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Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–2
BenefitsBenefits
Supplemental
pay
Executive services
Insurance benefits
Retirement benefits
Types of Employee Benefits
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–3
FIGURE 13–2 Private-Sector Employer Benefits Costs by Category, March 2009
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–4
TABLE 13–1 Some Required and Discretionary Benefits
* While not required under federal law, all these benefits are regulated in some way by federal law, as explained in this chapter.
Benefits Required by Federal or Most State Law
Benefits Discretionary on Part of Employer*
Social Security
Unemployment Insurance
Workers’ Compensation
Leaves under the Family Medical Leave Act
Disability, Health, and Life Insurance
Pensions
Paid Time Off for Vacations, Holidays, Sick Leave, Personal Leave, Jury Duty, etc.
Employee Assistance and Counseling Programs
“Family Friendly” benefits for Child Care, Elder Care, Flexible Work Schedules, etc.
Executive Perquisites
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–5
Policy Issues in Designing Benefit Policy Issues in Designing Benefit PackagesPackages
Policy Issues
Who will be covered
Coverage during probation
Degree of employee choice
Which benefits to offer
Whether to include retirees
How to finance benefits
Cost containment procedures
Communicating benefits options
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–6
Pay For Time Not WorkedPay For Time Not Worked
Vacations and holidays
Parental leave
Supplemental unemployment
benefits
Supplemental Pay Benefits
Unemployment insurance
Sick leave
Severance pay
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–7
Pay for Time Not WorkedPay for Time Not Worked• Unemployment InsuranceUnemployment Insurance
Provides for benefits if a person is unable to work through Provides for benefits if a person is unable to work through no fault of his or her own.no fault of his or her own.
Is an employer payroll tax that is determined by an Is an employer payroll tax that is determined by an employer’s rate of personnel terminations.employer’s rate of personnel terminations.
Tax is collected and administered by the state.Tax is collected and administered by the state.
• Vacations and HolidaysVacations and Holidays Number of paid leave days and holidays varies by employer.Number of paid leave days and holidays varies by employer.
Qualification for and calculation of holiday and leave pay Qualification for and calculation of holiday and leave pay varies by employer.varies by employer.
Premium pay for those who work on holidays.Premium pay for those who work on holidays.
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–8
Pay for Time Not Worked (cont’d)Pay for Time Not Worked (cont’d)• Sick LeaveSick Leave
Provides pay to an employee when he or she is out of work Provides pay to an employee when he or she is out of work because of illness.because of illness. Costs for misuse of sick leaveCosts for misuse of sick leave Pooled paid leave plansPooled paid leave plans
• Parental LeaveParental Leave The Family Medical Leave Act of 1993 (FMLA)The Family Medical Leave Act of 1993 (FMLA)
Up to 12 weeks of unpaid leave within a one-year period.Up to 12 weeks of unpaid leave within a one-year period. Employees must take unused paid leave first.Employees must take unused paid leave first. Employees on leave retain their health benefits.Employees on leave retain their health benefits. Employees have right to return to job or equivalent position.Employees have right to return to job or equivalent position.
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–9
Pay for Time Not Worked (cont’d)Pay for Time Not Worked (cont’d)• Severance PaySeverance Pay
A one-time payment when terminating an employee.A one-time payment when terminating an employee.
• Reasons for granting severance pay:Reasons for granting severance pay:
Acts as a humanitarian gesture and good public relations.Acts as a humanitarian gesture and good public relations.
Mirrors employee’s two-week quit notice.Mirrors employee’s two-week quit notice.
Avoids litigation from disgruntled former employees.Avoids litigation from disgruntled former employees.
Reassures employees who stay on after the employer Reassures employees who stay on after the employer downsizes its workforce of employer’s good intentions.downsizes its workforce of employer’s good intentions.
