Glossaryof CompensationTerms

U.S. Department of LaborAlexis M. Herman, Secretary

Bureau of Labor StatisticsKatharine G. Abraham, Commissioner

August 1998

Report 923

Individuals interested in employee compensation are likely toencounter the terms listed in this glossary. Definitions arebrief and may not reflect all usage. Some terms have a specificlegal meaning, either through legislative enactment or judicialinterpretations, which may differ from the usual definition.Readers who need more precise meanings for these terms shouldconsult standard textbooks or legal reference materials availableat bookstores and libraries. This glossary also provides examplesof how some of the terms are used in National CompensationSurvey publications; the terms may be used differently in otherBureau of Labor Statistics programs.

The Bureau’s new National Compensation Survey will inte-grate three major programs—The Employment Cost Index, theOccupational Compensation Survey program, and the EmployeeBenefits Survey—into one comprehensive compensation programby the end of this decade. The NCS program will produce infor-mation on the Employment Cost Index, employer costs for em-ployee compensation, occupational wage levels, and the incidenceof and provisions in employee benefit plans.

This glossary is based in part on an earlier one, Glossary ofCurrent Industrial Relations and Wage Terms (BLS Bulletin 1438,1965). Richard K. Yeast, an economist in the Division of Com-pensation Data Analysis and Planning, prepared this report. Ken-neth J. Hoffmann, an economist in the same division, assisted inthe preparation. Leon Lunden, formerly with the same division,was the original coordinator of the project.

The Bureau of Labor Statistics welcomes comments on theusefulness of the glossary and the adequacy of its definitions.Please send any comments to the Division of Compensation DataAnalysis and Planning, Room 4175, 2 Massachussetts Ave., NE,Washington, DC 20212. E-mail address: ocltinfo@bls.gov

Information in this publication is available to sensory impairedindividuals. Voice phone: (202) 606-7828; TDD phone: (202)606-6897; TDD message referral phone: 1-800-326-2577. Thisinformation is in the public domain and, with appropriate credit,may be reproduced without permission.

Preface

ACCIDENTAL DEATH AND DISMEMBERMENT (AD&D)INSURANCE

Insurance that provides payment for accidental loss of life,limb, hearing, or sight. Insurance usually covers both occu-pational and nonoccupational deaths and injuries, but cover-age may be limited to one or the other. Double indemnityprovisions of life insurance plans are considered to be AD&Dif they provide benefits for both accidental death and dismem-berment.

ACCRUAL LEAVE PLANSEmployees earn a specified number of vacation hours or sickleave hours each pay period. For example, new Federal gov-ernment employees earn 4 hours of vacation leave and 4 hoursof sick leave each pay period.

ACROSS-THE-BOARD WAGE CHANGEA general wage change affecting all or most employees in aplant, company, or industry, because of a cents-per-hour orpercentage increase or decrease.

ADMINISTRATIVE SERVICES ONLY (ASO) PLANAn employees benefit plan that is administered by an insur-ance company or other third party. The employer is entirelyat risk for paying employee claims.

ADOPTION ASSISTANCEFinancial aid given to employees for the purpose of coveringall or part of the cost of adoption.

ADOPTION LEAVEExcused leave accorded to employees for attending legal pro-ceedings leading to adoption and also, like maternity or pa-ternity leave, for a period of time after adoption of a child.(See Family and Medical Leave Act of 1993 (FMLA).

AFL-CIO (AMERICAN FEDERATION OF LABOR ANDCONGRESS OF INDUSTRIAL ORGANIZATIONS)

Federation of over 70 autonomous national and international

Glossary 1

unions created by the merger of the American Federation ofLabor (AFL) and the Congress of Industrial Organizations(CIO) in December 1955. The initials AFL-CIO after thename of a union indicate that the union is an affiliate.

AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967(ADEA)

Federal law prohibiting bias against older workers in hiring,discharge, compensation, or other terms, conditions or privi-leges of employment. Applies to workers aged 40 or olderworking for firms of 20 employees or more. (See Older Work-ers Benefit Protection Act of 1990.)

AGENCY SHOP (see Union Security)

AGREEMENT (COLLECTIVE BARGAINING AGREE-MENT, UNION CONTRACT)

Written contract between an employer (or an association ofemployers) and a union (or unions), usually for a specifiedterm, defining conditions of employment (wages, hours, va-cations, holidays, overtime payments, working conditions,etc.); detailing rights of workers, the union, and management;and describing procedures to be followed in settling disputesor handling issues that arise during the life of the contract.

AMERICANS WITH DISABILITIES ACT OF 1990 (ADA)Federal law barring discrimination against qualified individu-als who have disabilities in job application procedures, hir-ing, firing, advancement, compensation, benefits, job train-ing, and other terms, conditions and privileges of employ-ment. The law also requires reasonable accommodation tothe employee’s disabling condition. Rehabilitation Act (Sec-tion 503)-Bars discrimination and requires reasonable accom-modations by Federal contractors and subcontractors. (SeeEqual Employment Opportunity Commission.)

ANNIVERSARY YEAR VACATION PLANTime-based vacation plan offering additional vacation timeto employees on certain “anniversary years.” For example,

2 Glossary

employees receive an extra week of vacation at 10 or 20 yearsof service (but not during intervening years).

ANNUITYA form of distribution from a retirement plan providing peri-odic payments. Straight-life annuities provide payments, usu-ally monthly, for the lifetime of a retiree. Joint-and-survivorannuities provide payments to a retiree, and upon the retiree’sdeath, payments to a surviving spouse.

APPRENTICEA learner or beginner who enters into a formal agreement toachieve journey-level worker status in a skilled trade. Theagreement requires that the person undergo supervised prac-tical training and experience and receive technical off-the-job or classroom instruction related to the skilled trade, usu-ally for a specified period of time.

APPRENTICE RATESSchedule of wage rates applicable to workers’ formal appren-ticeship training. The rates usually rise gradually until ap-prentices achieve journey-level status and the rates that ac-company journey-level status.

ARBITRATION (VOLUNTARY, COMPULSORY, ADVI-SORY)

Method of settling labor-management disputes through an im-partial third party, whose decision is usually final and bind-ing. Arbitration is voluntary when both parties agree to sub-mit disputed issues to arbitration, and compulsory if requiredby law. A court order to enforce a voluntary arbitration agree-ment is not usually considered compulsory arbitration. Advi-sory arbitration - As provided in Federal Government agree-ments, arbitration without a final and binding award.

ARBITRATORAn impartial third party to whom disputing parties submittheir differences for decision (award). An ad hoc arbitrator

Glossary 3

acts in a specific case or a limited group of cases. A perma-nent arbitrator serves for the life of the contract or a stipu-lated term, hearing all disputes that arise during this period.

AREA DIFFERENTIALS (see Wage Differentials)

AT RISK PAYPay that an employee is not guaranteed to receive but mayreceive under certain circumstances. Examples include com-missions, piece rates, and various kinds of bonuses such assafety or attendance awards.

ATTENDANCE BONUSPayment or other type of reward (e.g., a day off) for employ-ees whose work attendance record meets certain standards.(See Bonus - (Production and Nonproduction).)

AUTOMATIC PROGRESSIONPolicy by which workers’ pay rates are automatically increasedat fixed time intervals. Also refers to automatic movementfrom trainee rate to job classification rate or to the minimumof a rate range.

AVERAGE HOURLY RATERate that is calculated by taking an employee’s earnings anddividing by the hours worked.

BACK LOADEDMultiyear collective bargaining contract in which wage oremployee benefit increases or both, are greater in the lateryears of the agreement than in the first year. (See FrontLoaded.)

BACK PAYPayment of part or all of an employee’s wages for a particularprior period of time, arising from arbitration, court, or boardawards, grievance settlements, errors in computation of pay,misinterpretation of wage legislation, etc.

4 Glossary

BARGAINING AGENT (BARGAINING REPRESENTATIVE)A union designated by an appropriate government agency,such as the National Labor Relations Board, or recognizedvoluntarily by the employer, as the exclusive representativeof all employees in the bargaining unit for purposes of collec-tive bargaining.

BARGAINING RIGHTSLegally recognized right of unions to represent workers indealings with employers.

BARGAINING UNITGroup of employees in a craft, department, plant, firm, orindustry recognized by the employer or group of employers,or designated by an authorized agency such as the NationalLabor Relations Board, as appropriate for representation bya union for purposes of collective bargaining.

BASE RATEWage rate for work performed during a unit of time, mostcommonly expressed as a rate per hour. It may, however, beexpressed as an amount per day, week, month, or year. Doesnot include overtime or incentive rates. Under an incentivepay system, base rate may refer to the rate of pay for workthat does not meet an incentive production standard or fordowntime. Sometimes differs from the guaranteed rate.

BENEFICIARYThe person designated by an employee or retiree to receivebenefit payments in the event of the employee’s or retiree’sdeath.

BENEFIT REOPENER (see Reopening Clause)

BENEFITSNonwage compensation provided to employees. The NationalCompensation Survey groups benefits into five categories:Paid leave (vacations, holidays, sick leave); supplementary

Glossary 5

pay (premium pay for overtime and work on holidays andweekends, shift differentials, nonproduction bonuses); retire-ment (defined benefit and defined contribution plans); insur-ance (life insurance, health benefits, short-term disability, andlong-term disability insurance) and legally required benefits(Social Security and Medicare, Federal and State unemploy-ment insurance taxes, and workers’ compensation).

BEREAVEMENT PAY ( see Funeral Leave)

BILINGUAL PAY DIFFERENTIALAn hourly, weekly or monthly addition to pay for employeeswho have qualified in a second language and are assigned tojobs that necessitate its use. Sign language for the hearingimpaired may qualify for the differential.

