Transcript Title of Chapter

Agenda
OH 12-1
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Article reviews
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Chapter 9 – Employee Compensation &
Benefits
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Chapter 10 – Managing a Safe & Healthy
Workplace
Employee Compensation and Benefits
9
OH 12-2
12-2
 Hospitality Human Resources Management and
Supervision
Learning Objectives
After completing this chapter, you should be able to:
 List and describe three federal laws that impact
compensation policies and programs.
 Explain the types of voluntary benefits that can
be included in a compensation package.
 Identify and describe three retirement and health
benefit laws that impact voluntary benefits.
 Describe five employee benefit programs that
are mandated by federal laws.
OH 12-3
Learning Objectives
After completing this chapter, you should be able to:
 Explain the procedures that help ensure the
correct compensation will be paid to employees.
 Explain the basic procedures that can be used
to control labor costs.
OH 12-4
Legal Aspects of Compensation
 Compensation management involves all of the
activities related to planning, implementing, and
monitoring wages, salaries, and benefits for
employees.
 Compensation and benefits must be
administered legally and fairly.
 Managers must understand the laws that govern
their workplace and the policies and procedures
to comply with them.
OH 12-5
Legal Aspects of Compensation
continued
 Managers need to keep current with changes;
below are resources available and should be
checked regularly for changes:
 U.S. Department of Labor and state websites
 http://www.dol.gov/dol/topic/wages/
 The National Restaurant Association and State
Restaurant Associations
 Local chambers of commerce
 Various human resources newsletters
OH 12-6
Ensuring Legal Wages
Fair Labor Standards Act
 Provides minimum wage and overtime pay
with exceptions for
 Tipped employees minimum wage: tipped
employees may receive a lower wage when
their tips are enough to ensure the basic
minimum wage is met
 Youth minimum wage: Employees under 20
years of age may be paid youth minimum wage
of not less than $4.25 an hour during the first 90
consecutive days of employment.
OH 12-7
Ensuring Legal Wages
continued
Fair Labor Standards Act
 Subminimum wage: Employers may pay certain
people a lower minimum wage under specific
circumstance
 Students placed in a job as part of a vocational
or educational program
 Individual with a reduced capacity to be
productive because of a physical or mental
disability.
 In both of these circumstance an employer
needs a certificate from the Wage and Hour
Division of the Department of Labor and must
post by the minimum wage poster
OH 12-8
Tip Income Details
 Employees and
employers must report
tip income at least
monthly.
 Employers must allot tip
income amounts to
employees who reported
tips of less than 8
percent of sales
 Employers must report
tip income from each
employee and withhold
taxes on tip income.
OH 12-9
Legal Wages
 Full-time employees are generally expected to
work forty (40) hours per week. If an employee
works more than 40 hours, it is considered
overtime.
 Non-exempt employees (hourly) receive
overtime pay (one and a half times hourly rate).
OH 12-10
Legal Wages
continued
 Exempt employees (salaried employees) are
not required to receive extra pay for overtime.
 Exempt employees must make a minimum of
$23,600 per year (a few exceptions apply)
 Exempt employees must perform exempt job duties:
 Management or supervision is a primary
responsibility
 Exempt employees must have genuine input into
the job status of other employees such as hiring,
firing, and promoting.
OH 12-11
Legal Wages
continued
 Compliance Actions
 Job descriptions should be created and reviewed
regularly to:
 Assure exempt and non-exempt employees are
classified and paid fairly.
 Child labor law requirements are met.
 Americans with Disability Act (ADA) requires that
anyone who performs the essential duties of the
position is paid the same
 Positions are evaluated and assigned a salary
grade and all employees are consistently
compensated
OH 12-12
Consumer Credit Protection Act
 The Consumer Credit Protection Act (CCPA) is
administered by the Wage and Hour Division of
the Department of Labor.