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–10
Pay for Time Not Worked (cont’d)Pay for Time Not Worked (cont’d)• Supplemental Unemployment Benefits (SUB)Supplemental Unemployment Benefits (SUB)
Payments that supplement the laid-off or furloughed employee’s Payments that supplement the laid-off or furloughed employee’s unemployment compensation.unemployment compensation.
The employer makes contributions to a SUB reserve fund.The employer makes contributions to a SUB reserve fund.
SUB payments are made to employees for the time the SUB payments are made to employees for the time the employee is out of work due to layoffs, reduced workweeks, employee is out of work due to layoffs, reduced workweeks, or relocations.or relocations.
SUB payments are considered previously earned SUB payments are considered previously earned compensation for unemployment calculation purposes.compensation for unemployment calculation purposes.
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–11
Retirement BenefitsRetirement Benefits• Social SecuritySocial Security
(Federal Old Age and Survivor’s Insurance)(Federal Old Age and Survivor’s Insurance) A federal payroll tax (7.65%) paid by both the employee A federal payroll tax (7.65%) paid by both the employee
and the employer on the employee’s wagesand the employer on the employee’s wages
Retirement benefits at the age of 62 Retirement benefits at the age of 62
Survivor’s or death benefits paid Survivor’s or death benefits paid to the employee’s dependentsto the employee’s dependents
Disability payments to disabled employees Disability payments to disabled employees and their dependentsand their dependents
The Medicare programThe Medicare program
Health services to people age 65 or olderHealth services to people age 65 or older
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–12
Retirement Benefits (cont’d)Retirement Benefits (cont’d)
Defined benefit plans
Defined contribution
plans
Qualified plans
Types of Pension Plans
Nonqualified plans
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–13
Pension PlansPension Plans
Membership requirements
Vesting schedule
Benefit formula
Plan funding
Policy Issues in Pension Planning
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–14
Personal ServicesPersonal Services• Credit UnionsCredit Unions
Separate businesses established with the employer’s assistance Separate businesses established with the employer’s assistance to help employees with their borrowing and saving needs.to help employees with their borrowing and saving needs.
• Employee Assistance Programs (EAPs)Employee Assistance Programs (EAPs) Provide counseling and advisory services:Provide counseling and advisory services:
Personal legal and financial servicesPersonal legal and financial services
Child and elder care referralsChild and elder care referrals
Adoption assistanceAdoption assistance
Mental health counselingMental health counseling
Life event planningLife event planning
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–15
Employee Assistance ProgramsEmployee Assistance Programs
1
Be aware of legal issues.
Ensure professional staffing.
Steps for Launching an EAP Program
Develop a policy statement.
Maintain confidential record-keeping systems.
2
3
4
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–16
Family-Friendly (Work–Life) Family-Friendly (Work–Life) BenefitsBenefits• Subsidized child careSubsidized child care
• Sick child benefitsSick child benefits
• Elder careElder care
• Time offTime off
• Subsidized employee transportationSubsidized employee transportation
• Food servicesFood services
• Educational subsidiesEducational subsidies
• Fitness and medical facilitiesFitness and medical facilities
• Flexible work schedulingFlexible work scheduling
Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 13–17
Flexible Benefits ProgramsFlexible Benefits Programs• Cafeteria (Flexible Benefits) ApproachCafeteria (Flexible Benefits) Approach
Each employee is given a limited benefits fund budget Each employee is given a limited benefits fund budget to spend on preferred benefits.to spend on preferred benefits.
Types of plansTypes of plans Flexible spending accountsFlexible spending accounts Core plus option plansCore plus option plans
• Employee LeasingEmployee Leasing Professional employer organizations or staff leasing firmsProfessional employer organizations or staff leasing firms Handle human resources functions for leased employees Handle human resources functions for leased employees
of small firmsof small firms Can provide benefits by aggregating employees into Can provide benefits by aggregating employees into
larger insurable groupslarger insurable groups Can raise worker commitment, co-employment, and Can raise worker commitment, co-employment, and
workers’ compensation issuesworkers’ compensation issues
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