BLACK LUNG BENEFITSA Federal program providing cash benefits to miners whosuffer from black lung, a respiratory disease resulting fromthe inhalation of coal dust.

BLUE CIRCLE RATE (GREEN CIRCLE RATE)Pay rate of a non-probationary worker that falls below theestablished rate ranges for workers performing the same du-ties.

BLUE-COLLAR WORKERSManual workers, usually those employed in production, main-tenance, and related occupations, and paid by the hour or onan incentive basis. The National Compensation Survey’s se-ries for blue-collar occupations cover the following occupa-tional groupings: Precision production, craft, and repair;machine operators, assemblers, and inspectors; transportationand material moving; and handlers, equipment cleaners, help-ers, and laborers. (See Production Workers; White-CollarWorkers.)

BONUS (PRODUCTION AND NONPRODUCTION)Production Bonus: Extra payment based on production inexcess of a quota or on completion of a job in less than stan-

6 Glossary

dard time. In the National Compensation Survey, productionbonuses are included in wages and salaries measures.

Nonproduction Bonus: A cash payment that is not directlyrelated to the output of either the employee or a group ofemployees. Examples include attendance, Christmas, profit-sharing, safety, and year-end bonuses. In the National Com-pensation Survey, lump-sum payments, and all nonproduc-tion bonuses, are excluded from wages and salaries measuresbut are included in the benefits component of total compen-sation.

BREAK IN SERVICEDescriptive of the loss of seniority that occurs when an em-ployee quits, is discharged, is laid off for a given time period,etc. If the employee is subsequently reemployed, senioritystarts as if the employee has never worked before for the com-pany. The employee loses previous status relative to otheremployees for layoffs, promotions, choice of vacation peri-ods, etc.

BREAK TIME (see Rest Period)

BROAD BANDINGA method of grouping a number of similar jobs into only afew broad banded jobs. The grouping may be across variousoccupations that differ but have a common thread (e.g., allare skilled trade jobs) or across various grades within a job,or a combination of both. For example, 18 skilled trade jobtitles might be reclassified into two broad banded groups ofjobs: Skilled Trade Worker I and Skilled Trade Worker II.

CAFETERIA PLAN (see Flexible Benefit Plans)CALL-IN PAY (CALLBACK PAY)

Pay guaranteed to a worker recalled to work after completingthe regular work shift. Call-in pay is a synonym for reportingpay. (See Reporting Pay.)

Glossary 7

CASH BALANCE PENSION PLANA defined benefit plan in which an account is maintained foreach plan participant. Each participant’s account is creditedwith employer contributions to fund retirement benefits.

CASH OR DEFERRED ARRANGEMENT (CODA) (see 401(k)Plans)

CASH PROFIT-SHARINGCash payments made to workers, often determined by a for-mula based on company profits. Such payments are not in-tended for retirement and individual accounts are not estab-lished. (See Deferred Profit-Sharing Plan; Bonus.)

CASUAL WORKERSWorkers who have no steady employer, but who shift fromemployer to employer. Also refers to workers not regularlyattached to a particular work group. Sometimes applied totemporary workers. (See Contingent Workforce; Hiring Hall;Migratory Workers.)

CHILD CARE BENEFITEmployers’ full or partial payment for the cost of caring foran employee’s children in a nursery, day care center, or by ababy-sitter, on or off the employer’s premises, while the em-ployee is at work. (See Elder Care.)

CHRISTMAS BONUS (see Bonus (Production and Nonproduc-tion)

CIVIL RIGHTS ACT OF 1964Under Title VII of this Federal act, private employers, unions,and employment agencies are required to treat all personsequally, regardless of race, color, religion, sex, or nationalorigin, in all phases of employment, including hiring, promo-tion, compensation, firing, apprenticeship, job assignments,and training. An Equal Employment Opportunity Commis-sion was created to assist in carrying out this section of the

8 Glossary

act. The act has been amended by the Equal EmploymentOpportunity Act of 1972 and the Pregnancy DiscriminationAct of 1978. The latter prohibits discrimination in employ-ment against women affected by pregnancy, childbirth, or re-lated medical conditions. (See Equal Employment Opportu-nity Commission (EEOC).)

CIVIL SERVICE REFORM ACT OF 1978 (CSRA)Federal law protecting the rights of Federal employees to or-ganize, bargain collectively, and participate through labor or-ganizations of their own choosing in decisions affecting them.Supersedes Executive Order 10988, which recognized theright of Federal employees to bargain with management. TitleVII specifies the duties and authority of the Federal LaborRelations Authority (FLRA).

CIVILIAN LABOR FORCEThe total of all civilian employed and unemployed persons.

CLEANUP TIME (WASHUP TIME)Paid time allowed to workers to clean their workplaces ortools or to wash before leaving the plant at the close of theworkday or for lunch. (See Clothes Changing Time.)

CLOSED SHOP (see Union Security)

CLOTHES CHANGING TIMETime allotted within the paid workday for changing from streetwear to work clothes or from work clothes to street wear, orboth. (See Cleanup Time.)

CLOTHING ALLOWANCE (UNIFORM ALLOWANCE)Monetary allowance for clothing or its upkeep or both, grantedby an employer to employees who are required to wear spe-cial clothing, such as uniforms or safety garments, in the per-formance of their work.

COBRA RATEThe Consolidated Omnibus Budget Reconciliation Act (CO-

Glossary 9

BRA) of 1985 includes provisions that apply to group healthplans of employers with 20 or more employees on a typicalworking day. COBRA gives participants and their beneficia-ries the right to maintain, at their own expense, coverage un-der their health plan that would be lost due to a qualifyingevent at a cost that is comparable to what it would be if theywere still members of the employer’s group. Qualifying eventsinclude an employee’s death, termination, reduced hours ofemployment, entitlement to Medicare, or bankruptcy. Formeremployees usually receive benefits under COBRA for up to18 months following the qualifying event. The cost of theCOBRA coverage is normally paid for by the former em-ployee, although some employers may pay a portion of thebenefit’s cost. The COBRA rate, which is the rate charged tothe former employee or employee’s beneficiary, is the actu-arially determined plan premium plus an additional 2 percentfee to cover administrative costs.

COFFEE BREAK (see Rest Period)

COINSURANCEThe amount of a health benefit’s cost which will not be paidby a plan. For example, a health benefit plan may include acoinsurance rate of 10 percent for medical services. Plan par-ticipants are responsible for paying 10 percent of the cost formedical services with the health benefit plan paying 90 per-cent of the cost. Plans may have different coinsurance ratesfor different types of services, such as hospital room and board,outpatient surgery, etc. (See Deductible.)

COLLECTIVE BARGAININGMethod whereby representatives of employees (unions) andemployers determine the conditions of employment throughdirect negotiation, normally resulting in a written contract set-ting forth the wages, hours, and other conditions to be ob-served for a stipulated period (e.g., 3 years). Term also ap-plies to union-management dealings during the term of theagreement.

10 Glossary

COMMISSION EARNINGSCompensation to salespeople based on a predetermined for-mula, for example, a percentage of the value of sales or thegross margin of goods or services sold. May be in addition toa guaranteed salary rate or may constitute total pay. (SeeIncentive Wage System.)

COMPARABLE WORTHA method of setting compensation providing for equal payfor work of equal value. It has been used as a means of achiev-ing parity in pay for women and minorities who have beenrelegated to specific jobs whose pay has been traditionallylow. (See Equal Pay Act of 1963; Equal Pay for Equal Work.)

COMPENSATION (see Earnings)

COMPENSATORY LEAVETime off to compensate an employee for time worked in ex-cess of the work schedule. Compensatory leave may be asubstitute for premium pay for overtime for workers who areexempt from the Fair Labor Standards Act.

COMPRESSED WORKWEEKRefers to completing standard weekly hours (e.g., 36, 37 1/2,40 hours) in fewer days than the traditional 5-day workweekby increasing daily hours worked. Usually, the 40-hour work-week is scheduled over 4 days of 10 hours.

CONSOLIDATED LEAVE PLANS (see Leave Banks)

CONSOLIDATED OMNIBUS BUDGET RECONCILIATIONACT (see Cobra Rate)

CONSUMER PRICE INDEX (CPI)A measure of the average change in prices paid by urban con-sumers for a fixed group of goods and services. It is calcu-lated and issued monthly by the Bureau of Labor Statistics.

Glossary 11

CONTINGENT COMPENSATIONThe linking of a portion of employees’ pay or benefits tochanges in some other measure, such as company profits, plantoutput, the Consumer Price Index, or the market price of acommodity. Contingent compensation payments may take theform, for example, of a lump sum payment in cash or com-pany stock, or a wage rate increase.

CONTINGENT WORKERA person employed to fill a temporary need for labor stem-ming from absence of regular employees, seasonal or irregu-lar increases in need for workers, or other temporary or short-term circumstances. Contingent workers may be employeesof the company for which they work, independent contrac-tors, or employees of temporary help firms. (See CasualWorkers; Hiring Hall; Migratory Workers; Part-Time Em-ployee.)

CONTRACT (see Agreement)

CONTRACTING OUT (SUBCONTRACTING, FARMINGOUT, OUTSOURCING)

Practice of having certain operations of the firm, such as partsof a manufacturing process, plant maintenance, security, orpayroll preparation, performed by outside contractors, ratherthan using employees of the firm.

CONTRACT SIGNING BONUSA nonproduction bonus given to unionized employees uponsigning of a new labor-management agreement. (See SigningBonus.)

CONTRIBUTORY PLANEmployee benefit plan, which is not 100 percent, paid for bythe employer. To receive plan benefits, an employee mustcontribute (pay) a specified amount towards the full cost ofthe plan. For example, employer pays 100 percent of the costof health insurance for the employee but pays only 40 percentof the cost of health care services for employee’s dependents.

