Compensation Chapter 12- Employee Benefits
companies spend trillions on benefots
a typical employee recalls only 15 percent
Employee benefits
are that part of the total compensation package, other than pay for time worked, provided to employees in whole or in part by employer payments. E.G., life insurance, pension, workers' compensation, vacation. Employee benefits can no longer realistically be called fringe benefits.
fair labor standards act 1938
created time and a half overtime pay. benefits linked to pay increase correspondingly with those overtime hours.
cost effectiveness of benefits
employee benefits are not taxable. group-based benefits come at a lower cost.
most other benefits are affected by laws
employee retirement income security act is one such law. patient protection and affordable care act is another.
advantages of a flexible benefits program
employees choose packages that best satisfy their unique needs flexible benefits help firms meet the changing needs of a changing workforce increased involvement of employees and and families improves understanding of benefits 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. cost containment: organization sets dollar maximum: employee chooses within that constraint
disadvantages of a flexible benefits program
employees make bad choices and find themselves not covered for predictable emergencies administrative burdens and expenses increase adverse selection: employees pick only benefits they will use; the subsequent high benefit utilization increases its cost flexible benefit plans are subject to nondiscrimination requirements in section 125 of internal revenue code.
Consolidated Omnibus Budget Reconciliation Act (COBRA)
employees who resign or are laid off through no fault of their own are eligible to continue receiving health coverage under employer's plan at a cost borne by the employee
employee retirement income security act 1974
if an employer decides to provide a pension (it is not mandated) specific rules must be followed. plan must vest (employee has right to both personal and company contributions into pension) after five year' employment. pension benefit guaranty corporation, as set up by this law, provides worker some financial coverage when a company and its pension plan go bankrupt.
claims processing
is when an employee asserts an event has occurred and demands the employer pay.
family medical leave act 1993
mandates 12 weeks of leave for all workers at companies that employ 50 or more people
Wagner Act of 1935 started
pension plans, unemployment, vacation plans, and guaranteed annual salary.
one study says employees don't want more benefits, rather a choice of benefits
perceived value rises when employers offer a flexible benefit package
Tax reforms 1982, 1986
permit individual retirement accounts for eligible employees. established 401k programs, a matched-contribution saving plan, that frequently serves as a part of a retirement package.
maintenance act 1973
required employers to offer alternative health coverage options to employees
the patient protection and affordable care act 2010
requires individuals to maintain minimal essential health insurance coverage or pay a penalty unless exempted for religious beliefs or financial hardship. employers must enroll new employees or face a levy
Many of today's benefit plans were employer initiated
traced to pragmatic concerns about employee satisfaction and productivity. benefits slowly became a costly entitlement
employee benefit communication revolves around 4 issues
what is communicated, to whom, how it is communicated, and how frequently
four major issues when setting up a benefit package
who should be protected or benefited? how much choice should employees have among an array of benefits? how should benefits be financed? are the benefits legally defensible?
three government mandated employee benefits
worker's compensation (state). unemployment (federal) and social security (federal)
some benefits are taken for granted
yet they drive satisfaction
