Ch.13 Benefits and Services

8/11/2019 Ch.13 Benefits and Services

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PART FOUR COMPENSATION

C H A P T E R T T h i r t e e n

BeneftsAnd

Services 13Lecture Outine

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Str!te"ic Overvie#

The Benefts Picture Today

Pay or Time Not Worked

Unemployment Insurance

Vacations and Holidays

Sick Leae

Parental Leae and the !amily and "edicalLeae #ct

Seerance Pay

Supplemental Unemployment Benefts

Insurance Benefts

Workers$ %ompensation

Hospitali&ation' Health' and (isa)ility

Insurance

Lie Insurance

Benefts or Part*Time and %ontin+ent

Workers

,etirement Benefts

Social Security

Pension PlansPension Plannin+

Pensions and the La-

Pension #lternaties

Personal Serices and !amily*!riendly Benefts

Personal Serices

!amily*!riendly Benefts

./ecutie Per0uisites

!le/i)le Benefts Pro+rams

The %aeteria #pproach

%omputers and Benefts #dministration

!le/i)le Work #rran+ements

In Brief: This chapter discusses thedifferent benefits and services that

companies might offer to employees.

These benefits and services areoffered to entice employees, retain

employees, and to help make them

more productive during their service.

Interesting Issues: More and more

companies are moving to flexible

benefits packages. Students mightwell be prodded to understand the

dynamics driving this, as well as the

costs and benefits to the employer.

ANNOTATE$ OUTLINE

I. The Benefits Picture Today Benefits can be classified by 1) pay for time notworked; 2) insurance benefits; 3) retirement benefits; and 4) services.

Know Your Employment Law: Benefits !ere are a myriad oflaws t!at affect benefits. "t is important t!at e#pert assistance besecured w!en formulatin$ benefits and benefits policies.

II. Pay for Time Not Worked

%. &nemployment "nsurance %ll states !ave unemployment insurance orcompensation acts 't!at follow federal $uidelines)( w!ic! provide for weeklybenefits if a person is unable to work t!rou$! some fault ot!er t!an !is!er own.

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!e benefits derive from an unemployment ta# on employers t!at can ran$e from*.1+ to ,+ of ta#able payroll in most states. %n employer-s unemployment ta#rate reflects its rate of personnel terminations.

B. acations and /olidays !e number of paid employee vacation days and!olidays varies considerably from employer to employer. 0irms !ave to addressseveral !oliday and vacationrelated policy issues.

. ick eave provides pay to employees w!en t!ey-re out of work due to illness.5ost sick leave policies $rant full pay for a specified number of permissible sickdays. o minimi6e employees usin$ t!eir sick leave as e#tensions to t!eirvacations( some employers are repurc!asin$ unused sick leave at t!e end of t!eyear by payin$ t!eir employees a daily e7uivalent sum for eac! sick leave daynot used or creatin$ a leave bank or paid time off '89).

. 8arental eave and t!e 0amily 5edical eave %ct stipulates t!at: 1) privateemployers of ,* or more employees must provide eli$ible employees up to 12weeks of unpaid leave for t!eir own serious illness( t!e birt! or adoption of ac!ild( or t!e care of a seriously ill c!ild( spouse( or parent; 2) employers mayre7uire employees to take any unused paid sick leave as part of t!e 12week

leave provided in t!e law; 3) employees takin$ leave are entitled to receive!ealt! benefits w!ile t!ey are on unpaid leave( and 4) employers must $uaranteeemployees t!e ri$!t to return to t!eir previous or e7uivalent position wit! no lossof benefits at t!e end of t!e leave; !owever( t!e law provides a limited e#ceptionfrom t!is provision.

. everance 8ay a onetime payment w!en terminatin$ an employee( is a!umanitarian $esture( and $ood public relations. 5ost mana$ers e#pectemployees to $ive t!em at least one or two weeks- notice if t!ey plan to 7uit; itt!erefore seems appropriate to provide at least one or two weeks- severance ifan employee is bein$ dismissed.

0. upplemental &nemployment Benefits supplement t!e employee-s

unemployment compensation( and !elp t!e person maintain !is!er standard oflivin$ for a time w!ile !es!e is out of work due to layoffs( reduced workweeks(and relocations. !ey are becomin$ more prevalent in union a$reements.

NOTES ducational 5aterials to &se

III. Insurance Benefits

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2. ontrollin$ ured employees back on t!e >ob as fast as possible( sinceworker compensation cost accumulate as lon$ as t!e person is out of work.