12 Glossary

COPAYMENTSmall payment made by a health benefits plan participant eachtime a service is required. For example, a plan may require a$5 or $10 copayment for each physician’s office visit. (SeeDeductible and Coinsurance.)

COST-OF-LIVING ADJUSTMENTAn across-the-board wage or salary change, or a supplemen-tal payment, reflecting changes in the cost of living. Cost-of-living adjustments are sometimes included in collective bar-gaining agreements, with the amount of the periodic adjust-ments determined by the change in the Consumer Price Indexpublished by the Bureau of Labor Statistics. Cost-of-livingadjustments may also be applied to pension payments. (SeeConsumer Price Index.)

CRAFTA skilled occupation requiring a thorough knowledge of pro-cesses involved in the work, often gained through formal ap-prenticeship, the exercise of considerable independent judg-ment, usually a high degree of manual dexterity, and in someinstances, extensive responsibility for valuable products orequipment.

DAVIS-BACON ACT OF 1931 (PREVAILING WAGE LAW)The Davis-Bacon Act applies to contractors and subcontrac-tors performing on federally funded or assisted contracts inexcess of $2,000 for the construction, alteration, or repair,including painting, of public buildings or public works. TheAct requires that contractors and subcontractors pay their la-borers and mechanics not less than the wage rates and ben-efits determined by the Secretary of Labor to be prevailingin the area for corresponding classes of laborers and mechan-ics employed on projects of a similar nature.

DEADHEADING (see Travel Time)

Glossary 13

DEDUCTIBLEThe amount of money a benefit plan participant must payduring a year before the plan begins to provide coverage andpay for all or a portion of the benefit. For example, a healthbenefits plan may include a $50 deductible per year per indi-vidual to receive reimbursement for prescription drugs. (SeeCoinsurance and Copayment.)

DEFERRED EARNINGSEarnings that an employee voluntarily places in a retirementaccount established as a 401(k) plan. Deferred earnings arenot taxed as income at the time the money is earned—incometaxes are deferred until benefits are distributed from the re-tirement account.

DEFERRED PROFIT SHARING PLANA defined contribution plan under which a company credits aportion of company profits to employees’ accounts. Plansmay set a fixed formula for sharing profits but this is not arequirement. Most plans hold money in employee accountsuntil their retirement, disability, or death.

DEFERRED WAGE CHANGEA negotiated wage change (almost always an increase) thatwill become effective at a specified date beyond the effectivedate of the contract. Usually found in multi-year contracts.

DEFINED BENEFIT PENSION PLAN (see 401(k), 403 (b),457 Plans)

A retirement plan that uses a specific, predetermined formulato calculate the amount of an employee’s future benefit. Inthe private sector, defined benefit plans are typically fundedexclusively by employer contributions. In the public sector,defined benefit plans often require employee contributions.

DEFINED CONTRIBUTION PLANA retirement plan in which the employer makes specified con-tributions but the amount of the retirement benefit is not speci-

14 Glossary

fied. Defined contribution plans may be wholly or partiallyfunded by employers.

DENTAL MAINTENANCE ORGANIZATIONAn organization that provides prepaid dental care services.

DENTAL PLANAn insurance plan that provides services or payment (usuallypartial) for preventive and restorative dental care. Preven-tive care typically includes checkups, cleanings, and xrays.Restorative care may involve fillings, surgery, inlays, orcrowns.

DEPENDENT CARE REIMBURSEMENT ACCOUNTS (seeReimbursement Accounts)

DIFFERENTIAL PIECE RATESPlan under which piece rates vary at different levels of out-put.

DISABILITYAny injury or illness, temporary or permanent, that preventsa worker from carrying on his usual occupation. (See Perma-nent and Total Disability.)

DISABILITY RETIREMENTRetirement brought on as the result of a totally disabling in-jury or illness prior to an employee’s eligibility for normal orearly retirement. The participant often has to meet a servicerequirement, usually 10 years or more. Benefits may be im-mediate or deferred, and immediate benefits may or may notbe reduced.

DISCHARGEDismissal of a worker from his employment. Term impliesdiscipline for unsatisfactory performance and is thus usuallylimited to dismissals for cause relating to the individual (e.g.,

Glossary 15

insubordination, absenteeism, inefficiency, etc.). (See Em-ployment-at-Will.)

DISCRIMINATIONPrejudice against or unequal treatment of workers in hiring,employment, pay or conditions of work, because of race, na-tional origin, creed, color, sex, age, marital status, sexual ori-entation, disabilities, union membership or activity, or anyother characteristic not related to ability or job performance.(See also Civil Rights Act of 1964; Equal Employment Op-portunity Commission.)

DISMISSAL PAY (see Severance Pay)

DISPLACED WORKERSThose who lost or left jobs due to plant or company closingsor moves, slack work, or the abolishment of their positions orshifts.

DOMESTIC PARTNERSCouples in a committed relationship other than the conven-tional marital affinity. The term applies to heterosexual andalso gay and lesbian couples. Domestic partner benefits arethe equivalent of traditional spousal benefits, (e.g., covering,health insurance and family leave) .

DONATED LEAVE (LEAVE SHARING)Transfer of leave from one employee to a second who hasexhausted leave. Leave from several workers may be accu-mulated in a bank and withdrawn in emergencies, such as per-sonal or family illness, by the employee who has exhaustedleave.

DOUBLE TIMEPenalty or premium rate (e.g., for overtime work, for work onSundays and holidays) amounting to twice the employee’sregular rate of pay for each hour worked.

16 Glossary

DOWNTIME (DEAD TIME; DELAY TIME; WAITING TIME)A brief period during which workers are unable to performtheir tasks because they are waiting for materials or for ma-chinery repair.

DRAW ACCOUNTUsually, an allowance given to sales people working on astraight commission as an advance against commission pay-ments.

DRUG ABUSE (see Substance Abuse)

DUTY HOURS (DUTY TIME) (see Work Schedule)

EARLY RETIREMENT (EARLY OUT)A retirement plan provision that gives an immediate pensionto retiring employees prior to normal retirement. The partici-pant must meet certain age or service requirements or both ora combined total of age and service. The pension is generallyreduced to reflect a longer payout. Some employers may of-fer special incentives (early retirement windows) under anearly out program to encourage individuals to retire beforethe normal retirement age.

EARNINGS (HOURLY; DAILY; WEEKLY; ANNUAL; AVER-AGE; GROSS; STRAIGHT-TIME; COMPENSATION)

Remuneration (pay, wages) of a worker or group of workersfor services performed during a specific period of time. Theterm invariably carries a defining word or a combination, e.g.,straight-time average hourly earnings. Since a statistical con-cept is usually involved in the term and its variations, the pro-ducers and users of earnings data have an obligation to definethem. In the absence of such definition, the following mayserve as rough guides: Hourly, daily, weekly, annual - Periodof time to which earnings figures, as stated or computed, re-late. The context in which annual earnings (sometimes weeklyearnings) are used may indicate whether the reference includes

Glossary 17

earnings from one employer only or from all employment plusother sources of income; average- usually the arithmetic mean;that is, total earnings (as defined) of a group of workers (asidentified) divided by the number of workers in the group;gross - usually total earnings, including, where applicable,overtime payments, shift differentials, production bonuses,cost-of-living allowances, commissions, etc.; straight-time -usually gross earnings excluding overtime payments and (withvariations at this point) shift differentials and other monetarypayments. Compensation - a concept sometimes used to en-compass the entire range of wages and benefits, both currentand deferred, that workers receive out of their employment.

The National Compensation Survey defines hourly earn-ings as the straight-time hourly wages or salaries paid to em-ployees. They include incentive pay (commissions, piece ratepayments, and production bonuses), cost-of-living adjust-ments, hazard pay, and payments for income deferred due toparticipation in a salary reduction plan. Excluded are pre-mium pay for overtime, holidays, and weekends, shift differ-entials, draws, nonproduction bonuses, tips, and uniform andtool allowances .

EDUCATION LEAVELeave, typically without pay, to employees wishing to attendan accredited college or university or recognized trade, voca-tional or technical school to take a course of study or trainingrelated to their jobs or employment opportunities at the com-pany.

EDUCATIONAL ASSISTANCE (TUITION AID; TUITIONPAYMENT PLAN)

A program that provides full or partial payment for tuition orbooks or both for training or educational courses.

EDUCATIONAL PAY DIFFERENTIALUsually for professional occupations such as teachers, edu-cational pay differentials provide for progressively highersalary rates based upon the employee’s completion of speci-fied academic requirements. For example, a person having a

18 Glossary

Ph.D. would receive higher pay than another having a master’sdegree, or an employee with a master’s degree would receivea higher salary than another having a bachelor’s degree.

ELDER CAREA program that provides paid or unpaid time off for the pur-pose of caring for sick or elderly parents, and employer spon-sored or subsidized adult day care. (See Family and MedicalLeave Act of 1993.)

ELIGIBILITY REQUIREMENTRequirement(s) that an employee must meet to be covered bya benefit plan. For example, employees must be scheduled towork a minimum of 32 hours per week to be covered under acompany’s health benefits plan.

EMPLOYEEAn employed wage earner or salaried worker. Used inter-changeably with “worker” in the context of a work situation,but a “worker” is not an “employee” when he is no longer onthe payroll.

EMPLOYEE ASSISTANCE PROGRAM (EAP)A structured, separate plan (independent from health insur-ance) that provides employee referral services, or referral andcounseling services concerning substance abuse, marital dif-ficulties, financial, emotional, and legal problems.

EMPLOYEE BENEFIT PLANA plan established or maintained by an employer, employeeorganization or both (through negotiated agreement or uni-laterally) to provide employees with welfare or retirementbenefits or both. (See Benefits.)

