Econ 448 Quiz 5
What is the current minimum wage & training wage in the State of Illinois?
$8.25 and $4.25
Unemployment insurance - To receive benefits, workers must meet eligibility requirements: o You must meet the State requirements for wages earned or time worked during an established period of time referred to as a ____ (In most States, this is usually the first four out of the last five completed calendar quarters prior to the time that your claim is filed.) o You must be determined to be unemployed through ____ (determined under State law), and meet other eligibility requirements of State law
- "base period". - no fault of your own
Social security - Workers must qualify for these benefits by working in covered employment, and earning a specified amount per quarter. o The amount needed for a credit in 2018 is ____ o You can earn a maximum of ____ credits for any year o For retirement benefits, the required number of credits is ____ (equivalent to 10 years of work if you earn the maximum number of credits per year)
- $1,320 - four - 40
Tipped wages - A tipped employee engages in an occupation in which he or she customarily and regularly receives more than ____ per month in tips - An employer of a tipped employee is only required to pay ____ per hour in direct wages if that amount combined with the tips received at least equals the federal minimum wage - If the employees' tips combined with the employers' direct wages of at least ____ per hour do not equal the federal minimum hourly wage, the employer must make up the difference o Many states require ____ direct wage amounts for tipped employees
- $30 - $2.13 - $2.13 - higher
Minimum wages o FLSA establishes a minimum wage of ____ per hour effective July 24, 2009. o FLSA also permits a lower "training wage": - paid to workers under age of 20 for up to ____ days - approximately ____ of minimum wage o Tipped wages
- $7.25 - 90 - 85%
Social security - Most ____ US employees are covered
- (over 90%)
Overtime and hours of work - FLSA requires overtime rate at ____ times employees' usual hourly rate for time spent on work above 40 hours/week o The usual hourly rate includes ____, and piece-rate payments o ____ is exempted; gifts or special-occasion bonuses are not included
- 1.5 - regular bonuses - Stock plan income
Child labor - Under ____ cannot work in hazardous occupations defined by DOL - Under ____ cannot work in jobs involving interstate commerce, except for a parent or a guardian o Exemptions include ____ jobs for a business entirely owned by the child's parents or guardian, babysitting, acting, and delivering newspapers
- 18 - 16 - non-harzard
When is overtime pay required? - Overtime pay is required, whether or not the employer specifically asked or expected the employee to work more than ____ hours - If the employer knows the employee is working overtime but does not pay overtime rate, the employer may be violating the ____
- 40 - FLSA
Retirement and savings plan payments - Many companies shifted to ____ o Dollar contribution is ____
- 401(k) plans - known and controllable
The current tax rate for social security is ____ for the employer and ____ for the employee, or ____ total. The current rate for Medicare is ____ for the employer and ____ for the employee, or ____ total
- 6.2%; 6.2%; 12.4%; 1.45%; 1.45%; 2.9%
Miscellaneous benefits
- Continuous education - Child care - Elder care - Domestic partner benefits - Legal insurance
____ branch - Headed by the President - Enforces the laws
- Executive
Exempt and nonexempt status - ____ employees - managers, outside salespeople, and other employees not covered by FLSA requirement for overtime pay o Salary test: $455/week
- Exempt
Living wage - NOT part of ____ - Minimum wage tailored to ____ at local levels - Narrower coverage than minimum wage laws: o cover only ____ employees, or ____ contractors; o or cover only ____ wages
- FLSA - living costs - city (or state); state/city - base
Medical and medically related payments
- General Health Care - Short- and Long-Term Disability - Dental Insurance & Vision Care - Flexible Spending Account
____ branch - Headed by the Supreme Court - Interprets the law - The Supreme Court is the court of final appeal
- Judicial
____ branch - Headed by Congress - Enacts / passes laws
- Legislative
How should benefits be financed? o ____ (employer pays total costs) o ____ (costs are shared with employee) o ____ financed Does the company fully comply with tax codes and legal requirements?
