for a relatively short amount of time, then he or she may collect short-term disability insurance. Short-term DI provides a percentage of the employee's regular income if that person can't work or, in some cases, if that person is unable to work in his or her chosen profession. The length of time support can be collected varies, but it is unlikely that an employee could receive short-term DI for more than two years. Employees who are disabled for a relatively long time, usually two years or more, collect long-term disability insurance. Long-term disability insurance coverage begins once short-term disability insurance runs out. Employees can collect a portion of their income (usually around 60 percent) until they can return to work or retire. Not all companies provide short- or long-term disability insurance, though it can be a valuable tool for recruiting and retaining qualified employees.

Legally Required Benefits

Employers are legally required by the Federal Insurance Contribution Act of 1935 (FICA) to provide Social Security to their employees. Social Security is intended to protect employees and their dependents by providing retirement benefits, disability income, Medicare, and survivor benefits. However, the system of Social Security has been subject to significant criticism in recent years and will likely face revisions in the future. State laws also require employers to provide employee benefits of unemployment compensation and workers' compensation. The requirement of unemployment compensation was established by the 1935 Social Security Act, and provides benefits to out-of-work employees at a rate of around 50 to 80 percent of normal pay and usually for a maximum of 26 weeks. Employers are not required to pay unemployment compensation to employees who were fired for misconduct, quit, or are not actively looking for new employment. Workers' compensation provides no-fault insurance to employees when injury, disability, or death occurs while at work.

White Collar Exemptions

Exemptions for executive, administrative, and professional employees; the latter category includes doctors, lawyers, and teachers, among others

T/F- employers closely track the hours of exempt and nonexempt employees, and that they accurately calculate and pay overtime.

F- They do not have to do so for exempt employees.

family oriented benefits

FMLA- family and medical leave act mandating that employers provide up to 12 weeks of unpaid leave in circumstances where employees undergo childbirth, adopt a child, need to care for a seriously ill child, parent, or spouse, or are themselves seriously ill. This unpaid time is commonly called family leave. When family issues remain unattended, they can and often do negatively affect an employee's work performance. This sometimes results in complications like behavioral issues and increased absenteeism. The act does not require unpaid leave for employees who have worked less than one year, who work less than 25 hours each week (or less than 1,250 hours in the previous 12 months), and who are among the top 10 percent of the highest-paid employees at a company. Employers who employ less than 50 employees for at least 20 weeks of the year are exempt from the FMLA. paid vacation time, unpaid leave, and paid leave does not count toward the minimum hours an employee must work to be entitled to family leave.

Payroll Schedules

Pay schedules can be broken into two different components: the pay period and the date of payment. The date of payment amounts to the hours worked during the pay period. The length of pay periods can vary based on an organization's size and sector, but the most common pay periods are weekly and bi-weekly. With weekly pay periods, employees' pay date is at the end of every week, and employees are compensated for the hours worked during the previous week. Bi-weekly pay periods are structured the same but with a pay date every two weeks. Pay periods can also extend to semi-monthly (twice a month) and monthly periods, and are also structured the same. Studies show that employees would rather get paid more often than less often, so the pros and cons of the various pay schedules ultimately come down on the accounting department. Weekly pay schedules can often be the most burdensome on accounting departments because of additional factoring when conducting monthly reports. State regulations vary on pay schedules, usually setting a minimum number and less so a maximum. Because of this, it is always crucial to check with state legislature and the accounting department before adopting any particular pay schedule.

For employees who are subject to the minimum wage and/or overtime provisions, the following records must be retained for at least three years:

Personal information, including employee's name, home address, Social Security number, occupation, gender, and birth date if under 19 years of age Hour and day when the workweek begins Total hours worked each workday and each workweek Total daily or weekly straight-time earnings Regular hourly pay rate for any week when overtime is worked Total overtime pay for the workweek Deductions from or additions to wages Total wages paid each pay period Date of payment and pay period covered

Claims Processing Requirements

Processing various claims is an integral part of HR, and compensation and benefits related claims are the most common type. Within compensation and benefits related claims, there are various subtypes that the HR department must be equipped to handle.