EMPLOYEE BUYOUT (see Employee Stock Ownership PlanPlan (ESOP))

EMPLOYEE LEASING COMPANIESFirms that provide other companies with personnel. The leas-

Glossary 19

ing company is the legal employer of the leased personneland is therefore responsible for hiring, reviewing, and firing.The leasing companies pay wages, benefits, and payroll taxes.

EMPLOYEE PURCHASES AND DISCOUNTS (PERQUI-SITES; PERKS)

Opportunities offered to employees to receive free, or to pur-chase at discounted prices, the goods and services of the em-ployer (e.g., discounts on automobiles and trucks or electri-cal appliances, or free or discounted electrical, gas, telephone,transit, and transportation services, etc.).

EMPLOYEE RETIREMENT INCOME SECURITY ACT OF1974 (ERISA)

This act sets uniform minimum standards to assure that pri-vate sector employee benefit plans are established and main-tained in a fair and financially sound manner. Employee ben-efit plans include pension plans and employee welfare plans,providing health benefits, disability benefits, death benefits,prepaid legal services, vacation benefits, day care centers,scholarship funds, apprenticeship and training benefits, orother similar benefits. ERISA sets standards for administer-ing these plans, including a requirement that financial andother information be disclosed to plan participants and ben-eficiaries and other requirements for processing claims forbenefits under the plans.

EMPLOYEE STOCK OWNERSHIP PLANS (ESOP)A defined contribution plan in which the employer contrib-utes to a fund that invests primarily in company stock andmakes distributions in stock or cash. The plan must be spe-cifically designated in its name or official description as an“employee stock ownership plan.”

EMPLOYERAny individual, corporation, or other operating group that hiresworkers (employees). The terms “employer” and “manage-ment” are often used interchangeably when there is no intent

20 Glossary

to draw a distinction between owners and managers.

EMPLOYERS’ ASSOCIATIONVoluntary membership organization of employers establishedto deal with problems common to the group. It may be formedspecifically to handle industrial relations and to negotiate witha union or unions. Employers’ associations may arrange withthird parties to provide their employees health or other ben-efits.

EMPLOYMENT-AT-WILLThe theory that employers have the power to hire and fireworkers solely at their own discretion.

EMPLOYMENT COST INDEX (ECI)A fixed-employment-weighted index which tracks quarterlychanges in labor costs (wages, salaries, and employer costsfor employee benefits), free from the influence of employ-ment shifts among occupations and industries. Occupationsin the private sector and State and local government are sur-veyed. The ECI is published quarterly by the Bureau of La-bor Statistics.

ENTRANCE RATEWage rate at which an employee starts a job. The rate mayapply to a new hire or to a worker who changes jobs withinthe establishment.

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION(EEOC)

An independent agency enforcing a variety of Federal lawsbarring discrimination in the public and private sectors, amongthem, Title VII of the Civil Rights Act of 1964, the Equal PayAct of 1963, the Age Discrimination in Employment Act(ADEA), and the Americans with Disabilities Act of 1990(ADA). The EEOC receives and investigates charges of dis-crimination, conciliates, and, if necessary, litigates. It seeksrelief for victims of discrimination and remedies designed tocorrect the discrimination and to prevent its recurrence.

Glossary 21

EQUAL PAY ACT OF 1963An amendment to the Fair Labor Standards Act prohibitinggender-based differences in wages and benefits, unless thedifferential can be justified by factors not based on sex (e.g.,seniority). The principal enforcement agency is the EqualEmployment Opportunity Commission.

EQUAL PAY FOR EQUAL WORKA policy denoting, or a demand for, payment of equal com-pensation to all employees in an establishment performingthe same kind or amount of work, regardless of race, sex, orother characteristics of individual workers not related to abil-ity or performance. (See Comparable Worth.)

ESTABLISHMENTAn economic unit that produces goods and services (e.g., fac-tory, store, etc.) at a single location and is engaged in onetype of economic activity. An establishment is not necessar-ily identical with a company, which may consist of one ormore establishments. For example, a grocery store companymay operate seven individual establishments.

EXCLUSIVE PROVIDER ORGANIZATION (EPO)Groups of hospitals and physicians that contract to providecomprehensive medical services. Participants are requiredto obtain services from members of the organization to re-ceive plan benefits.

EXEMPT/NONEXEMPT EMPLOYEESExempt employees are not subject to the provisions of theFair Labor Standards Act (e.g., executive, administrative, andprofessional employees; employees of Federal, State and lo-cal governments, etc.). Nonexempt employees are coveredby the provisions of the Fair Labor Standards Act (e.g., em-ployees engaged in, or producing goods and services for, in-terstate commerce; employees of certain hotels, restaurants,or motels; etc.).

EXPERIENCE RATINGProcess of basing tax rates or insurance premiums on the

22 Glossary

employer’s own record - as in workers’ compensation, unem-ployment insurance, and commercially insured health and in-surance programs - so that the employer may benefit from agood record.

EXTENDED UNEMPLOYMENT INSURANCE BENEFITSBenefits that are paid during periods when unemploymentlevels exceed certain percentages. Individuals who have ex-hausted their regular benefits or whose benefits end within anextended benefit period are eligible for these benefits if theyotherwise meet the requirements for regular benefits and arenot disqualified for any reason.

FAIR LABOR STANDARDS ACT OF 1938 (FLSA; WAGE-HOUR LAW)

Federal law which prohibits oppressive child labor and es-tablishes a minimum hourly wage and premium overtime payfor hours in excess of a specific level (now time and one-halfafter 40 hours per week) for all workers engaged in, or pro-ducing goods for, interstate commerce. The minimum wageand the coverage of the Act have been modified several timessince enactment.

FAMILY AND MEDICAL LEAVE ACT OF 1993 (FMLA)A Federal law entitling employees up to 12 weeks of job-protected, unpaid leave during any 12-months for the follow-ing reasons: Birth and care of the employee’s child or place-ment for adoption or foster care of a child with the employee,to care for an immediate family member (spouse, child, par-ent), or for the employee’s own serious health condition. TheFMLA applies to private sector employers engaged in com-merce, or in any industry affecting commerce, that have 50 ormore employees each working day during at least 20 calen-dar weeks or more in the current or preceding calendar year.State and local government agencies, including schools, andmost Federal government employees are also covered.

FAMILY CARE DEVELOPMENT FUNDSFunds jointly administered by management and unions, pri-

Glossary 23

marily in the telephone industry, to encourage an increase inthe number of child care and elder care facilities and to ex-pand the capabilities and quality of professional care organi-zations and their staffs.

FAMILY CARE LEAVEA variety of family-related paid or unpaid leave includingleave for maternity, adoption, care of a newborn child (i.e.,parental leave), and family illness. Also included is short-term leave, generally paid time off from work for reasons suchas a child’s medical appointments or parent-teacher confer-ences. (See Child Care; Elder Care; Family and Medical LeaveAct of 1993 (FMLA).)

FEDERAL MEDIATION AND CONCILIATION SERVICE(FMCS)

An independent Federal agency that provides mediators toassist the parties involved in negotiations, or in a labor dis-pute, in reaching a settlement; provides lists of suitable arbi-trators on request; and engages in various types of “preven-tive mediation.” Mediation services are also provided by sev-eral State agencies.

FEE-FOR-SERVICE PLANA health care plan that reimburses care providers or patientsafter services have been rendered. Fee-for-service plans al-low workers to select the health care providers (physiciansand hospitals) of their choice.

FINANCIAL COUNSELINGEducation provided to employees to increase their knowledgeand understanding of personal financial decisions, financialplanning, and financial investments.

FIRST DOLLAR COVERAGEA feature of a health benefits plan in which the plan does notrequire its participants to pay any deductibles or copaymentsbefore benefits are received. Basic benefits are usually re-ferred to as this, because initial expenses are paid by the planrather than by the patient.

24 Glossary

FLAGGED RATE (see Red Circle Rate)

FLAT RATE (see Single Rate)

FLEXIBLE BENEFIT PLAN (CAFETERIA PLAN)A plan that provides employees with options to choose amonga number of plans covering several different benefits. Theyoften consist of a “core” package of benefits (vacations, lowoption health insurance, etc.) that employees must take. Inaddition, an optional package may be offered from which em-ployees can select specific benefits (high option health, lifeand long-term disability insurance, extra vacation days, childcare expenses, etc.) that they desire.

FLEXIBLE WORK SCHEDULE PLAN (FLEXITIME)A work schedule plan that allows employees to determinetheir own work hours within generally set parameters. Typi-cally, employees are required to be at work a minimum num-ber of “core” hours each day (e.g., from 10 a.m. to 3 p.m.),but the start and end time or total hours worked varies ac-cording to employee preference.

FLEXIBLE WORKPLACE (FLEXIPLACE)Arrangements permitting employees to work at home severaldays of the workweek. Such arrangements are especially com-patible with work requiring the use of computers linking hometo the central office. (See Homework; Telecommuting.)

FLOATING HOLIDAYA holiday that can vary from year to year, the day on whichthe holiday is observed being selected by the employer or theemployee.

401(k), 403(b), 457 PLANSDefined contribution benefits plan established under Section401(k) of the Internal Revenue Code (IRC) permit employ-ees to make pre-tax contributions via salary reduction agree-ments. IRC Section 403(b) plans are deferred compensationplans for employees of certain not-for-profit organizations andpublic schools. IRC Section 457 plans are deferred compen-

Glossary 25

sation plans for employees of State and local governmentsand tax-exempt organizations.

FRINGE BENEFITS (see Benefits)

FRONT-LOADEDA multiyear collective bargaining agreement in which wageor benefit increases or both are greater in the first year of theagreement than in subsequent years. (See Back-Loaded.)