- Noncontributory - Contributory - Employee
Exempt and nonexempt status - ____ employees - employees covered by FLSA requirements for overtime pay o Manual laborers or other blue collar workers; o Police, firefighters, paramedics, and other first responders
- Nonexempt
Size of unemployment tax imposed on each employer depends on the employer's experience rating: o ____ a company has laid off in the past and cost of providing them with unemployment benefits o Careful workforce planning can ____ and keep their experience rating favorable
- Number of employees - minimize layoffs
Payments for time not worked - ____ during work hours for rest periods, lunch, etc. - Payment for time ____ includes: o vacations and holidays o paid sick leave o other payments such as jury duty - Maternity leave
- Paid time off - not worked
- Employers must pay: o ____, unemployment and workers compensation taxes on wages and salaries o Unless the worker is an ____
- Social Security - independent contractor
Other EEO laws
- The 1967 Age Discrimination in Employment Act (ADEA) - 1990 Americans with Disability Act (ADA) - Equal Pay Act (1963) and The Lilly Ledbetter Fair Pay Act (2009)
Life insurance - ____ of employees have paid life insurance o Typically ____ times annual salary o Most premiums are paid by the ____ o Nearly all are forfeitable upon ____ o Some offer a basic life coverage with optional ____ coverage available
- Three-fourths - one to two - employer - quitting - additional
Key Questions in Performance Appraisal: o ____ is evaluated? o ____ is evaluated? o How to ____ what is evaluated? o Who ____ the evaluation? Who has input? o Who ____ the evaluation? For what purpose? o ____ should it be conducted?
- Who - What - measure - performs - sees - When
Each performance standard is measured on a scale so variation falls along ____ o Descriptors (adjectives, behaviors, or outcomes) anchoring the ____ provide the major difference in rating scales
- a continuum - continuum
Performance appraisal methods - Require raters to evaluate employees against ____ rather than against each other
- a standard
Standard rating scale: ____ are used as anchors
- adjectives
Employee retirement income security act (ERISA) - General requirements o Employees are eligible for pension plans from ____ o Employers may require ____ years of service
- age 21 - one to three
Behaviorally anchored rating scales (BARS): ____ are used as descriptors
- behaviors
Effective performance appraisals helps the organization achieve its ____
- business objectives
Defined contribution (DC) plans: o It is the ____ not the ultimate benefit, that is funded o It is focused on ____ o ____ typically has choice over how to invest, how much to save, etc., but also bears the investment risk
- contribution, - saving/accumulation - Individual
How to classify employee or independent contractor? o Tax law (by IRS) and ERISA are relevant o Two general criteria - How much ____ the firm exercises - The type and ____ of the relationship
- control - permanency
Four major issues in setting up a benefit package: o Which groups of employees are ____? o How much ____ should employees have among an array of benefits? o How should benefits be ____? o Does the company fully ____ with tax codes and legal requirements?
- covered - choice - financed - comply
Social security - Workers must qualify for these benefits by working in ____, and earning a ____ per quarter
- covered employment; specified amount
Social security - Current contributions pay ____
- current beneficiaries
Pay discrimination and dissimilar jobs - The Supreme Court determined that pay differences for dissimilar jobs may reflect ____ o Courts uphold the use of ____ to justify pay differences in different jobs o Or, find a ____ to compare the value of jobs (jobs of comparable worth) - It must permit dissimilar jobs to be declared ____ - It must permit pay differences for dissimilar jobs that are not ____ - Job evaluation has become that ____
- discrimination - market data - standard - equal - comparable - standard
Persons are classified as unemployed if they
- do not have a job - have actively looked for work in the prior 4 weeks - and are currently available for work - Persons who were not working and were waiting to be recalled to a job from which they had been temporarily laid off are also included as unemployed
Rate errors - Recognizing and understanding errors is the first step to communicating and building a more ____ appraisal process
- effective
Fair Labor Standards Act of 1938 (FLSA) o Covers all ____ of companies engaged in interstate commerce or in the production of goods for interstate commerce o Major provisions include: ____, hours of work (including overtime), and child labor. Records must be kept of employees, their hours worked, and their pay
- employees - minimum wage
The Pension Protection Act of 2006 (PPA) o Allows employees in publicly traded companies to sell off any ____ purchased through deferrals or aftertax contributions o Identifies ____ that are less than 70% funded
- employer stock - 'at risk' plans
Title VII of the civil rights act of 1964 - Major law regulating ____ in the US - Title VII of the Civil Rights Act: o Prohibits employers from ____ based on race, color, religion, sex, national origin o Applies to organizations that employ ____ or more. o Employers may not ____
- employment opportunity - discriminating - 15 - retaliate
Equal employment opportunity (EEO) - EEO: the condition in which all individuals have an ____ for employment, regardless of their race, color, religion, sex, age, disability, or national origin - Enforcement agency: ____ o Responsible for enforcing most of ____ o Complaints must be filed within ____ days of incident o EEOC has ____ days to investigate complaint