 It prohibits employers from terminating or
disciplining employees (in some cases) when a
court or a government mandates that their wages be
paid in part to a third party. This happens when:
 A creditor obtains a court order to receive
payments directly from an employee’s
earnings.
 When a government tax agency, such as IRS,
seizes wages to pay for back taxes, fines or
penalties.
OH 12-13
Employment Cycle & Benefits
OH 12-14
OH 12-15
OH 12-16
Basics of Employee Benefits Plans
 Employee benefit plans describe the non-wage
compensation an employee is eligible to receive.
 Employees must enroll for benefit plans.
 Plan providers offer the benefits.
 A participant is a member of a plan; a
beneficiary is entitled to receive benefits under
the plan.
OH 12-17
Employee Benefit Programs
Mandated by Federal Government
 Family and medical leave
 Healthcare coverage after termination (if
covered before termination)
 Military leave
 Social Security
 Unemployment insurance
 Workers’ compensation
OH 12-18
Common Voluntary Benefits
 Uniform benefits
 Meal benefits
 Medical/Dental benefits
 EAP
 Retirement
OH 12-19
Common Voluntary Benefits
 Uniform benefits
 Uniforms and dress
codes provide a
professional look that
impacts the
customers’
impression of the
operation.
 Proper uniforms also
provide some
measure of personal
protection.
OH 12-20
Common Voluntary Benefits
 Meal benefits
 Many operations
provide meal
benefits by offering
meals to employees
at a reduced or no
cost.
OH 12-21
Common Voluntary Benefits—
Healthcare Plans
Common types
 Fee-for-service plans
 Preferred provider organizations (PPOs)
 Health maintenance organizations (HMOs)
 Flexible spending accounts
OH 12-22
Common Voluntary Benefits—
Employee Assistance Programs (EAPs)
 EAPs provide counseling and other services to
individuals and families to help them deal with
problems that impact their ability to work
effectively.
OH 12-23
Common Voluntary Benefits—
Retirement Benefits
 Retirement benefits provide regular payments to
employees who retire because of age.
 Defined benefits (DB)
 The employee is guaranteed certain payments upon
retirement (the final value of the benefit is defined).
 Defined contribution (DC)
 Payments are made into an account owned by the
employee (the employer’s or employee’s
contribution is defined).
OH 12-24
Common Elements of Retirement Benefits
 Both have rules for eligibility.
 Benefits belong to the employee and cannot be
revoked even if the employee leaves before
retirement.
OH 12-25
Saving for Retirement
 This young employee
is probably not
thinking about
retirement. However,
he should recognize
the importance of
financial
independence after
retirement and begin
saving for it now.
OH 12-26
Employee Retirement Income
Security Act (ERISA) of 1974
 Protects employee pensions and healthcare
plans from incompetent, unethical, and unfair
administration
 ERISA helps ensure that benefits promised to
employees will be available when the
employees need them.
 Participants must receive a Summary Plan
Description and notification about any changes
in the plan.
OH 12-27
OH 12-28
Consolidated Omnibus
Reconciliation Act (COBRA) of 1986
Extends healthcare coverage for people who would
otherwise lose healthcare insurance
COBRA enables eligible people to continue their
employer’s healthcare group plan for a limited time if they
pay their own and the employer’s share of the cost, plus,
sometimes, an administrative fee.
OH 12-29
OH 12-30
Consolidated Omnibus
Reconciliation Act (COBRA)
 COBRA requires plan administrators to communicate
open enrollment and cancellation procedures to
employees.
 COBRA also requires that employers notify the plan
administrator when an employee
 leaves the operation
 loses healthcare coverage due to reduction in hours
 dies
 becomes eligible for Medicare
 other qualifying life events: divorce, separation, etc.
OH 12-31
Health Insurance Portability
and Accountability Act (HIPAA)
Three main functions:
1.
To give people the right to add family members to their
group healthcare plan at times other than open
enrollment, under certain circumstances
2.
To protect people from being excluded from healthcare
plans or denied coverage because of a preexisting
conditions
3.