FUND (TRUST FUND)Money and investments set aside in a separate account, usu-ally administered by trustees, to take care of the payment ofpensions, supplemental unemployment benefits, strike ben-efits, etc.

FUNERAL LEAVE (BEREAVEMENT LEAVE)Paid time off due to a death in the family.

GAINSHARING PLANA form of contingent compensation in which a portion ofemployee pay varies with the ability of groups of employeesto reach or exceed predetermined goals in cost savings, earn-ings improvements, quality gains, or profit improvements.Included are Scanlon Plans, Rucker Plans, Improshare, etc.Payments are made in the form of annual bonuses, not addedto basic wage rates.

GARNISHMENTLegal attachment of an employee’s wages to pay a debt owedby the employee to someone other than the employer.

GOING RATE (see Prevailing Rate)

GRANDFATHERED BENEFITBenefit (or benefit provision) available only to employeesmeeting certain criteria, usually having been employed and

26 Glossary

participating in a benefit plan prior to it being eliminated orits provisions changed.

GRAVEYARD SHIFT (see Shift)

GREEN CIRCLE RATE (see Blue Circle Rate)

GROUP HEALTH PLANA plan that provides medical benefits for the employer’s ownemployees and their dependents through insurance or other-wise (such as a trust, health maintenance organization, self-funded pay-as-you-go basis, etc.).

GROUP INCENTIVE PLANPayment of incentive earnings based on the output of a groupof workers (team, department, etc.) rather than the output ofthe individual worker.

GUARANTEED RATE, TIMERate of hourly or weekly pay promised to a worker under anincentive system, regardless of whether incentive pay isearned. For example, piece rate workers may be guaranteedan hourly pay rate of $6.25 plus any piece rate paymentsearned. Also, term is sometimes used for wage or employ-ment assurances. For example, a guarantee of 8 hours’ payfor employees called to work at a construction site, althoughthe actual number of hours worked may be less than 8.

HARDSHIP ALLOWANCEAdditional payment for working under adverse conditions,for example, outside during periods of extremely cold weather.

HAZARD PAYExtra pay to an individual worker or a group of workers work-ing under dangerous or undesirable conditions.

HEALTH CARE COST CONTAINMENT PROVISIONSProvisions included in some health benefits plans in an at-

Glossary 27

tempt to address the rise in medical care costs. Examplesinclude mandatory second surgical opinions and preadmissioncertification before being admitted to a hospital, incentivesfor employees to audit hospital and medical services bills,and incentives for child deliveries in lower cost birthing cen-ters rather than in hospitals.

HEALTH CENTERUsually a clinic administered by a union, or by trustees repre-senting employers and unions, where members and their fami-lies may receive medical examinations and treatment free orat a nominal charge.

HEALTH MAINTENANCE ORGANIZATION (HMO)Organization that provides prepaid comprehensive health careservices. HMOs both insure and deliver health care services.Enrollees usually reside within a fixed geographic area andare required to obtain services only from providers affiliatedwith the HMO. An exception to this case is Point of ServiceOpen-Ended HMOs, which allow enrollees the option of ob-taining services from physicians and facilities not affiliatedwith their HMO.

HELPERSSemi-skilled workers who assist other workers who usuallyhave higher levels of competence or expertise. Helpers per-form a variety of duties such as furnishing another workerwith materials, tools, and supplies; cleaning work areas, ma-chines, and equipment; holding materials or tools; and per-forming other routine tasks.

HIGH TIME PAYExtra pay for workers engaged in a job high above ground,and, thus, dangerous or uncomfortable, as in construction.Sometimes also applied to work below ground level with ex-tra dangers or discomforts. (See Hazard Pay.)

HIRING HALLAn office maintained by a union, or jointly by employers andunion, for referring workers to jobs or for the actual hiring

28 Glossary

operation. Common in maritime and longshore industries. (SeeCasual Workers; Contingent Workforce.)

HIRING RATE (see Entrance Rate)

HOLIDAY (see Paid Holiday)

HOLIDAY PREMIUM PAYPay to workers at premium rates (e.g., double time) for workon holidays. (See Paid Holiday.)

HOME WORKProduction of goods by workers in their homes from materi-als supplied by the employer. Such activities are sometimesreferred to as “cottage industries”. (See also Flexible Work-place (Flexiplace); Telecommuting.)

HOSPITALIZATION BENEFITSHealth benefits coverage for hospital room and board charges,routine nursing care, prescription drugs, and surgical dress-ings, etc.

HOURLY RATEUsually, the rate of pay, expressed in dollars and cents perhour, for manual and other workers paid on a time basis. Alsoused to designate the earned rate per hour under incentivemethods of wage payment.

HUMAN RESOURCE MANAGEMENT (HRM)Involves the employer’s management of its workforce. Hu-man resource management broadly encompasses personnelresponsibilities including HRM planning, job design and jobanalysis, selection and staffing, employee training and devel-opment, performance appraisal, compensation, communica-tions, and employee involvement.

INCENTIVE WAGE SYSTEMGeneral term for methods of wage payment that relate earn-

Glossary 29

ings of workers to their actual production, individually or asa group. (See Group Incentive Plan; Piecework.)

INDEPENDENT CONTRACTORA worker who receives compensation for performing servicesfor an establishment outside the normal employer-employeerelationship. The Internal Revenue Service has established20 factors or guidelines to clarify whether a worker is an em-ployee or an independent contractor. The guidelines includecompliance with instructions, training, set hours of work, workdone on employer’s premises, tools and materials, workingfor more than one firm at a time, etc.

INDIVIDUAL PRACTICE ASSOCIATION (see IPA)

INDIVIDUAL RETIREMENT ACCOUNT (IRA)A type of retirement plan that workers may establish and con-tribute to regardless of whether they are covered by an em-ployer-sponsored pension plan.Usually, an employee may con-tribute up to $2,000 per year. Provisions related to deduct-ibility of contributions, taxation of earnings, and timing ofwithdrawals vary.

INDUSTRIAL CLASSIFICATION (see North American Indus-try Classification System Manual)

INDUSTRIAL RELATIONSMatters of mutual concern to employers and employees; therelationships, formal and informal, between employer and em-ployees or their representatives; government actions and lawbearing upon these relationships; an area of specialization ina company focusing on labor-management relations.

INSURANCEA method of providing or purchasing protection against someor all of the economic consequence of a loss. For employeebenefits purposes, it is full or partial coverage for the finan-cial losses and expenses that can result from employee injury,

30 Glossary

illness, disability, or death. (See Insurance Carrier; InsurancePolicy.)

INSURANCE CARRIERA commercial insurer that underwrites or administersinsurance policies or does both for such programs as lifeinsurance, health care, short-term disability, and long-termdisability benefits.

INSURANCE POLICYThe contract between an insurance carrier and an insured em-ployer under which the carrier agrees to pay the policy ben-efits when specific losses occur, providing the carrier receivesthe required premiums.The policy presents in detail the benefit plan provisions.

INVERSE SENIORITY (INVERSE LAYOFFS)The waiver of seniority rights in layoff. This permits senioremployees to avoid placement on relatively undesirable orlow paying jobs, and allows junior workers, those more likelyto have families with young children, to continue employ-ment.

IPA (INDIVIDUAL PRACTICE ASSOCIATION)A form of HMO that contracts with medical care providers inthe community who practice out of their own offices and seeHMO members there.

IRA (see Individual Retirement Account)

JOB ANALYSISSystematic study of a job to discover its specifications, itsmental, physical, and skill requirements, its relation to otherjobs in the establishment, etc., usually for wage setting or jobsimplification purposes. (See Job Description.)

JOB CLASSIFICATIONArrangement of tasks in an establishment or industry into a

Glossary 31

limited series of jobs or occupations, rated in terms of skill,responsibility, experience, training, and similar considerations,usually for wage setting purposes. This term, or job class,refers to a single cluster of jobs of approximately equal“worth.”

JOB DESCRIPTIONA written statement listing the elements of a particular job oroccupation, e.g., purpose, duties, equipment used, qualifica-tions, training, physical and mental demands, working condi-tions, etc.

JOB EVALUATION (JOB GRADING; JOB RATING)Determination of the relative importance or ranking of jobsin an establishment, for wage setting purposes, by systemati-cally rating them on the basis of selected factors, such as skill,responsibility, experience, etc. Ordinarily used as a means ofdetermining relative levels, not the actual rate structure as awhole.

JOB SECURITYThe protection of workers from the loss of job and earningsfor reasons not related to a worker’s performance or behav-ior. Employment security is the certainty that the employee’sattachment to the employer will continue even though theemployee’s specific job may disappear because of techno-logical change, work reorganization, etc.

JOB SHARINGThe division of a full-time position into two part-time jobs.The duties and responsibilities of the job are assigned to twoemployees who share accountability, pay, and benefits. In re-cent years, it has been used to employ or retain workers whoseobligations (e.g., education, child care, illness in the family,etc.) prevent them from taking a full time job. In a period ofslack work, it also refers to sharing the available work to fore-stall layoff. In this event, the sharing occurs among groups ofworkers rather than two workers sharing one job. Layoffs mayfollow if the number of weekly hours falls below designatedlevels.

32 Glossary

JOB TITLEA label for a job or occupation, which distinguishes it fromother jobs or occupations. For example, Cost AccountantLevel III or Emissions Mechanic-Trainee.

JOURNEY LEVELA fully qualified skilled trade or crafts worker, generally hav-ing mastered a trade by completing a formal apprenticeshipprogram. Also used to designate fully-qualified workers inother jobs.

JOURNEY LEVEL RATERate of pay for a fully qualified worker in a skilled trade orcraft, usually as distinguished from apprentice rate, helpers’rate, probationary rate, etc.