Employee Assistance Programs (EAPs) and Family Oriented Benefits

Some Employee Assistance Programs (EAPs) provide counseling and advisory services for personal issues, including child and elder care, adoption assistance, mental health counseling, and life event planning. Often companies providing EAPs contracts with vendors to provide these services. Some companies offer specific benefits for employees who adopt children, including cash incentives and paid leave. While employee benefits have traditionally only extended to an employee's children and spouse, some companies are now offering an extension of employee benefits to domestic partners or spousal equivalents. These employers are attempting to recognize that modern families do not necessarily consist of married couples, and that by extending benefit coverage to spousal equivalents, they are providing a service to employees and the partners of employees in long-term relationships who cohabitate, including unmarried gay and lesbian couples.

how employees reduce benefit costs

Some companies have employed flexible benefits packages, also known as Cafeteria Plans and 125 Plans, in an attempt to reduce the cost of benefits. These flexible packages provide employees with a certain sum of money allocated to their benefits plan and then permit individual employees to choose where to spend those credits each year. Such plans recognize that different employees at different times in their lives have varying needs and wants, and they aim to minimize the chance that company funds will be funneled into benefits that are not appreciated or even used by employees. such flexible plans also carry risks of their own. Flexible benefit plans come with more administrative costs because it is more difficult to communicate and coordinate them. Furthermore, if the only employees that select health insurance coverage are higher-risk, then the premium rate for the company as a group might rise.

healthcare costs

Some employers have begun offering defined contribution coverage in response to rising healthcare costs. Employers have responded in a variety of ways, some of which include increased employee deductibles, coinsurance, and the use of preferred provider and health maintenance organizations.

Payroll

Sometimes payroll tasks are completed by the HR department, and sometimes they are fulfilled by a company's finance or accounting department. Furthermore, payroll- and compensation-related tasks are frequently outsourced. In such cases, the providers performing these services must meet an organization's needs. The process of selecting and monitoring those vendors is often an HR responsibility. First, employee earnings must be accurately calculated. This requires access to information about an employee's base pay, differential pay, tips, and bonuses. It also involves tracking and recording the use of paid leave and how many hours an employee worked during a pay period. In addition to calculating pay, payroll also involves managing deductions from the compensation an employee receives. Some deductions are mandatory, like Social Security, Medicare, and state and federal income taxes. These expenses are withheld from employee paychecks and then periodically submitted to the IRS or another relevant government agency. The amounts withheld and submitted on the employee's behalf are reported on W-2 forms at the end of each year. In addition to mandatory deductions, employers may withhold additional, voluntary deductions. Voluntary deductions correspond to optional benefits, such as 401(k) contributions, health insurance-related expenses, and union dues.

premium

The amount paid for an insurance policy or healthcare policy

Social Security

Unlike pension or insurance plans, money collected for Social Security from an individual at a particular time goes to pay for individuals who are at that time retired or disabled. However, because the elderly population is growing because of longer life expectancy, the ratio of individuals working and paying into Social Security and the number of recipients of Social Security has become imbalanced. Popularly discussed amendments to Social Security include adjustment of payments, increasing the age of retirement, and the establishment of private Social Security accounts.

Vision Insurance

Vision insurance provides support for employees who seek vision care. This is typically a low-cost benefit, and it can assist with exams and vision aids such as glasses and contact lenses.

Cash Balance Plan

When an organization promises to provide an employee with an established amount of money at retirement. Typically deposits are made into a cash balance plan account annually; those deposits are calculated, after interest, to add up to the appropriate amount at the time of retirement. Cash balance plans have become very popular in recent years because they are ultimately less costly than defined-benefit plans. Employees also tend to like cash balance plans because they are easy to transfer from one workplace to another. After resigning from an organization, employees can withdraw funds from these plans. However, employees with existing defined-benefit plans who have those plans converted to cash balance plans often suffer a significant reduction in benefits. As a result, the IRS placed a moratorium on such conversions in 1999—but conversions resumed after Congress cleared up several technical issues with the passage of the Pension Protection Act of 2006.

Consumer Credit Protection Act of 1968

When employees face certain debts, their employer may be legally required to withhold money from their paychecks to satisfy those debts. Employers are not allowed to terminate employees who have their wages garnished for a single debt, and limits are placed on how much may be garnished in any particular week.

restriction of output or soldiering

When pay strategies are tied to productivity, sometimes this challenge develops. This involves employees collaborating to reduce and limit their productivity to make sure standards are kept artificially low. Evidence of restriction of output can be seen when new employees enter a workspace. If their productivity increases as they learn their job, surpassing the productivity levels of their colleagues, but then suddenly drops to fall in line with that of their colleagues, this is an indication of restriction of output. Employees may restrict output when they are concerned that increased productivity will cause their managers to raise the standard of performance that is expected. This challenge has sometimes been addressed by having employees work alone. Ultimately, restriction of output can be an indication that workers do not trust their managers, and solutions may require greater communication.