To protect people from discriminatory pricing or treatment
under a plan because of preexisting condition or other
health status factors
Requires healthcare plans to provide Certificate of Credible
Coverage
OH 12-32
Ensuring Mandatory Benefits
 Benefits required by federal and state law:
 Social Security
 Worker’s Compensation Insurance
 Unemployment Compensation Insurance
 Unpaid leave of absence (in some cases)
 Managers need to understand their legal
responsibility for providing and administering
these mandated benefits.
OH 12-33
Mandatory Benefits—Social Security
A federal pension program providing
 Retirement benefits
 Survivor benefits
 Disability benefits
 Medicare
Both employers and employees pay for Social Security
benefits through a payroll tax.
OH 12-34
Mandatory Benefits—
Unemployment Insurance
 Provides a temporary reduced level of income to
employees who lose their jobs involuntarily.
 Some employees are typically not eligible for
unemployment insurance including those who



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OH 12-35
Are fired
Turn down a job offer of suitable work
Go on strike or do not work because of a labor dispute
Accept certain types of income such as workers’
compensation, retirement or Social Security pension, or
Social Security payments
Workers’ Compensation
Kitchens can be dangerous places to work if equipment is
improperly operated and/or if operating procedures are not
consistently followed.
OH 12-36
Mandatory Benefits—Family and Medical
Leave Act (FMLA)
 Allows qualified employees to take up to twelve
weeks of continuous or intermittent unpaid leave
in a twelve-month period for certain medical or
family-care situations.
FMLA requires employees to allow unpaid leave
when employees
OH 12-37

Have a serious medical condition

Must take care of a child, spouse, or parent with a
serious medical condition

Have a newborn child or adopted child
Mandatory Benefits—Family and Medical
Leave Act (FMLA)
 If the employee has health insurance through the
employer, the employer must continue to provide this
benefit during the leave, and the employee must pay any
premiums that he/she would normally pay, including
healthcare insurance premiums.
 Employers must comply with FMLA if they have fifty or
more full-time employees who live within seventy to
seventy-five miles of the business.
 To be eligible for FMLA benefits, covered employees
must have worked for the operation for one year and a
minimum of 1250 hours in the previous 12-month period.
 Military leave must also be provided for applicable
employees
OH 12-38
Mandatory Benefits—Uniformed Services
Employment and Reemployment Rights Act
 Protects employees from workplace
discrimination based upon an obligation to,
application for, or interest in military service.
 While on military leave, USERRA requires the
employer to continue all of the employee’s
benefits as if the employee were not on leave.
Note: employers must communicate information
about USERRA to their employees.
OH 12-39
Mandatory Benefits—Uniformed Services
Employment and Reemployment Rights Act
 USERRA
poster
illustrated in
Exhibit 9.11
(page 289).
OH 12-40
SUMMARY
Mandatory Benefits
Voluntary Benefits
Social Security
Health Insurance
FMLA
Vision Insurance
COBRA
Dental Insurance
Unemployment Insurance
Retirement Plan
Military Leave
EAP
Workman’s Compensation
Uniforms
Meals
OH 12-41
Keeping Current on Benefits
and Related Laws
 This manager and
employee must know
about many workrelated concerns.
The wide array of
voluntary and
mandatory employee
benefits that
(seemingly) always
change are high on
this list.
OH 12-42
Keeping Current on Benefits
and Related Laws continued
 Benefit laws are numerous and complex.
 Noncompliance can be expensive (or worse!).
 http://www.dol.gov/compliance/guide/minwage.htm#Penalites
 All managers must be trained in employee
benefits, policies, procedures, and
workplace laws.
OH 12-43
Ensuring Accurate Compensation
 Managers must ensure that employees receive a
correct paycheck.
 Tracking the length of time and dates an employee
has worked is also important to ensure proper
vacations, retirement benefits, etc.
 Payroll administrator must ensure that all applicable
items are deducted from each employee’s wages
and forwarded to the correct agency, company, or
account.