JURY DUTY LEAVEFully paid, partially paid, or unpaid leave from work when anemployee is summoned to serve as a juror.

LABOR GRADESOne of a series of rate steps (single rate or a range of rates) inthe wage structure of an establishment’s occupations. Laborgrades are typically the outcome of some form of job evalua-tion, or of wage rate negotiations, by which different occupa-tions are grouped, so that occupations of approximately equal“value” or “worth” fall into the same grade and, thus, com-mand the same rate of pay. (See Job Classification and JobEvaluation.)

LABOR-MANAGEMENT COOPERATION (EMPLOYEE IN-VOLVEMENT; QUALITY OF WORK LIFE; UNON-MAN-AGEMENT COOPERATION; WORKER PARTICIPATION)

A process in which employees participate in making deci-sions, ordinarily made by managers, that affect their workand work environment. Activities may include goal setting,identification and solution of problems, and developing the

33 Glossary

means of implementing decisions. The goal is to improve thequality of products and services, job satisfaction, the skillsand abilities of workers, etc.

LABOR MANAGEMENT RELATIONS ACT 1947 (TAFT-HARTLEY ACT)

Federal law amending the National Labor Relations Act(Wagner Act), 1935, which, among other changes, definedand made illegal a number of unfair labor practices by unions.It preserved the guarantee of the right of workers to organizeand bargain collectively with their employers, or to refrainfrom such activities, and retained the definition of unfair la-bor practices as applied to employers. The Act does not ap-ply to employees in a business or industry where a labor dis-pute would not affect interstate commerce. Other major ex-clusions are: Employees subject to the Railway Labor Act,agricultural workers, government employees, nonprofit hos-pitals, domestic servants, and supervisors. Amended by theLabor-Management Reporting and Disclosure Act of 1959.(See National Labor Relations Act of 1935 (Wagner Act);National Labor Relations Board.)

LABOR-MANAGEMENT REPORTING AND DISCLOSUREACT OF 1959 (LANDRUM-GRIFFIN ACT)

Federal law designed “to eliminate or prevent improper prac-tices on the part of labor organizations, employers, labor re-lations consultants” and others. Its seven titles include: A billof rights which sets forth certain basic rights which Congressbelieved should be guaranteed to union members by Federallaw, requirements for the filing of information and financialreports, regulations governing trusteeships over subordinateunions, standards for elections of union officers, and fidu-ciary responsibility of union officers.

LABOR STANDARDSThe minimum levels or floors, established through collectivebargaining or by law, for wages, hours, benefits, and workingconditions that together define the standard of living for work-

34 Glossary

ers and their families. The Fair Labor Standards Act (FLSA),for example, establishes levels of minimum wages and weeklyhours for workers and sets age levels and the nature of jobs(e.g., nonhazardous) in which children may be employed. ThePublic Contracts Act (Walsh-Healey Act) applies similar stan-dards to workers under Federal contracts. The OccupationalSafety and Health Act (OSHA) authorizes the establishmentof worksite safety and health standards. (See Living Wage.)

LANDRUM-GRIFFIN ACT (see The Labor-Management Re-porting and Disclosure Act of 1959)

LAYOFF (REDUCTION IN FORCE; FURLOUGH)Involuntary separation from employment for a temporary orindefinite period, without prejudice, that is, resulting from nofault of the workers. Layoffs may be caused by a decline insales of a company’s product or service, a merger of one com-pany with another, or a decrease in labor requirements broughtabout through automation. Although “layoff” usually implieseventual recall, or at least an intent to recall workers to theirjobs, the term is occasionally used for separations plainly sig-nifying permanent loss of jobs, as in plant shutdowns. Reduc-tion in force usually signifies permanent layoffs.

LEARNERNormally, a beginner learning a job for which extensive tech-nical training or experience is not required. (See Apprentice.)

LEARNER RATE (BEGINNER RATE)Rate or, more frequently, schedule of rates applicable to work-ers inexperienced in the job for which they are employed,until they attain the necessary competence. (See EntranceRate.)

LEARNER’S CERTIFICATECertificates issued by the U. S. Department of Labor, underthe provisions of the Fair Labor Standards Act of 1938, whichpermit employers to pay rates below the statutory minimum

Glossary 35

to learners, messengers, apprentices, and disabled workersso as not to curtail opportunities for their employment.

LEAVE BANK (CONSOLIDATED LEAVE PLAN)Provides several different types of leave, such as vacations,holidays, sick leave, etc., under a single plan.

LEAVE OF ABSENCENormally, excused time (unpaid) away from work, usuallyfor a week or more, without loss of job or seniority.

LEAVE SHARING (see Donated Leave)

LEGALLY REQUIRED BENEFITSThe National Compensation Survey benefit grouping that in-cludes railroad retirement, railroad supplemental retirement,railroad unemployment, workers’ compensation, Social Se-curity, Medicare, State unemployment insurance, State re-quired disability insurance, and the Federal UnemploymentTax Act.

LEGAL SERVICES PLANA prepaid plan providing to workers and their families a vari-ety of basic legal services (e.g., drafting of wills, reviewinglegal documents, etc.). For more complex legal problems,plans usually provide discounts from usual and customary fees.

LIFE INSURANCEProvides a lump-sum payment to a designated beneficiary orbeneficiaries of deceased employees. Companies may pro-vide a basic amount of life insurance benefits, which mayvary depending on an employee’s age, income, or occupa-tion, and allow employees to pay for additional amounts ofcoverage.

LIVING WAGEA wage sufficiently high to permit a worker to keep a givenstandard of living. (See Labor Standards.)

36 Glossary

LONGEVITY PAYA specified increase in hourly pay rate, a lump sum payment,or a form of bonus (e.g., government savings bond, add-on toseverance pay, etc.) paid to employees based upon their lengthof service.

LONG TERM CARE BENEFITSLong-term care benefits, normally provided through an in-surance plan, cover expenses related to home care, nursinghome care, or custodial care. Benefit payments normally lastfor more than 1 year. Employers may offer plans that arefinanced entirely by the employees at group insurance rates.Employees may purchase policies for themselves, a spouse,or other family members.

LONG TERM DISABILITY INSURANCE (LTD)Provides a monthly benefit to employees who, due to illnessor injury, are unable to work for an extended period of time.Usually LTD benefit payments begin after 3 or 6 months ofdisability and continue until retirement age is reached, or fora specified number of months, depending on the employee’sage at the time of the disability. Payments typically equal afixed percent of predisability earnings.

LUMP-SUM PAYMENTSThese are made to employees in lieu of a general wage rateincreases. The payment may be a fixed amount as set forth ina labor agreement or an amount determined by a formula.For example, 2.5 percent of an employee’s earnings (wages,cost-of-living allowance payments, shift differential payments)during the prior year. Lump-sum payments are not incorpo-rated into an employee’s base pay rate or salary.

MAJOR MEDICAL INSURANCEThis insurance is typically offered in two forms. Supplemen-tal plans offer additional coverage, subject to deductibles andcoinsurance requirements, to what is provided in a basic health

Glossary 37

plan by covering expenses that exceed the limits of the basicplan and expenses not covered by the basic plan. Compre-hensive major medical plans are offered where there is nobasic plan; they cover a wide range of medical services, withpayment of benefits subject to a deductible and a coinsurancerequirement.

MAKEUP PAYThe difference between actual piecework earnings and earn-ings at guaranteed rates or statutory minimum rates. The termis also associated with the practice of permitting employeesto earn a full week’s wages by making up for lost time.

MANAGED HEALTH CAREThese plans integrate the financing and delivery of appropri-ate health care services to covered individuals. Managed careusually involves some or all of the following elements: Ar-rangements with selected health care providers to furnish acomprehensive set of services; explicit standards for the se-lection of health care providers; formal programs for ongo-ing quality assurance and utilization review; and significantfinancial incentives for members of the plan to use providersand procedures covered by the plan. Health maintenance or-ganizations and preferred provider organizations use managedhealth care concepts.

MANAGEMENTThe employer and his or her representatives, or corporationexecutives who are responsible for the administration and di-rection of an enterprise. (See Employer.)

MATERNITY LEAVE (PREGANCY LEAVE)Paid or unpaid leave provided to women at the time of thebirth of their baby. Unpaid maternity leave may usually betaken after regular paid leave is used and can continue for afixed period of time. Employees returning from employerapproved maternity leave can expect to return to their own orsimilar jobs.

38 Glossary

MCNAMARA-O’HARA ACT (see Service Contract Act)

MEALTIME (see Paid Lunch Period)

MEDIATION (CONCILIATION)An attempt by a third party, voluntarily agreed to by the par-ties, to help in negotiations or in the settlement of a disputethrough suggestion, advice, or other ways of stimulating agree-ment, short of dictating its provisions (a characteristic of ar-bitration). Most of the mediation in the United States is un-dertaken through Federal and State mediation agencies. Me-diator: a person who undertakes mediation of a dispute. Con-ciliation: in practice, synonymous with mediation; the termlives on mainly in the name of the chief mediation agency.(See Federal Mediation and Conciliation Service.)

MEDIATION-ARBITRATION (MED-ARB)A dispute resolution process in which a third party neutralattempts to mediate outstanding issues and then arbitrates thosethat remain after mediation. In some instances, one neutralmay mediate and then pass off remaining unsettled issues toanother neutral for arbitration.

MEDICAL LEAVE (see Sick Leave)

MEDICAREThe Federal health insurance program under Social Security.It consists of two parts: Part A covers hospital insurance andPart B covers supplementary medical insurance to help payfor physicians’ services, outpatient hospital services, and othermedical supplies and services not covered by Part A. TheMedicare program is funded through a joint employer-em-ployee paid tax applied to covered earnings.