- equal chance - EEOC - EEO laws - 180 - 60
Unemployment insurance - Most funding comes from ____ on employers
- federal and state taxes
Prevailing wage laws - Prevailing wage laws set pay for work done to produce goods and services contracted by the ____ - ____ prevailing wage o The minimum wage that must be paid for work done on covered ____
- federal government - Government-defined - government projects or purchases
The Equal Pay Act of 1963, part of FLSA: o Forbids wage discrimination on the basis of ____ if employees perform equal equal work in the same firm o Jobs are considered equal if requiring equal ____, effort, and responsibility, performed under similar working conditions o Pay differences legal if affirmative defense: - ____; Merit or quality of performance; ____ of production; or some factor other than sex
- gender - skill - Seniority - Quality or quantity
For an employer to support a claim of unequal work, the following must be met: o The effort/skill/responsibility must be substantially ____ in one of the jobs compared o Tasks with the extra effort/skill/responsibility must consume a significant amount of ____ for all employees' wages in question o Extra effort/skill/responsibility must have a ____ commensurate with the pay differential
- greater - time - value
Worker's compensation - Operate under a principle of no-fault liability: o Employee does not need to show that the employer was ____ in order to receive compensation o Employer is protected from ____
- grossly negligent - lawsuits
Defined benefit plans - Pension plan that ____ - Employer sets up a ____ to invest contributions - Such plans must meet funding requirements of ____ - Employer must contribute enough for the plan to ____ to be paid out to retirees
- guarantees a specified level of retirement income - pension fund - Employee Retirement Income Security Act (ERISA) of 1974 - cover all benefits
Definition of equal - The Supreme Court ruled that the equal work standard required only that jobs be substantially equal, not ____ - When job descriptions differed from actual employee duties, the courts held that the actual ____ performed must be used to decide whether jobs are substantially equal
- identical - work
Compliance: a proactive approach - A proactive compensation manager can: o Join professional associations - to stay ____ on emerging issues - to act in concert to inform and influence public and legislative ____ o Constantly review ____ practices and their results - Should consult with ____ - ____ of all employees is the goal of a good pay system, and legislation
- informed - opinion - compensation - legal counsel - Fair treatment
Defined contribution plans - In defined contribution (DC) plans, the employer sets up an ____ for each participating employee and specifies ____ into that account - When the employee retires, the pension is based on o ____ contributions o ____ contributions o any gains (or losses) in ____
- investment account; the size of the investment - their - employer - stock investments
Key elements in a good appraisal o Culture and strategy determine ____ to measure o Involve ____ in all stages of the process o Raters should be trained and employee ____ the system o Raters are motivated to rate ____ o Raters should maintain a ____ of employee performance o Feedback must be ____
- key factors - employees - understand - accurately - diary - timely
Cost of workers' compensation insurance depend on: o Kinds of occupations involved: ____ occupations have low premiums o ____ where company is located o Employer's experience rating: Unfavorable experience ratings lead to ____ insurance premiums
- low-risk - State - higher
Defined benefit (DB) plans: o Employer promises the employee a ____ after retirement o Focused on ____ usually for life o ____ is responsible for funding and bears the funding risk
- monthly benefit - income, - Employer
Management By Objectives (MBO) uses ____ as the standard of performance measure
- outcomes
Benefits planning and design - Decide the role of benefits and integrate them into the ____ o Ensuring ____ and adequacy of benefits o Weighing between benefit adequacy and ____
- overall compensation package - external competitiveness - cost effectiveness
Medical and medically related payments - Short- and Long-Term Disability o Salary continuation plans and Long-term disability plans. - Short-term illness is covered by ____ - Short-term disability (STD) pays a percentage of an employee's salary for ____ - Long-term disability (LTD) plans, take over when short-term plans expire: Usually underwritten by insurance, provides ____ of pay for two years, up to life
- paid time off (PTO) - temporary disability - 60 to 70 percent
Social security - Funding: Employers and employees share Social Security cost through a ____ The percentage is set by law
- payroll tax.
Employee retirement income security act (ERISA) - ERISA does not require that employers offer a ____ But if a company decides to have one, it has to comply with ERISA provisions
- pension plan.
Family and medical leave o If an employee is temporarily unable to perform her job due to ____ the employer must treat her in the same way as any other disabled employee; e.g., modified tasks, alternative assignments, disability leave, or leave without pay
- pregnancy,
Which groups of employees are covered? o There are a variety of employees and statuses. - Are there ____ periods? - Which ____ are covered? - Should ____ be covered? - How about ____ of deceased employees? - What coverage is extended to employees with ____ - During ____? Strikes? - Should coverage be limited to ____?