Employee wellness programs

While employee wellness programs often require significant investments on the part of an employer, the pay-off for wellness programs can be tremendous in some circumstances. Usually, a small number of employees produce a disproportionate amount of healthcare costs, and if wellness programs address underlying lifestyle issues for those employees, healthcare costs can be greatly reduced. (i.e. smoking and bad eating habits)

Wage and Hour Claims

a common type of claim that HR may see. These types of claims are usually associated with violations from the Fair Labor Standards Act (FLSA). Wage and hour claims can be costly if brought to court and especially if they become a class action suit. Many insurance companies do not cover wage and hour claims because of the potential legal battle. So, it is essential to be versed in the rights of employees and employee labor laws in general to avoid these types of claims from being filed. However, if a claim is filed, it is still HR's responsibility to be as truthful and precise as possible to avoid incurring further penalties.

Employee Stock Ownership Plan (ESOP)

a compensation system that awards employees shares of company stock in addition to their regular compensation

compa-ratio

a formula that allows an employer to determine how close an employee's pay is to pay in the middle of an organization's pay range. compa-ratio score is presented as a percentage, and it is calculated by dividing the employee's base salary by the midpoint salary of the organization's pay range. Employees in similar positions should have similar compa-ratios. example: Imagine an employee earns $50,000 a year at an organization where salaries range between $30,000 a year and $65,000 a year. The midpoint of that salary range is $30,000 + $65,000 a year divided by 2, or $47,500. The ratio is then $50,000 / $47,500, or 1.05%.

total rewards statement

a year-end report that details the full scope of rewards an employee earns for their time, performance, and expertise. These statements allow for transparency, increased communication about compensation, and have been shown to increase employee retention. Total rewards statements describe an employee's salary, medical benefits, flexible spending accounts, stock options, bonuses, disability benefits, employee assistance programs, tuition assistance, and paid leave. Other benefits can be included as well, such as flexible schedules, telecommuting, pet insurance, on-site childcare, company-catered food, and company discounts on products and services.

Which of the following employee protections is provided by the CCPA? a) employees are protected from termination based on their wages being garnished for a single debt b) employees are protected against levies on their paychecks c) employees are protected against unfair labor practices d) employees are protected against predatory investors

a) employees are protected from termination based on their wages being garnished for a single debt

Which of the following is covered by the FLSA? a) record-keeping b) meal periods c) pay raises d) procedures for discharging employees

a) record-keeping

According to the Portal-to-Portal Act, in which of the following circumstances should an employee be compensated for his or her time? a) when printing copies for a work-related presentation on the way home from work b) when making a daily commute to and from the office c) when taking time away from work for a lunch break d) when planning a party at his desk after work hours are over

a) when printing copies for a work-related presentation on the way home from work

other than HR, the company department most likely to administer payroll

accounting

One downside of flexible benefit packages is that they come with higher _________________ costs.

administrative

Portal-to-Portal Act of 1947

aims to specify the compensable time for which employers are accountable. The Act determines that commute time is not compensable, but that employers must compensate workers for performing job-related tasks outside of work hours or during lunch breaks.

An effective compensation system needs to __________________________.

align overall company goals with employee goals and match company performance against each individual's performance

flexible scheduling

allow employees to dictate their individualized working hours. Instead of being chained to a desk for a given amount of time each day, the focus has shifted towards achieving specific goals and allowing time to recharge. Employees can benefit from flexible work schedules by: 1. Having more control over their work environment 2. Being better able to meet home/personal needs 3. Working when they can accomplish the most (ex., morning person vs. night owl) 4. Saving on commuting expenses and time 5. Reducing childcare needs/costs through adaptable schedules 6. Preventing job burnout due to work overload can reduce turnover, improve morale, and even improve the quality of work because employees can work when and where they are most productive.

childcare benefits

assistance in finding information about the cost and quality of available childcare (offered by about 36 percent of employers). Some organizations provide vouchers or discounts for employees using childcare (about 5 percent). Still, others offer childcare at the worksite itself (9 percent). Providing onsite childcare comes with liability concerns and high costs for an employer. Besides, it is unclear if providing onsite childcare significantly affects employee performance or absenteeism.