MERIT INCREASEAn increase in the wage rate of a worker, usually given on thebasis of certain criteria of worth (e.g., efficiency and perfor-mance).

Glossary 39

MERIT PROGRESSION (see Wage Progression)

MERIT SYSTEMS PROTECTION BOARDIndependent Federal agency charged with protecting the in-tegrity of Federal merit systems and the rights of Federal em-ployees working in the systems. The Board conducts specialstudies, hears and decides charges of wrongdoing and em-ployee appeals of adverse agency actions. It may order cor-rective and disciplinary actions when appropriate.

MIGRATORY WORKERSPersons whose principal income is earned from temporaryemployment (usually in farming) and who, in the course ofthe year, move one or more times, often through several States.

MILITARY LEAVEProvides employees an unpaid, partially paid, or fully paidabsence from work to fulfill their military commitments. Someemployers pay the difference between an employee’s regularearnings and the amount they receive from the military.

MINIMUM PREMIUM PLANArrangement, used by self-insured health care plans, that pro-vides insurance coverage to pay claims above a specifiedamount, limiting the employer’s liability in the case of cata-strophic expenses. (See Self-Funding (Self-Insurance) Plans.)

MINIMUM WAGERate of pay, established by law or through collective bargain-ing, below which workers cannot be employed. Exceptionsare frequently made for learners and disabled workers. Usu-ally expressed as an hourly rate. (See Fair Labor StandardsAct of 1938.)

MONEY PURCHASE PENSION PLANA defined contribution plan with fixed employer contribu-tions, typically a percent of employee earnings. Contribu-tions are allocated to individual accounts established for each

40 Glossary

employee. Upon retirement, the contributions and investmentearnings are used to purchase an annuity or to provide forsome other form of retirement income. Some plans may al-low employee contributions but employees are seldom re-quired to make any contributions.

MOVING ALLOWANCE (see Relocation Allowance)

MULTI-EMPLOYER BARGAININGCollective bargaining between a union or unions and a groupof employers, usually represented by an employer associa-tion, resulting in a uniform or master agreement. Typicallyfound in construction, maritime, retail food, trucking, and ap-parel industries.

MULTI-EMPLOYER (UNION) PENSION PLANPlan in which employers, usually in the same industry, con-tribute to a fund which is administered by a union or profes-sional association, or jointly by an employer(s) and an union.Employer contributions are determined by the solvency ofthe pension fund, and in the case of union plans, the amountof the employer contribution is usually in terms of cents perhour worked and set during the negotiation for a labor-man-agement agreement. Multi-employer plans are generally de-fined benefit pension plans.

MULTIPLANT BARGAINING (COMPANYWIDE BAR-GAINING)

Collective bargaining between a company and the union orunions representing workers in more than one of its plants,usually resulting in a master agreement. If all or most plantsare involved, the term “companywide” is appropriately used.

MULTIPLE EMPLOYER WELFARE ARRANGEMENTS(MEWAs)

MEWAs, also referred to as multiple employer trusts (METs)or association health plans (AHPs), sell health and welfarebenefit plans to employers.

Glossary 41

NAFTA (NORTH AMERICAN FREE TRADE AGREE-MENT)

A 1994 agreement by the United States, Canada, and Mexicoopening each country’s borders to free trade with the otherparticipating Nations.

NAFTA-TAA (NAFTA-TRANSITIONAL ADJUSTMENT AS-SISTANCE PROGRAM)

An agency established in the U.S. Department of Labor tohelp workers who lose jobs or are threatened with job lossbecause of the increase in imports from Canada and Mexicothat are competitive with products or services of their em-ployers. Assistance, available through the combined effortsof Federal and State agencies, include skill training, job searchhelp, relocation allowance, and income support.

NATIONAL LABOR RELATIONS ACT, 1935 (WAGNERACT)

The basic Federal act guaranteeing workers the right to orga-nize and bargain collectively through representatives of theirown choosing. The Act also defined “unfair labor practices”of employers. Amended by the Labor Management RelationsAct, 1947 (Taft-Hartley Act), and the Labor-ManagementReporting and Disclosure Act of 1959 (Landrum-Griffin Act).

NATIONAL LABOR RELATIONS BOARD (NLRB)Federal agency created by the National Labor Relations Act,1935, and continued through subsequent amendments, whosefunctions are to define appropriate bargaining units, to holdelections to determine whether a majority of workers want tobe represented by a specific union or no union, to certify unionsto represent employees, to interpret and apply the Act’s pro-visions prohibiting certain employer and union unfair prac-tices, and otherwise to administer the provisions of the Act.(See Labor Management Relations Act, 1947.)

NATIONAL MEDIATION BOARDFederal agency established by the Railway Labor Act, 1926,to provide aid in settling disputes between railway compa-

42 Glossary

nies and unions over union representation, negotiation ofchanges in agreements, and interpretation of agreementsreached through mediation. The provisions of the RLA werelater extended to airlines. (See Railway Labor Act of 1926. )

NATIONAL RAILROAD ADJUSTMENT BOARDFederal agency established in 1934 which functions as a boardof arbitration, handing down final and binding decisions ondisputes arising out of grievances, or the application and in-terpretation of agreements, in the railroad industry (airlineindustry not covered). Board is composed of 36 members, 18of whom represent and are paid by the carriers and 18 bynational railway labor organizations.

NIGHT SHIFT (see Shift)

NONCONTRIBUTORY PLANAn employee benefit plan that is completely paid for by theemployer. (See Contributory Plan.)

NONEXEMPT EMPLOYEES (see Exempt/Nonexempt Em-ployees)

NONPRODUCTION BONUS (see Bonus (Production and Non-production)

NONQUALIFIED DEFERRED COMPENSATION PLANDeferred compensation plans that do not receive favorabletax treatment, usually because they are offered to only a fewexecutives or managers of a company leading to the plan notmeeting the government’s nondiscrimination rules or becausethey offer benefits in excess of those allowed by the rules.

NONWAGE CASH PAYMENTSNonproduction bonuses and lump sum payments given in lieuof wage rate increases.

NORTH AMERICAN FREE TRADE AGREEMENT (seeNAFTA)

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NORTH AMERICAN INDUSTRY CLASSIFICATION SYS-TEM (NAICS)

The North American Industry Classification System (NAICS)Manual replaces the 1987 Standard Industrial Classification(SIC) Manual. The NAICS Manual, as was the SIC Manual,is used by Federal Government statistical agencies to defineand classify industries in the economy in a consistent mannerbased on their primary economic activity. It will take severalyears for the NAICS Manual to be adopted by statisticalprograms. In the meantime statistics will be published usingthe classification scheme of the 1987 SIC Manual’s. Thegovernments of Canada, Mexico, and the United Statesdeveloped the NAICS Manual, which became effectiveJanuary 1997.

OCCUPATIONA job, or family of jobs, common to many industries and ar-eas. For example, carpenter, administrative assistant, or ac-countant.

OCCUPATIONAL CLASSIFICATION SYSTEM (see StandardOccupational Classification System Manual)

OCCUPATIONAL RATESWage rates (single or rate ranges) for particular occupationsin an establishment, industry, or area.

OLD AGE, SURVIVORS AND DISABILITY INSURANCEBENEFITS (OASDI)

Retirement income and survivors’ and disability paymentsavailable to eligible workers covered by Federal social secu-rity legislation.

OLDER WORKERS BENEFIT PROTECTION ACT OF 1990Clarifies that employee benefits and benefit plans are subjectto the Age Discrimination in Employment Act of 1967.

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ON CALL PAYPay received by employees for being ready to report to workif necessary. Employees receiving on call pay usually arerequired to be readily available by phone or pager, within areasonable distance from the workplace, and able to reportpromptly to work.

OPEN SEASONA period of time during which employees may change theirprior selection of benefit plans offered by their employer. Forexample, an employer may allow employees to change healthbenefit plan providers during November of each year.

OTHER LEAVE PLANSA National Compensation Survey benefit grouping that in-cludes personal leave, military leave, funeral leave, jury duty,and family leave.

OUT OF LINE RATE (see Red Circle Rate)

OUT OF TOWN WORK PAYMENTSPayments, in addition to per diem or meal allowances, to em-ployees required to work outside of their normal living area.For example, construction workers may receive an out of townpayment of 15 percent of their normal pay rate. (See TravelTime. )

OUT OF WORK BENEFITSPayments made by a union to unemployed members.

OUTPLACEMENT ASSISTANCEHelp, usually provided by the employer, union or a public agencyor all three, to displaced workers who have lost jobs for reasonsother than cause (e.g., downsizing, restructuring, plant closing,etc.). Among the help provided are job search assistance, resumedevelopment, training for job interviews, etc.

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OUTSOURCING (see Contracting Out)

OVERTIMEWork performed in excess of basic workday or workweek, asdefined by law, collective bargaining agreement, or companypolicy. Sometimes applied to work performed on Saturdays,Sundays, and holidays at premium rates.

OVERTIME PAYPayment at premium rates (e.g., time and one-half, doubletime) for work defined as overtime.

PAID ABSENCE ALLOWANCEPayment for lost working time available to workers for vari-ous types of leave not otherwise compensated, for exampleexcused personal leave.

PAID HOLIDAY LEAVEHolidays are days of special religious, cultural, social, or pa-triotic significance on which work and business ordinarilyceases. Workers typically receive time-off from work, at fullpay or partial pay, on a specified number of holidays eachyear. Some employers also include “personal holidays,” suchas an employee’s birthday or “floating holidays” that varyfrom year-to-year as determined by the employer or employeeor both.

PAID LUNCH (MEALTIME)Period of time, normally 30 minutes to one hour, for employ-ees to eat and rest.