- probationary - dependents - retirees - survivors - disabilities - layoffs - full-time workers
Many believe valuation discrimination does not define correctly: o Valuation discrimination can occur when men and women hold different jobs, with the ____ comparable worth - ____ pay for comparable worth - Also called ____ or ____ - Not supported by ____ but several state laws require a comparable worth standard
- same - Equal - pay equity; gender pay equity - federal law
Family and medical leave o Employers must guarantee these employees ____ when they return to work
- same or comparable job
- Funding comes from: o Some states have a ____ o Most states allow employers to ____ from private insurance companies o Most also ____ by employers
- single state fund - purchase coverage - permit self-funding
Will employees have a choice of benefits? o A ____ benefit package offers no choice o The other extreme is "cafeteria-style", or ____ benefit plans o Most companies are offering ____ choices o Flexible plans may increase employee ____ of benefit value
- standard - flexible - some - recognition
Family and medical leave o When employees experience pregnancy and childbirth, employers must also comply with ____
- the Pregnancy Discrimination Act
Receiving benefits from the Unemployment Insurance (UI) program has no bearing on whether a person is classified as ____
- unemployed
Pension Benefit Guaranty Corporation (PBGC). o Established by ERISA o Employers must buy insurance from the PBGC who guarantee payment of ____
- vested benefits
Types of benefits
1. Legally Required Benefits 2. Retirement and Savings Plan Payments 3. Life Insurance 4. Medical and Medically Related Payments 5. Payments for Time Not Worked 6. Miscellaneous Benefits
An employee works at a manufacturing company and worked 50 hours last week. The employee's base rate of salary is $12 per hour, and this employee also earned a weekly bonus of $40 last week. How much overtime pay should this employee receive for the last week?
50-40 = 10 (12 * 40 + 40)/40 = 13 13 * 40 = $520 13 * 1.5 = 19.5 19.5 * 10 = $195 $520 + $195 = $715
Disparate Impact
A condition in which employment practices are seemingly neutral yet disproportionately exclude a protected group from employment opportunities
Disparate Treatment
Differing treatment of individuals based on the individuals' race, color, religion, sex, national origin, age, or disability status
Employee retirement income security act (ERISA) Portability
ERISA does not require mandatory portability of private pensions
Four-Fifths Rule
Evidence of discrimination if the hiring rate for a minority group is less than four-fifths the hiring rate for the majority group
Skill
Experience, training, education, and ability as measured by job performance requirements
Unemployment insurance
Federally mandated program administered by states to minimize unemployment hardships
Social Security
Flat payroll tax on employees and employers
Health Care
For employers with at least 50 employees, payment of a fee to the federal government if the employer does not meet conditions for providing health insurance benefits
Forced ranking
Forced Distribution (or Top Grading, Stack Ranking) o Initiated at GE: Vitality Curve (20-70-10) o Employees are ranked in groups o AIG (10-20-50-20) with no dismissal of the bottom 20% o Other companies using forced distribution: Enron, IBM, Motorola, Yahoo!, Microsoft, Adobe, Ford
Effort
Mental or physical, the degree of effort actually performed on the job
example of Payments for Time Not Worked
Paid time off; vacations & holidays; sick leaves
Unemployment Insurance
Payroll tax on employers that depends on state requirements and experience rating
Workers' Compensation
Provide coverage according to state requirements; Premiums depend on experience rating
Performance appraisals
Provide critical information for day-to-day decisions about salary, benefits, and recognition programs
Performance appraisal methods - Two Categories
Ranking and Rating
Employee retirement income security act (ERISA) Vesting
Requirement for employee contributions and employer contributions
Family and Medical Leave Act (FMLA) of 1993
Requires organizations with 50 or more employees to provide up to 12 weeks of unpaid leave: - After childbirth or adoption - To care for a seriously ill family member - For an employee's own serious illness
Worker's compensation
State programs that provide benefits to workers who suffer work-related injuries or illnesses, or to their survivors
Ranking methods
Straight ranking method, Alternation ranking, Paired comparison ranking method
Responsibility
The degree of accountability required in the job performance
Health care - In 2010, Congress passed the Patient Protection and Affordable Care Act
The law requires medium-sized and large companies to choose between offering health insurance that meets its standards or paying a penalty, which took effect in 2015
Working conditions
The physical surroundings and hazards of a job; inside/outside, heat/cold, and poor ventilation
Family and Medical Leave
Up to 12 weeks of unpaid leave for childbirth, adoption, or serious illness
example of Miscellaneous Benefits
a. Employee continuous education b. Child care; Elder care
Halo error
an appraiser giving favorable ratings to all job duties based on impressive performance in just one job function. For example, a rater who hates tardiness rates a prompt subordinate high across all performance dimensions exclusively because of this one characteristic