B. /ospitali6ation( 5edical( and isability "nsurance is aimed at providin$protection a$ainst !ospitali6ation costs and loss of income arisin$ from accidentsor illness occurrin$ from offt!e>ob causes( and is offered by most employersbecause medical care and insurance are so e#pensive. mployer !ealt! and!ospitali6ation plans must comply wit! t!e %mericans wit! isabilities %ct.

%ccidental deat! and dismemberment covera$e provides a lumpsum benefit inaddition to life insurance benefits w!en deat! is accidental. isability insuranceprovides income protection for loss of salary due to illness or accident. % !ealt!maintenance or$ani6ation '/59) is a medical or$ani6ation consistin$ of severalspecialists operatin$ out of a communitybased !ealt! care center. 8referred

provider or$ani6ations '889s)( a cross between /59s and t!e traditionaldoctorpatient arran$ement( are $roups of !ealt! care providers t!at contract toprovide medical care services at a reduced fee.

1. =ew rends in /ealt! are ost ontrol many employers are c!an$in$t!eir medical plans by: 1) movin$ away from 1**+ medical cost paymentsand includin$ a deductible; 2) increase annual deductibles; 3) re7uiremedical contributions; 4) use $atekeepers; ,) encoura$e preventive !ealt!care; ?) form !ealt! care coalitions; and @) mana$e t!e cost of aids.

2. 5ental /ealt! Benefits !e costs of mental !ealt! treatment are risin$because of widespread dru$ and alco!ol problems. !ere is an increase int!e number of states re7uirin$ employers to offer a minimum packa$e of

mental !ealt! benefits. !e 5ental /ealt! 8arity %ct of 1AA? sets minimummental !ealt! care benefits at t!e national level.

3. !e 8re$nancy iscrimination %ct '8%) pro!ibits se# discrimination basedon pre$nancy( c!ildbirt!( or related medical conditions( t!us employers musttreat women affected by pre$nancy( c!ildbirt!( or related medical conditionst!e same as any employee not able to work( wit! respect to all benefits(includin$ sick leave and disability benefits( and !ealt! and medicalinsurance.

4. 9B% 'ompre!ensive 9mnibus Bud$et econciliation %ct)re7uirements are t!at most private employers must make continued !ealt!benefits available to terminated or retired employees and t!eir families for a

period of time( $enerally 1C mont!s. !e former employee must pay for t!ecovera$e( if desired( as well as a small fee for administrative costs.

,. on$erm are is a new benefit aimed at supportin$ people in t!eir olda$e. !e /ealt! "nsurance 8ortability and %ccountability %ct( enacted in1AA?( lets employers and employees deduct t!e cost of lon$term careinsurance premiums from t!eir annual income ta#es.

. ife "nsurance 5ost employers provide $roup life insurance plans( w!ic! usuallyaccept all employees( re$ardless of !ealt! or p!ysical condition.

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. Benefits for 8arttime and ontin$ent


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1. arly etirement


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3. lder are pro$rams are bein$ offered to employers to !elp employeesw!o must care for elderly w!o can-t fully care for t!emselves.

4. 9t!er Dobelated Benefits employers provide include subsidi6edemployee transportation( food services( and educational subsides.

,. eptember 11 t!is terrorist attack !ad two effects: 1) many firms e#pandedt!eir trauma counselin$ services( and 2) insurance became muc! moree#pensive to obtain.

The New Worplace: omestic 8artner Benefits 5any companiesare e#tendin$ benefits covera$e to same se# domestic partners.Because " $uidelines do not include suc! partners in t!e definitionof Edependents(F t!ere is considerable doubt t!at t!ese benefits willbe ta# free.

. #ecutive 8er7uisites 'perks( for s!ort) include mana$ement loans( salary$uarantees( protection for e#ecutives if t!eir firms become tar$ets of ac7uisitionsor mer$ers( financial counselin$( relocation benefits( time off wit! pay(outplacement assistance( company cars( c!auffeured limousines( security

systems( company planes and yac!ts( e#ecutive dinin$ rooms( p!ysical fitnesspro$rams( le$al services( ta# assistance( liberal e#pense accounts( clubmembers!ips( season tickets( credit cards( and c!ildren-s education.

NOTES ducational 5aterials to &se

VI. Fle!i"le Benefits Pro#rams

%. !e afeteria %pproac! 'cafeteria benefits plan is $enerally synonymous wit!fle#ible benefits plan) is w!ere eac! employee is $iven a benefits fund bud$et tospend on w!ic!ever benefits !es!e wants once t!e employer limits t!e total costfor eac! benefits packa$e and includes certain nonoptional items. 0le#iblespendin$ accounts let employees pay for certain benefits e#penses wit! preta#dollars. ore plus option plans establis! a core set of benefits( w!ic! are usuallymandatory for all employees; t!en t!e employees can c!oose from variousbenefits options.