Section 125 flexible spending accounts (FSA's)

allow employees to set money aside pre-tax for certain expenses, including healthcare deductibles, child and elder care expenses, prescriptions, other health services. Flexible spending funds cannot be used to cover all employee needs, however, and certain expenses like the costs of education, weekend babysitting, and transportation costs are not eligible expenses. FSA's of this kind can save both employees and employers a significant amount of money. However, if an employee chooses to make deposits into a flexible spending account, but does not use those funds during the year, those funds are forfeited. Another disadvantage of flexible spending accounts is that they require employees to cover their expenses out of pocket, and then to submit claims for reimbursement from the FSA. From the employer's perspective, the most significant disadvantage of FSAs is that they can be difficult to administer. In general, employees are not able to change the amount of money they've elected to place in flexible spending accounts once the year begins. However, there are exceptions. In particular, employees can revise flexible spending accounts when they experience a change in status, or a qualifying event takes place. Examples of changes in status include changes in marital status (for example, getting married, getting divorced, or experiencing the death of a spouse) or a change in the number of people who count as their dependents (for example, after giving birth, adopting a child, or the death of a child). Qualifying events occur when a previously ineligible dependent becomes eligible to be covered by the plan or when a previously eligible dependent becomes ineligible to be covered by the plan.

Health reimbursement arrangements (HRA's)

allow employers to reimburse employees for medical expenses. There are no limits to the amount employers are allowed to set aside for these arrangements, nor are there limits on distributions to employees. HRAs must be used in combination with comprehensive insurance plans. Money set aside by employers for HRAs is untaxed, and taxes are not withheld from employee distributions.

compressed work schedule

allow for deviations from the standard Monday through Friday, 9 to 5 workweek. Employees working a compressed work schedule typically perform a certain number of hours of work in fewer workdays than it would usually take. For example, popular alternative work schedules include the 4/10 arrangement (working four 10-hour days with a 3-day weekend) and the 9/80 arrangement (nine-hour workdays with every other Friday off).

Preferred provider organizations (PPOs)

allow more choice but cost more for patients who choose to go outside a prescribed "network" of healthcare providers..

A Medical Savings Account is _____________________.

an account in which employees can put aside money, tax-free, to cover all but catastrophic medical costs

Halsey premium plan:

an approach to compensation that rewards efficiency. It calls for paying employees an hourly wage as well as some predetermined percentage of their hourly rate (called a Halsey premium) for any time they save relative to their past performance. If an employee earns $15 an hour and historically spends 10 hours a week on data entry, then if they receive a 33% Halsey premium and complete data entry in 8 hours, they'd earn an additional $10 for the two hours saved (2 x (15 X .33)).

Federal-State Unemployment Insurance Program of 1935

an extension of the Social Security Act, this program provides benefits to employees who have lost their employment for certain reasons. Employees may collect a percentage of their previous income in the form of unemployment for a limited amount of time after employment ends. most states do not permit employees to collect unemployment if they have been terminated for fault. Employers pay a state unemployment insurance tax to support the availability of this benefit.

methods of tracking benefit costs:

annual cost method- looking at the annual cost of making that benefit available measure the cost per employee per year- to do so, divide the total cost of the benefit for the year by the number of employees who received that benefit. This kind of analysis can help determine whether certain benefits are being used by only a small portion of employees.

Pay for Performance (P4P)

any compensatory system that links pay and performance. One of the benefits of pay for performance is that it can motivate high performance and cut company costs in the event of low performance. One of the risks of pay for performance is that it can often be affected by factors (such as the economy or changes in a client's purchasing behavior) outside a worker's control. Also, those motivated to achieve individual performance may be less inclined to value teamwork or to sacrifice personal gain for the organization.

Qualified Domestic Relations Orders (QDRO)

are legal orders that enforce these alternative payee arrangements. Only spouses, former spouses, children, or dependents of an employee may be alternative payees for the employee's pension plan. Employees may leave directions for employers to continue paying funds from an employee's pension fund to an alternate payee. For example, an employee may wish that his or her spouse would continue to receive pension payments if he or she dies and is survived by the spouse.

Total compensation statements

are useful, but many organizations are still hesitant to use them. Some organizations are concerned that employees will be displeased with the data in the reports, or that employees will compare their benefits with co-workers and those in comparable jobs elsewhere.