OH 12-44
Payroll System
A method for recording and tracking employees’
time and issuing paychecks
 Managers must ensure that employees
report the correct number of hours.
 Methods range from manual timecards to
electronic card readers.
OH 12-45
Payroll Administration Options
 Many operations outsource payroll
administration.
 Small operations may use a part-time
bookkeeper and/or bookkeeping software.
OH 12-46
Controlling Labor Costs
 Set Pay Rates
 Pay rates must be competitive with the local job
market.
 The operation’s total labor needs must be carefully
considered.
 Legal aspects of compensation must be considered
as wage rates are established.
OH 12-47
Controlling Overtime
 Overtime must be approved before it is incurred.
 Employee hours worked should be monitored.
OH 12-48
Key Term Review
Beneficiary Someone who is entitled to receive a benefit
under an insurance or retirement plan because of his or her
relationship with the plan’s participant.
Deductible The amount of money an insured party must pay
before the insurance company’s coverage plan begins.
Defined benefit (DB; retirement) A retirement benefit in which
an employee is guaranteed certain payments on retirement.
Defined contribution (DC; retirement) A retirement program
that guarantees certain payments will be made into an
account owned by an employee, such as a 401(k) plan.
Employee assistance program (EAP) A program that provides
counseling and other services to help employees deal with a
wide range of problems that hinder their ability to function
effectively at work.
OH 12-49
Key Term Review
continued
Employee benefit plan A program of nonwage compensation that
an employee is eligible for and the situations under which the
employee will receive the benefits.
Enrollment The signing up of an employee for a benefit plan.
Exclusion period The exclusion of coverage for preexisting conditions
for a certain time after enrollment in an insurance plan; it is allowable
as long as it is applied equally to all plan participants.
Exempt employee An employee who is not required to receive extra
pay for overtime.
Garnishment Payments ordered by a court that are directly
deducted from an employee’s earnings.
Group plan (benefits) A plan that provides essentially the same
benefit to multiple people, such as a life insurance plan offered to all
employees.
OH 12-50
Key Term Review
continued
Individual plan (benefits) A plan that provides a benefit for one
person or family.
Levy Payments taken by a government agency such as the IRS from
an employee’s earnings.
Medicare A federally insured healthcare plan for people aged 65 or
older.
Nonexempt employee An employee paid an hourly wage who is
entitled to overtime pay when working more than 40 hours in a
week.
Open enrollment period (benefits) A limited time period during which
employees are typically able to change benefit plans and
coverage and add or remove family members.
Participant Someone who is a member of a benefit plan.
Payroll administrator The person, department, or external company that
ensures paychecks are issued.
OH 12-51
Key Term Review
continued
Plan administrator (benefits) A designated person, department, or
company that is responsible for handling administrative tasks for
group plans.
Preexisting condition A medical condition for which a person has
sought medical treatment before applying to join a healthcare plan.
Premium (healthcare) The monthly insurance fee; in most cases both
employers and employees share its cost.
Self-insured A situation in which some very large employers pay all
covered healthcare costs with their own funds.
Social Security A federal government program that provides
retirement and disability income and other financial benefits to
those who qualify.
Subminimum wage A wage below the minimum wage that
employers may pay certain people, such as students placed in a job
as part of a vocational or other educational program.
OH 12-52
Key Term Review
continued
Summary plan description (SPD) An explanation of a
retirement or healthcare plan’s benefits and participants’
rights and responsibilities.
Tip credit (FLSA) The choice given to operations that employ
tipped employees to pay the basic minimum wage or to pay
a reduced cash wage and use a tip credit.
Tipped employee An employee who may be paid a lower
cash wage when his or her tips are enough to ensure that the
basic minimum wage is met.
Youth minimum wage A wage that employees younger than
20 years of age may be paid, of not less than $4.25 an hour,
which is lower than the basic minimum wage, during their first
90 consecutive days of employment.
OH 12-53