The HR Scorecard! Strategy and Re"ult": !e =ew Benefits 8lan !e /otel 8aris implements a new family friendly benefits plan. "tscenterpiece was a proposal for dramatically improved familyfriendlybenefits. Because so many of eac! !otel-s employees were sin$leparents( and because eac! !otel !ad to run 24 !ours a day( t!ey setaside a room in eac! !otel for an onsite c!ildcare facility.

B. omputers and Benefits %dministration omputes( includin$ 8basedsystems and t!e "nternet( enable employees to update and manipulate t!eirbenefits packa$es.

. 0le#ible


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8. What is 9-orta"ility91 Why do you think it is :or isn5t; im-ortant to a recent colle#e #raduate18ortability is t!e ability of an employee to take !is or !er retirement income w!en t!ey leave anor$ani6ation and roll it over into a new employerHs savin$s plan or "%. odayHs colle$e $raduate maynot t!ink about it( but it is important to consider t!e 7uestion of portability. 5ost colle$e $raduatescan e#pect to c!an$e employers several times durin$ t!eir career. /avin$ portable retirement planscan !elp ensure t!at t!ey end up wit! a reasonable retirement income. "f t!e plans are not portable(it will take e#ceptional plannin$ on t!e employeeHs part to ensure ade7uate retirement income.

ob;4) employers must $uarantee employees t!e ri$!t to return to t!eir previous or e7uivalent positionwit! no loss of benefits at t!e end of t!e leave; !owever( t!e law provides a limited e#ception from t!isprovision to certain !i$!ly paid employees.

$ESSLER COMPANION &EB SITE

We invite you to visit the Dessler homepage (!ttp:www.pren!all.comdessler) on the

Prentice Hall Web site for the best online business support available This site

provi!es professors "ith a customi#e! course Web site$ inclu!ing ne"

communication tools$ one%clic& navigation of chapter content$ an! great resources$

such as 'nternet esources$ an H' E*am Prep +ui!e$ assessment e*ercises$ an!

more

IN$I'I$UAL AN$ (ROUP ACTI'ITIES

. Workin# individually or in #rou-s( find out the unem-loyment rate and la's of your state.Write a summary detailin# your state%s unem-loyment la's. 7ssumin# =om-any > has a 6?@rate of -ersonnel terminations( calculate =om-any >%s unem-loyment ta! rate in your state.u$$est t!at t!e students use t!e "nternet to researc! t!e unemployment rate and laws for your state.

3. 7ssume you run a small "usiness. Workin# individually or in #rou-s( visit the We" sitewww.dol.$ovelaws. Write a t'o-a#e summary e!-lainin#A :; the various retirement savin#s-ro#rams availa"le to small"usiness em-loyers( and :3; 'hich retirement savin#s -ro#ramyou 'ould choose for your small "usiness and 'hy. Based on w!at t!ey learned from t!ec!apter and t!e results of t!eir "nternet searc!( t!e students s!ould include at a minimum a 4*1'k)plan t!at can be assessed online.

6. $ou are the )R consultant to a small "usiness 'ith a"out 8? em-loyees. 7t the -resent time

the firm offers only five days vacation( five -aid holidays( and le#ally mandated "enefits suchas unem-loyment insurance -ayments. 2evelo- a list of other "enefits you "elieve theyshould offer( alon# 'ith your reasons for su##estin# them. !e specific ones to recommendwould depend partly on t!e profile of t!e employees of t!e firm. "n t!e absence of t!at information(t!e least costly addition of benefits would be to add some sick leave 'or personal days) and consideradditional vacation andor !olidays. !e ne#t benefit t!at t!ey mi$!t look to would be to add t!eavailability of some kind of !ealt! plan t!at could include a contributory cost to t!e employee. !iswould be less e#pensive to t!e company and add real value to t!e employees because of $roupdiscounts.

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http://www.prenhall.com/desslerhttp://www.dol.gov/elawshttp://www.dol.gov/elawshttp://www.prenhall.com/desslerhttp://www.dol.gov/elaws


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8. The )R=I Test S-ecificationsC a--endi! at the end of this "ook :-a#es DE


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3. What 'ould you tell Hennifer are the advanta#es and disadvanta#es to =arter =leanin#=enters of -rovidin# its em-loyees 'ith health( hos-itali4ation( and life insurance -ro#rams1!e student s!ould refer to t!e !ospitali6ation( medical( and disability insurance section of t!ec!apter to develop t!eir lists of advanta$es and disadvanta$es.