How do you know if your pay is competitive?

ask around- ask new employees who may have previously worked for another company in the area about their experiences. take a formal survey- This is most appropriate when those you are asking are not competitors. For instance, the owner of a small, independently-owned grocery store in Ohio might want to survey the owners of other small independently-owned Ohio grocery stores about their pay policies. take advantage of industry associations- Many times, an industry association will have conducted a compensation survey, asking its members to participate. Geography does have to be taken into account (as the same job function may pay more in a large metropolitan area). work with third party vendors- Salary.com, wageweb.com, and other sites offer information gained from their proprietary research. The federal Bureau of Labor and Statistics also has relevant information, free of charge.

Pension plans

assist employees with their retirement savings, and some require employee contributions.

Richie is a captain in the Army Reserve; he takes a four-month leave of absence from his job to take mandatory training. Which statement describes his rights under USERRA after he returns from his leave of absence? a. Richie is entitled to back pay for the four months of work that he missed. b. Richie can return to his old job, and he is given extra time to make up missed contributions to his 401(k)..Click for more information about this answer c. Richie cannot be fired without cause for one year.. d. Richie cannot be promoted for one year.

b. Richie can return to his old job, and he is given extra time to make up missed contributions to his 401(k)..Click for more information about this answer

Which of the following terms describes an employee's annual bonus? a. Family-oriented benefit. b. Variable compensation c. Base rate. d .Intrinsic reward

b. Variable compensation

pay grades

bands of minimum and maximum salaries offered for jobs valued at similar rates. typically, pay grades have upper and lower limits that are 10 to 20 percent above and below the midpoint. Thus, if the midpoint for a pay grade is $50,000, the upper and lower limits are likely between $55,000 and $60,000 and $45,000 and $40,000.

The process of balancing ________________ and ______________ is one of fine-tuning compensation

base pay incentive pay

base wage or salary

base rate- wages or salary before overtime pay, bonuses, or other incentive pay is required. (set off of skill level and experience; does not recognized learning that has occured) merit pay- a variation on the base salary that compensates employees through the salary range for their position based on their performance. (problem with such an arrangement is that some employees will come to expect that they will routinely get a raise after each evaluation—eliminating the motivational impact of the extra pay) "cost of living increases"- a form of compensation. This is an increase in base wage or salary meant to compensate for the falling value of the dollar due to inflation, leaving employees with the same buying power for their pay.

elements of compensation

base wage or salary benefits incentives

wages or salary before overtime pay or incentives

baserate

non-wage forms of compensation, in addition to an employees regular pay

benefits

flexible benefits packages

benefits plans that allow employees to select from a pool of choices, including health coverage, retirement contributions, cash, vacation times.

The practice of establishing a small number of broadly defined pay levels is known as _______________.

broadbanding

Employees are not entitled to FMLA leave in which of the following circumstances? a) 12 months after the birth of a child b) to adopt a child c) to care for the employee's sick father-in-law d) to care for the employee's sick mother

c) to care for the employee's sick father-in-law

Which of the following is NOT a provision of the Fair Labor Standards Act? a. Nonexempt employees must be paid overtime. b. Minors under the age of 18 are not allowed to work in hazardous jobs.. c. Nonexempt employees must be paid double-time for working on Sundays.. d. Employers must keep records of wages paid, hours worked, and other relevant data for each nonexempt employee.

c. Nonexempt employees must be paid double-time for working on Sundays

Health plan purchasing cooperatives (HPCs)

can help reduce the costs of healthcare. They involve cooperative contracts with insurance providers. Large cooperatives can leverage the volume of business for discounted rates. (apart of managed care)

job evaluation

categorize all jobs at a company according to the level of responsibility and required skills. the evaluation also considers the amount of supervision required for the job and the amount of supervision that the employee has over other workers.