Employee benefits
are the part of the total compensation package, other than pay for time worked, provided to employees in whole or in part by employer payments. o e.g., health insurance, paid leave, pension, workers' compensation, etc
Central tendency error
avoiding extremes in ratings across employees
Leniency error
consistently rating someone higher than is deserved
Spillover error
continuing to downgrade an employee for performance errors in prior rating periods
First impression error
developing a negative or positive opinion of an employee early in the review period and allowing that to negatively or positively influence all later perceptions of performance
2009 lilly ledbetter fair pay act
employers liable for pay loss resulting from discrimination
Clone error
giving better ratings to individuals who are like the rater in behavior and/or personality
Valuation discrimination
looks at the pay women and minorities receive for the jobs they perform (Hinges on the standard of equal pay for equal work)
Balanced Scorecard
looks at what contributes value in an organization
1990 Americans with disabilities act (ADA)
must accommodate a persona able to fulfill "essential elements" of a job
Balanced Scorecard - Financial
o All indicators related to profitability and financial goals
Balanced Scorecard - Customer
o Attraction of new customers, improving relations with customers, improving company image
Balanced Scorecard characteristics
o Customer (time, quality, performance, service, cost) o Internal business processes (processes that influence customer satisfaction) o Innovation and learning (operating efficiency, employee satisfaction, continuous improvement) o Financial (profitability, growth, shareholder value)
Retirement and savings plan payments - Two generic pension plans are
o Defined Benefit Plans o Defined Contribution Plans
Balanced Scorecard - Learning and growth
o Education of personnel, growth strategies
Advantages of flexible benefit programs
o Employees choose packages that best satisfy their unique needs o Flexible benefits help firms meet the changing needs of a changing workforce o Increased involvement of employees and families improves understanding of benefits o Flexible plans make introduction of new benefits less costly. Any new option is added merely as one among a wide variety of elements from which to choose o Cost containment: organization sets dollar maximum; employee chooses within that constraint
Disadvantages of flexible benefit programs
o Employees make bad choices and find themselves not covered for predictable emergencies o Administrative burdens and expenses increase o Adverse selection: employees pick only benefits they will use; the subsequent high-benefit utilization increases its costs o Flexible benefit plans are subject to nondiscrimination requirements in Section 125 of the Internal Revenue Code
Federal Old Age, Survivors, Disability and Health Insurance (OASDHI) program (Social Security) combines
o Old age (retirement) insurance o Survivor's insurance o Disability insurance o Health insurance
Balanced Scorecard - Internal processes
o Optimizing internal processes and improving performance
360-degree feedback - Subordinate as rater
o Should be administered anonymously (grade inflation otherwise)
360-degree feedback - Customer as rater
o Surveys and mystery shoppers rate performance
360-degree feedback - Self as rater
o They have complete knowledge of their own performance, yet they are the most lenient o Used for development rather than administration
360-degree feedback - Supervisors as raters
o They have experience rating employees and know the job requirements, however, they are not likely to observe employees on daily basis
360-degree feedback - Peers as raters
o They may have more interaction with the employee and can provide important performance information; however, they may not have rating experience and could be lenient
Who provides info for evaluation? - 360 degree performance evaluation
o managers o peers o subordinates o self o customers
Worker's compensation - Benefits fall in four major categories
o medical care o temporary or permanent disability payments o survivor death benefits o rehabilitation and training services
2000 worker economic opportunity act
overtime pay does not have to include stock plan income
1978 pregnancy discrimination act
pregnancy must be covered as a medical condition
1964 title VII of civil rights act of 1964
prohibits discrimination on basis of race, sex, color, religion, or national origin
1967 age discrimination in employment act (ADEA)
protects employees 40 and older from age discrimination
1938 fair labor standards act (FLSA)
sets minimum wage, hours worked, overtime; prohibits child labor
Access discrimination
the denial of particular jobs, promotions or training opportunities to qualified women or minorities
Horn error
the opposite of a halo error. Downgrading an employee across all performance dimensions exclusively because of poor performance on one dimension
Recency error
the opposite of first impression error. Allowing performance, either good or based, at the end of the review period to pay too large a role in determining an employee's rating for the entire period
Severity error
the opposite of leniency error. Rating individuals consistently lower than is deserved
1993 family and medical leave act (FMLA)
up to 12 weeks of unpaid leave for family/medical emergencies