6. Would you advise esta"lishin# some ty-e of day care center for the =arter cleanin#em-loyees1 Why or 'hy not1 % better approac! for a small company suc! as arter would be tolocate a licensed day care provider t!at would be willin$ to $ive a discount to arter employees.0rom t!at startin$ point( s!e could t!en consider w!et!er to subsidi6e c!ildcare.

PART+EN$IN( 'I$EO CASE C,-.ens!ti,n

%n$elo /ernande6( a recruiter for 0ocus 8ointe( is dissatisfied wit! !isincentive plan. /e feels !is current plan( w!ic! is based on t!e 7uantityof recruits !e brin$s to t!e company( does not fairly reward !im for !isefforts. %n$elo speaks wit! !ona astillo in t!e / department aboutreevaluatin$ !is incentive plan( and e#plorin$ ot!er forms ofcompensation. !is se$ment discusses !ow and w!en incentive plansare best used( as well as alternative met!ods of compensation: benefits(services( rewards( etc.

0or full video case and discussion 7uestions( please visit t!e 0acultyesource section of t!e essler ompanion


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or#ani4ation :)+&; clock medical services as well as preventative medicine in a clinictypearran$ement for employees( w!o pay a nominal fee in addition to t!efi#ed annual fee t!e employer pays.

-referred -rovider Iroups of !ealt! care providers t!at contract wit! employers insuranceor#ani4ation :PP&; companies( or t!irdparty payers to provide medical care services at a

reduced fee.

#rou- life insurance 8rovides lower rates for t!e employer or employee and includes allemployees( includin$ new employees( re$ardless of !ealt! or p!ysicalcondition.

Social Security 0ederal pro$ram t!at provides t!ree types of benefits: retirement incomeat a$e ?2 and t!ereafter; survivorHs or deat! benefits payable to t!eemployeeHs dependents re$ardless of a$e at time of deat!; and disabilitybenefits payable to disabled employees and t!eir dependents. !esebenefits are payable only if t!e employee is insured under t!e ocialecurity %ct.

-ension -lans 8lans t!at provide a fi#ed sum w!en employees reac! a predetermined

retirement a$e or w!en t!ey can no lon$er work due to disability.

defined "enefit % plan t!at contains a formula for determinin$ retirement benefits.-ension -lan

defined contri"ution % plan in w!ic! t!e employerHs contribution to employeeHs retirement or-lan savin$s funds is specified.

8?:k; -lan % defined contribution plan based on section 4*1'k) of t!e "nternalevenue ode.

savin#s and thrift -lan 8lan w!ere employees contribute a portion of t!eir earnin$s to a fund;t!e employer usually matc!es t!is contribution in w!ole or in part.

deferred -rofitsharin# % plan in w!ic! a certain amount of profits is credited to eac! employee-s-lan account( payable at retirement( termination( or deat!.

em-loyee stock % 7ualified( ta#deductible stock bonus plan in w!ic! employerso'nershi- -lan :,S&P; contribute stock to a trust for eventual use by employees.

,m-loyee Retirement i$ned into law by 8resident 0ord in 1A@4 to re7uire t!at pension ri$!tsIncome Security 7ct be vested( and protected by a $overnment a$ency( t!e 8BI.:,RIS7;

vestin# 8rovision t!at money placed in a pension fund cannot be forfeited for anyreason.

Pension Benefits stablis!ed under "% to ensure t!at pensions meet vestin$uarantee =or-oration obli$ations; also insures pensions s!ould a plan terminate wit!out:PB=; sufficient funds to meet its vested obli$ations.

early retirement % type of offerin$ by w!ic! employees are encoura$ed to retire early( t!e'indo' incentive bein$ liberal pension benefits plus per!aps a cas! payment.

cash "alance -lans efined benefits plans under w!ic! t!e employer contributes a

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of employees- current pay to t!e employees- pension plans every year(and employees earn interest on t!is amount.

em-loyee assistance % formal employer pro$ram for providin$ employees wit! counselin$ and-ro#ram :,7P; or treatment pro$rams for problems suc! as alco!olism( $amblin$( or

stress.

fle!i"le "enefits -lan J "ndividuali6ed plans allowed by employers to accommodate employeecafeteria "enefits -lan preferences for benefits.

/o" sharin# %llows two or more people to s!are a fulltime >ob.

'ork sharin# % temporary reduction in work !ours by a $roup of employees durin$economic downturns as a way to prevent layoffs.

telecommutin#

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Ch.13 Benefits and Services