The standard hour plan:

connects employee pay to performance. First, time-and-motion studies are used to establish just how much productivity an employee is expected to produce in an hour. Then, an hourly rate is established, but whether it is earned is not determined by minutes but by productivity. If the employee completes an hour's worth of work in 60 minutes, then they earn the hourly rate. If they produce less than an hour's worth of work, they receive a portion of the hourly rate proportionate to the work completed. This can lead to substantial pay increases for employees who outperform the expected hourly work output.

three types of leave according to the FMLA

continuous- when an employee is away from work for an extended period of time, usually starting after three consecutive absent days. (like maternity leave) reduced- a reduction in the employees usual work schedule for a given amount of time. reduced leave can be a decrease in daily hours worked or full days of the week. (an employee recovering from an illness and cannot yet work a full schedule) intermittent- a variable form of leave for when an employee is away from work for multiple periods usually because of a single illness or injury. the organization may designate an employee with intermittent leave to an alternative position with equal pay and benefits to accommodate the employee. (long standing treatment like chemo)

Geographic pay differentials are most frequently based on what factor?

cost of labor

Adjustments to the wage curve for ___________________ increases are often tied to the consumer price index, a measure of economic inflation

cost-of-living

Organizations should track the ____________________ to determine which benefits justify the expenses involved and which do not.

costs of benefits

Ensuring that employees within an organization with similar skills and responsibilities are within the same pay range is called: a) broadbanding b) wage compression c) external equity d) internal equity

d) internal equity

Which federal law introduced the concept of the prevailing wage?

davis bacon act

Information collected in a pay survey can quickly become outdated, what is one way to make use of the information that was collected some time ago?

determining the aging factor and multiplying the median salary from the survey by that factor. For example, if wages are increasing by 3.5 percent a year, and data was collected 1.25 years ago, then the aging factor is 4.375 percent. If the median salary of the pay survey was $50,000, the updated salary after application of the aging factor is $52,187.50

Benchmarking can be an important part of..

determining whether pay equity has been achieved within an organization. The process involves first identifying skills and responsibilities critical for particular jobs within the organization. This analysis is then used to compare compensation packages for employees with particular skills and responsibilities to compensation packages offered to comparable employees at other organizations, also known as the external market rate.

Disability Benefits

disability benefits are awarded to individuals who suffer from an injury or illness that is unrelated to work, but the ailment prevents the individual from performing their job. Disability benefits usually come from a private insurance company or, if severe enough, from the government's Social Security Disability Insurance. Disability benefits are typically described as short-term or long-term. long-term disability insurance lasts between two to five years, or until legal retirement age. Short-term disability insurance is usually only for 12 weeks out of the year.

non-qualified retirement plans

don't receive the same tax benefits of qualified plans because the benefits of those plans exceed the limits placed on qualified plans. If an organization offers a non-qualified retirement plan, it is not necessary that the plan extends to all employees, and certain employees may receive benefits that others do not.

Actual Deferral Percentage Tests

mandated by the IRS, are tests that ensure highly compensated employees don't benefit unduly from 401(k) plans at the expense of other employees. Highly compensated employees are those who earn more than $130,000 a year, own 5 percent or more of a company, and are among the 20 percent of the organization's most highly paid employees. If the ADP finds that highly compensated employees benefit from a plan more than non-highly compensated employees, then the organization must make adjustments or lose the tax benefits associated with the plan.

added compensation, above the base rate, awarded for high quality performance

meritpay

Wage compression

occurs when an employee is hired at a higher salary than other employees in the organization who have similar skills and responsibilities. Wage compression should be avoided because it raises questions about the fairness of an organization's compensation strategy, and this may lead to problems with staffing and performance. wage compression may occur in certain economic conditions. For example, if a particular skill set is in demand in the marketplace, then an organization may have to offer a higher salary to recruit talented potential employees. Such compression can be offset by adjusting the salaries of existing employees according to market demands.

Benefits account for roughly what share of total compensation costs?

one third

Differential pay

or premium pay more money, above the base rate, to motivate them to accept a specific work assignment, shift, or job situation. not required by law (except overtime pay).

telecommuting

or working away from the office, is becoming the norm at many companies. This is made possible with the advances in technology and generally leads to increased job satisfaction.

maternity leave

paid leave given to a female employee for the birth of their child.

Old Age, Survivors, and Disability Insurance (OASDI) of 1935

part of the social security act, offers benefits to employees who retire or become unable to work employees pay a percentage of their income to the federal government, and employers match those contributions. Employees may earn up to 4 credits a year for their contributions, and employees who have earned at least 40 credits are eligible to retire and collect a percentage of their income from Social Security. surviving defendants may collect as well if person dies.