PAID VACATIONSTime-off from work normally taken in days or weeks that pro-vide employees with a rest or break from work. The amountof time-off may vary based on an employee’s length-of-ser-vice with the employer or it may be a fixed number of days or

46 Glossary

weeks. The time-off is normally paid for at an employee’snormal hourly rate or salary.

PARENTAL LEAVEPaid or unpaid leave for a new mother or father to use to carefor a child. Parental leave plans are separate from anemployee’s other leave plans, such as sick leave and paid va-cations. Unpaid maternity and paternity leave usually can betaken after regular paid leave is used and can continue for afixed period of time. Employees can expect to return to theirown or similar jobs following approved parental leave.

PART-TIME EMPLOYEESWorkers employed on a temporary or regular basis for a work-week shorter than the scheduled workweek for full-time em-ployees.

PATERNITY LEAVE (see Parental Leave)

PATTERN BARGAINING (see Wage Pattern)

PAY COMPRESSIONA lessening of the pay differential among workers in differ-ent pay grades. Pay compression can be caused by workersreceiving across-the-board flat sum pay increases or by work-ers at higher pay grades receiving smaller percentage increasesin pay than those at lower pay grades.

PAY EQUITY (see Comparable Worth)

PAY-FOR-KNOWLEDGE (SKILL-BASED PAY)An alternative compensation system in which pay is based,not upon the specific job the employee performs, but uponthe number of skills or tasks the employee is capable of per-forming. Such pay systems are linked to flexible work as-signments or both, rotating jobs, typical of self-managed workteams. Also called skill-based pay, knowledge-based pay, ormultiskill compensation.

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PAYROLL DEDUCTIONSAmounts withheld from employees’ earnings by the employerfor Social Security, Federal and State income taxes, and othergovernmental levies, union dues, group insurance premiums,and other authorized wage assignments.

PAYROLL PERIODFrequency with which workers’ wages are calculated and paid,usually weekly, biweekly, or semimonthly. Also used by wageand salary surveys to designate the reference date of surveydata. For example, the BLS Employment Cost Index data arecollected for the payroll period including the 12th day of thesurvey months of March, June, September, and December.

PEACE CORPS/VISTA LEAVETime off from work for an extended period of time (e.g., 1 or2 years) to take an assignment in the Peace Corps or VISTA.Company policy and relevant collective bargaining provisionsusually protect seniority during the time off as well as theright to return to work.

PENALTY RATEExtra rate paid for particularly hazardous or onerous work.The term may apply to any premium or overtime rate. (SeeHazard Pay; Premium Pay.)

PENSION BENEFIT GUARANTY CORPORATION (PBGC)A Federal agency established under the Employee RetirementIncome Security Act of 1974 (ERISA) to guarantee the pay-ment of basic retirement benefits, within limits set by law, toparticipants of private defined benefit pension plans. PBGCprograms are financed by premiums levied on employers spon-soring covered plans, investment returns on PBGC assets, andrecoveries from employers responsible for underfunded ter-minated plans.

PENSION PLAN (RETIREMENT PLAN)Pension or retirement plans are designed to provide funds to

48 Glossary

retirees. (See Defined Contribution Plans; Defined BenefitPlans.)

PENSION PORTABILITYAbility to maintain and transfer years of credited service oraccumulated pension benefits from one employer to another.

PER DIEM ALLOWANCEDaily add-on to pay for workers in travel status. Usually cov-ers lodging, meals, and miscellaneous expenses related totravel.

PERKS (see Employee Purchases and Discounts)

PERQUISITES (see Employee Purchases and Discounts)

PERSONALIZED RATE (see Red Circle Rate)

PERSONAL LEAVEAlso known as general leave, personal leave provides em-ployees with time-off from work for various purposes not cov-ered by other types of leave plans.

PIECE RATEPredetermined amount paid per unit of output to worker un-der a piecework incentive plan.

PIECEWORKMethod of wage payment based on the number of units pro-duced, or any work for which piece rates are paid.

POINT OF SERVICE HEALTH PLANSA type of health maintenance organization (HMO) that al-lows employees the option of using doctors and facilities ex-ternal to the HMO. Employees who use the option typicallypay a higher fee for the health services than if they were pro-vided by the HMO’s own physicians. These plans are some-times called open-ended HMOs.

Glossary 49

PORTAL-TO-PORTAL PAYPayment for time spent traveling to and from the plant or mineentrance to the working site, or conceptually, for all time inthe plant rather than time at the workplace. (See Travel Time.)

POST-RETIREMENT PENSION INCREASESAdjustments to pension benefits being received by alreadyretired employees. Postretirement pension increases may beat the discretion of the former employer or pension fund ormay be automatic, usually based on changes in the ConsumerPrice Index.

PREADMISSION CERTIFICATIONAuthorization given by a health benefits provider to a benefitrecipient prior to hospitalization or before the delivery of cer-tain health care benefits. Failure to obtain a preadmissioncertificate in nonemergency situations reduces or eliminatesthe health benefit provider’s obligation to pay for servicesrendered.

PREFERENTIAL HIRINGAgreed upon arrangement whereby the employer gives pref-erence in hiring to union members, to applicants with previ-ous training and experience in the industry, to workers dis-placed from another plant or from another part of a particularplant, or by order of the National Labor Relations Board toemployees found to be discharged on a discriminatory basis.

PREFERRED PROVIDER ORGANIZATION (PPO)Preferred Provider Organization health plans offer a higherbenefit for services rendered by designated health care pro-viders although plan participants are free to choose any pro-vider they wish.

PREGNANCY DISCRIMINATION ACT OF 1978 (PDA)Federal act barring discrimination in hiring or at the work-place because a woman is pregnant or affected by childbirthor related medical conditions.

50 Glossary

PREGNANCY LEAVE (see Maternity Leave)

PREMIUM PAYCompensation at greater than regular rate. May refer to over-time, shift differentials, or penalty rates.

PRESCRIPTION DRUG PLANHealth benefits plan provision covering outpatient drug pre-scriptions. Benefits may be subject to an annual deductibleor may include a minimal copayment per prescription.

PREVAILING RATE (GOING RATE)Term may be used in varying contexts. May refer to averagelevel of wages paid by employers for specific occupations ina community or area; or rate most commonly paid; or ratepaid to most workers; or rate established by union contracts.

PREVAILING WAGE LAW (see Davis-Bacon Act of 1931)

PROBATIONARY PERIODUsually a stipulated period of time (e.g., 30, 60, or 90 days)during which a newly hired employee is on trial prior to es-tablishing seniority or otherwise becoming a regular employee.Sometimes used in relation to discipline (e.g., a period dur-ing which a regular employee, accused of misbehavior, is ontrial). Probationary employee - a worker in a probationaryperiod. Where informal probation is the practice, a workerwho has not yet attained the status of regular employee maybe called a temporary employee. (See Regular Employee.)

PROBATIONARY RATETrial rate of pay for an experienced and otherwise qualifiedworker during the initial period of his employment on a newjob in a new plant.

PRODUCTION BONUS (see Bonus (Production and Nonpro-duction)

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PRODUCTION WORKERSUsually, employees directly involved in manufacturing or op-erational processes, as distinguished from supervisory, sales,executive, and office employees. The term “production andrelated workers” as used in Federal Government statistics iscommonly defined specifically for survey purposes.

PROFIT SHARING (see Cash Profit-Sharing; Deferred Profit-Sharing)

PROGRESSION SYSTEM (see Wage Progression)

PROMOTION (see Upgrading)

PUSH MONEYMoney paid by a supplier of goods or services, directly orindirectly through the employer, to retail salespeople as anincentive to increase sales of the goods or services. Depart-ment store cosmetics sales persons often receive push moneypayments.

PYRAMIDINGDouble payment of overtime rates for overtime work that mayresult from paying both daily and weekly overtime rates forthe same hours of work; sometimes applied to any premiumadded to another premium rate.

QUALITY CIRCLESStructured employee involvement groups operating in desig-nated work areas that meet regularly to identify work relatedproblems and to suggest solutions or improvements to man-agement.

QUALITY OF WORK LIFE COMMITTEESCommittees existing at multiple organizational levels withina company charged with developing changes to improveperformance and the quality of employees’ work life. Ifcommittees are established as part of a labor-management

52 Glossary

agreement they do not address contractual issues such as payand benefits.

QUASI-GOVERNMENT ESTABLISHMENTEstablishments that are controlled both by the governmentand private sectors through joint ownership of stock or jointmembership on boards of directors or other controlling bodies.

RAILROAD RETIREMENT ACT OF 1935 (RRA)Federal act establishing a nationwide program providing rail-road employees with retirement benefits (old age, disability,and survivors’ benefits) based on the individual worker’s earn-ings and length of service in the railroad industry. Railroadworkers are not covered by the Social Security Act.

RAILWAY LABOR ACT OF 1926 (RLA)Federal law that established a framework for labor-manage-ment relations in the railroad industry and, later, the airlineindustry. Two agencies administer the Act: the National Me-diation Board and the National Railroad Adjustment Board.

RATE CUTTINGA reduction by management of established incentive or timewage rates in the absence of comparable changes in job con-tent, or any actions by companies in reducing wages.

RATE RANGEThe lower and upper limits of wage rates paid to workers inan occupation. For example, the rate range for a parts deliv-ery driver job might be $5.75 to $7.25 per hour.

RATE SETTINGProcess of establishing wage or piece rates for a job or opera-tion.

REAL WAGESPurchasing power of money wages, or the amount of goods

Glossary 53

and services that can be acquired with money wages. An in-dex of real wages takes into account changes over time inearnings levels as measured by an appropriate index (e.g., theConsumer Price Index).

RED CIRCLE RATE (OUT OF LINE RATE; FLAGGED RATE)A wage rate exceeding the formal pay