Transcript Slide 1

Chapter 9
Employee
Compensation and
Benefits
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.
Learning Objectives continued:
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.
Chapter 9 Employee Compensation and Benefits
LEGAL ASPECTS OF COMPENSATION
Fair Labor Standards Act
Minimum Wage
Tip Credits
Overtime
Compliance Actions
Chapter 9 Employee Compensation and Benefits
Consumer Credit Protection Act
Equal Pay Act
Chapter 9 Employee Compensation and Benefits
EMPLOYEE BENEFIT PLANS
Overview of Employee Benefit Plans
Types of Benefits
Chapter 9 Employee Compensation and Benefits
Chapter 9 Employee Compensation and Benefits
Chapter 9 Employee Compensation and Benefits
Common Voluntary Benefits
Uniform Benefits
Meal Benefits
Healthcare Plans
Employee Assistance Programs
Retirement Benefits
Chapter 9 Employee Compensation and Benefits
RETIREMENT AND HEALTH BENEFIT LAWS
Chapter 9 Employee Compensation and Benefits
The Employee Retirement Income Security Act
Chapter 9 Employee Compensation and Benefits
The Consolidated Omnibus Budget Reconciliation Act
Chapter 9 Employee Compensation and Benefits
The Health Insurance Portability and Accountability Act
Chapter 9 Employee Compensation and Benefits
ENSURING MANDATORY BENEFITS
Social Security
Unemployment Compensation
Workers’ Compensation
Family and Medical Leaves of Absence
Military Leaves
Chapter 9 Employee Compensation and Benefits
Chapter 9 Employee Compensation and Benefits
ENSURING ACCURATE COMPENSATION
Payroll Administrators
Payroll Systems
Payroll Administration Options
Chapter 9 Employee Compensation and Benefits
CONTROLLING LABOR COSTS
Set Pay Rates
Analyze Total Labor Needs
Research Wage Rates
Determine Market Position
Chapter 9 Employee Compensation and Benefits
Control Overtime
Chapter 9 Employee Compensation and Benefits - Summary
1. List and describe three federal laws that impact compensation
policies and programs.
•
The Fair Labor Standards Act (FLSA) establishes minimum wage and
overtime pay standards.
•
Most hourly positions are entitled to the basic minimum wage, but
state and local laws may set a higher minimum, and tipped
employees can be paid less when tips bring their wages up to the
minimum.
•
Overtime, 1.5 times the normal hourly rate, must be paid when
nonexempt employees work more than 40 hours in a week.
•
Managers must monitor compliance with wage and hour
requirements.
•
The Consumer Credit Protection Act (CCPA) prohibits employers from
terminating or disciplining employees when wages must be paid to a
third party via levy or garnishment.
Chapter 9 Employee Compensation and Benefits - Summary
1. List and describe three federal laws that impact compensation policies and
programs continued…
•
The Equal Pay Act (EPA) makes it illegal to pay different wages to
men and women for equal work in the same workplace.
•
Equal jobs require equal levels of skill, effort, and responsibility under
similar conditions.
Chapter 9 Employee Compensation and Benefits - Summary
2. Explain the types of voluntary benefits that can be included in a
compensation package.
• Managers can offer numerous voluntary benefits to employees who
meet requirements that they establish.
• Examples include bonuses, dependent care, death benefits, dental
insurance, disability benefits, and educational and professional
development support.
• Other voluntary benefits may include employee assistance programs,
flexible spending accounts, funeral leave, health savings accounts,
healthcare plans, and life insurance.
• Long-term care insurance, meals, mental health insurance, paid
holidays and vacation, and pension and retirement plans may also
be available.
• Still other benefits may include personal time off, profit-sharing plans,
religious holiday time off, stock option plans, uniforms, and vision care.
Chapter 9 Employee Compensation and Benefits - Summary
3. Identify and describe three retirement and health benefit laws that
impact voluntary benefits.
• The Employee Retirement Income Security Act (ERISA) protects
employee pensions and healthcare plans from incompetent,
unethical, and unfair administration.
• The Consolidated Omnibus Budget Reconciliation Act (COBRA)
extends healthcare coverage for people who would otherwise lose it.
• The Health Insurance Portability and Accountability Act (HIPAA) helps
ensure people do not lose access to healthcare because of limits on
plan enrollment periods, preexisting conditions, or other health status
factors.
Chapter 9 Employee Compensation and Benefits - Summary
4. Describe five employee benefit programs that are mandated by
federal laws.
• Social Security is a federal program that includes benefits for
retirement, survivors, disabilities, and Medicare insurance.
• Employers and employees pay for benefits through a payroll tax, and
the value of the benefit depends, in part, on how much the
employee earned and when the payment begins.
• Unemployment compensation temporarily provides a reduced
income to employees who lose their job involuntarily.
• Each state has its own rules for the amount of benefits to be paid and
for how long.
• Workers’ compensation is a system for providing financial
compensation to employees or their survivors when an employee is
injured, becomes sick, or dies as a result of a workplace situation.
• These programs differ from state to state.
Chapter 9 Employee Compensation and Benefits - Summary
4. Describe five employee benefit programs that are mandated by federal laws
continued…
• The Family and Medical Leave Act (FMLA) gives qualified employees
the right to take up to 12 weeks of continuous or intermittent unpaid
leave in a rolling 12-month period for certain medical or family care
situations.
• The Uniformed Services Employment and Reemployment Rights Act
(USERRA) protects employees from workplace discrimination based
on military service.
• It ensures that military personnel are not penalized when they return
from duty.
Chapter 9 Employee Compensation and Benefits - Summary
5. Explain the procedures that help ensure the correct compensation
will be paid to employees.
• Payroll administrators must deliver accurate employee paychecks on
time.
• A payroll system tracks work times and issues paychecks.
• These systems may be manual or automated but require that
supervisors review and sign employee time records to confirm that
they are correct.
• Many managers outsource payroll administration.
• In smaller operations, a part-time bookkeeper may handle these
tasks.
• Software is also available.
Chapter 9 Employee Compensation and Benefits - Summary
6. Explain the basic procedures that can be used to control labor
costs.
• A four-step process can be used to establish pay levels.
• First, establish pay rates and, second, analyze total labor needs.
• Third, research competitors’ wage rates.
• This will enable managers to determine market position so pay ranges
can be determined, which is the fourth step.
• Overtime cost control requires a policy of approval before overtime is
incurred.
• It is also important to review time records at the end of each shift to
reduce the likelihood that employee’s hours could lead to overtime.
Chapter 9 Employee Compensation and Benefits
Key Terms:
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.
Chapter 9 Employee Compensation and Benefits
Key Terms 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.
Chapter 9 Employee Compensation and Benefits
Key Terms 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.
Chapter 9 Employee Compensation and Benefits
Key Terms 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.
Chapter 9 Employee Compensation and Benefits
Key Terms 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.
Chapter 9 Employee Compensation and Benefits
Chapter Images
Chapter 9 Employee Compensation and Benefits
Chapter Images continued