Walsh Healy Public Contracts Act (PCA)

passed in 1936 and was intended to protect employees working under government contracts from working for substandard wages. It required organizations receiving government contracts greater than $10,000 to pay employees a wage that matches wages in the local area (i.e., the prevailing wage) as determined by the Secretary of Labor. - states that employees are entitled to overtime pay at a rate of 1.5 times their regular wage for every hour of work after 8 hours in a day or 40 hours in a week. - prohibits hiring children under 18 - prohibits hiring people who have been convicted of a crime - requires that workplaces meet safety and sanitation standards.

Health maintenance organizations (HMOs)

prioritize reducing employee expenses and require that all healthcare be obtained from a specific group of providers. One type of HMO is the individual practice association. This model involves groups of physicians in private practice who service HMO subscribers. However, in this case, the physicians are typically seeing far more patients who are not subscribers than those who are. These non-HMO patients help cover the cost of the fees that are lost when treating HMO patients. Group model HMO's involve physician groups entering into contracts to provide services to HMO members. Physicians are typically paid based on the number of subscribers. Group health cooperatives involve hospitals, clinics, and physicians entering into contracts to provide services for the members of the HMO. Those members pay a monthly fee that is not dependent on how often they use these services. Employees get the benefit of being able to access medical care as frequently as they want, but they don't get to decide which of the physicians in the cooperative they see for each visit.

Older Workers Benefit Protection Act (OWBPA) of 1990

prohibits employers from discriminating against older employees when it comes to benefit plans. older workers may choose to waive their rights, but in such cases, the employer must offer the employee something else of significant value.

Uniformed Services Employment and Reemployment Rights Act (USERRA) of 1994

protect individuals who serve in the military. In particular, it protects those who serve from losing their jobs or being denied employment because they are in the military, because they are about to join the military, and because they have taken a leave of absence to serve in the military (including both voluntary and involuntary service like active duty, training, boot camp, reserve duty, National Guard mobilizations, and fitness-for-duty examinations). employers are not required to pay employees who are on leave for service. Benefits, on the other hand, are protected. Employees may not be discharged without cause within six months of returning from a leave of 30-180 days, or within one year for leaves of 181 days or more.

Summary Plan Descriptions

provide important information about healthcare plans, including provisions, rules, and policies that are part of the plan, as well as who is eligible for the plan and the conditions for disqualification or ineligibility. A summary also identifies plan sponsors, administrators, and trustees that employees may consult for guidance when looking to use the plan. Finally, the plan must contain any relevant collective bargaining agreement information. The Employee Retirement Income Security Act requires that summary plan descriptions be provided for group health plans.

qualified retirement plans

provide tax benefits for both employees and employers and meet guidelines outlined by the Employee Retirement Income Security Act (ERISA) Qualified plans must be available to all employees in an organization, and additional benefits cannot be offered to shareholders, executives, supervisors, or highly compensated employees.

pay ranges

range of pay for a specific position provide incentives for employees to do good work in hopes of earning a salary higher in the band, so it's a good idea not to define ranges too narrowly. A common strategy is to start new employees at the bottom of the band and to plan for employees to move to the midpoint based on time spent with the company. The upper limits of the band may be left to reward outstanding work.

requirement equity act of 1984

reduced the existing age limits restricting participation in pension plans. Furthermore, the Act provided more protections for survivors of employees entitled to pensions, requiring that written approval be received from a spouse rejecting survivor benefits and restricting conditions that could be placed on survivor plans.

Consolidated Omnibus Budget Reconciliation Act (COBRA)

requires employers to extend a health care coverage purchase option when an employee is terminated or resigns from a job.

Patient Protection and Affordable Care Act (the PPACA, known as "Obamacare")

requires most employers to offer healthcare coverage to their employees while mandating that individuals must obtain coverage or else pay a fine. While the PPACA provides subsidies to help low-income Americans purchase coverage, the first years of the law's implementation have seen premiums rise—substantially so, in some areas.

Mental Health Parity Act of 1996

requires that insurers provide the same limits for mental health services for employees that they provide for other medical benefits. does not require that insurers offer mental health benefits, nor does it prohibit other kinds of restrictions.

group incentive pay

rewards groups for exceeding a goal as a team. Such a pay system makes a portion of middle-managers' compensation "at risk," dependent on the achievement of specified goals.

Point of service (POS)

similar to PPOs, but in the case of POSs, doctors control the costs of the plan by making referrals to specialists when a patient needs additional care. Patients are expected to get such referrals from their physicians in all non-emergency cases