CHAPTER SIX

EMPLOYEE PAY AND BENEFITS

OBJECTIVES

• Compute payroll deductions and net pay from information and tables provided.

• Identify optional and required employee benefits and recognize their value as additions to net pay.

• Explain trends in the workplace such as flexible schedules, job rotation, job sharing, and permanent part-time employment.

• Understand the role of unions and professional organizations in the workplace.

Gross Pay, Deductions and Net Pay

Gross Pay

• The total or agreed-upon rate of pay before any deductions are made.

Ways of Getting Paid

• Hourly Rate: The number of hours you worked times the hourly rate of pay

• Overtime: Hours worked beyond the regular hours.

• Monthly Salary: You receive pay for 40 hours a week with no pay for overtime.

• Annual Salary: Divided into equal parts over the year

Deductions

• Amounts subtracted from your Gross Pay.

• Examples: – Required by Law: Social Security, Federal

Income Tax, and State Income Tax.– Not Required by Law: Health Insurance, IRA,

TSA, optional benefits, etc.

Net Pay• The amount left over after all

deductions are taken out. Net pay is also referred to as take-home pay.

• This is the amount of your check you can actually spend.

Formulas

• Regular Wages or Salary + Overtime = Gross Pay

• Gross Pay – Deductions = Net Pay

• Look at figure 6-2. Employee Withholding Sheet.

• Look at figure 6-3

Benefits and Incentives

Profit Sharing

• A plan that allows employees to receive a portion of the company’s profits at the end of the corporate year.

Paid Vacations and Holidays

• While you are on vacation you are paid as usual.

• Another benefit you might receive is paid time off for holidays. If an employee is required to work on a holiday they usually receive double time or time and ½.

Employee Services

• Extras that companies offer in order to improve employee morale and working conditions.

• Example: if you work in a clothing store you might receive a 10% discount.

Sick Pay

• Allowance of days each year are given for illness.

• It is normal to receive 3-10 days sick leave a year without deduction.

Leaves of Absence

• Some employers allow employees to leave their jobs(without pay) for certain reasons, such as having children and completing education, and then return to their jobs at a later time.

• The Family and Medical Leave Act took effect August 5, 1993

– Stated that Employers with fifty or more employees must give up to twelve weeks unpaid leave per year for the birth or adoption of a child, care of a loved one, etc

Insurance

– Most Employers offer insurance benefits to their employees.

– Most plans are paid for.– Insurance plans typically include

health, dental, vision, and life insurance

Health Insurance

• A typical plan is a $150 deductible. After that the insurance will pay 80% and the user will pay 20%.

• We will discuss this in a later chapter.

Life Insurance

• Pays a cash benefit to a designated person, called a beneficiary, when the insured dies.

• We will cover this issue in detail in a later chapter.

Dental Insurance/Vision

• We will discuss in Chapter 27

Bonuses and Stock Options

• Incentives based on quality of work done, years of service, or company sales or profits.

• Christmas bonuses are popular.

• Stock-purchase options give the employees options to buy stock in the business.

Pension and Savings Plans

• Employee sponsored savings plans– 401 (K) for private employers– 403 (K) for government employers

• Usually employees can not withdraw from these accounts until retirement

Travel Expenses

• If you are required to travel you receive money in order to travel.– Car, Insurance, gas expense, meals, lodging,

etc.

TRENDS IN THE WORKPLACE

Altered Workweeks

• Flexible Schedules– Starting and finishing when you like as long as

you are there eight hours during core hours.

• It allows people to work when their schedules are best.

Job Rotation

• Training employees to be efficient in more than one specialized area.

• This can be costly to the companies, however it is better for the individuals because it helps them to improve individually.

• It is also better because then one person doesn’t have total control over one area.

Job Sharing

• Two people share a full time job.

• Salaries are split according to each persons contributions

Permanent Part-time and Telecommuting

• Some employees are choosing to work only part-time and some businesses are allowing those people benefits.

• Telecommuting allows employees to work in their own home in such areas as routine data entry, transcription, keyboarding, and software development.

• Information processing and related fields, home work is becoming popular.

Childcare

• Many companies have started providing on-site child care facilities as well as coverage of child care expenses as part of employee benefits.

• Legislation will focus on high-quality, affordable programs for children and working parents.

LABOR UNIONS AND PROFESSIONAL

ORGANIZATIONS

History of Unions

• Unions were organized in the US as early as 1800.

• The first union was a local group of skilled craftspeople that wanted to protect themselves from competition by untrained and unskilled employees.

• 1886: the American Federation of Labor was organized by Samuel Gompers.

More………..

• The unions had little power till 1935.

• In 1935 the National Labor Relations Act gave unions the right to organize and bargain with employers.

• In 1938, John L. Lewis became the first president of a new union called the CIO(Congress of Industrial Organizations)

More………..

• Unions continued to grow in number, power, and size until 1947, when Congress passed the Labor Management Relations Act, commonly called the Taft-Hartley Act.

• This act was passed to limit the powers of unions and to curb strikes.

More…….

• In 1955, the AFL and CIO merged under the leadership of George Meany and became the largest and most powerful union in the U.S.

Functions of Unions:

• To recruit new members

• To engage in collective bargaining

• To support political candidates who are favorable to the union

• To provide support services for members

More……..

• Collective Bargaining: the process of negotiating the terms of employment for union members

• Union contracts usually provide for seniority----last one hired should be first to be laid off.

• Mediation: When a union gets the help of a 3rd party.

Three Types of Unions

• Craft Unions: members are people with a particular craft or trade.

• Industrial Unions: Industry workers. AFL-CIO, Teamsters, and United Auto Workers.

• Public Employee Unions: Municipal, county, state, or federal employees such as firefighters, teachers, and police officers.