Understanding Pay, Understanding Pay, Benefits, and IncentivesBenefits, and Incentives

Gross Pay – total pay before any deductionsGross Pay – total pay before any deductions YTD – year to dateYTD – year to date

Hourly Wages and OvertimeHourly Wages and Overtime• Standard workweek is 40 hours in a 5-day Standard workweek is 40 hours in a 5-day

period of 8 hours each dayperiod of 8 hours each day• According to Fair Labor Standards Act, hourly According to Fair Labor Standards Act, hourly

workers must receive overtime at the rate of workers must receive overtime at the rate of 11/2 times the regular rate of pay11/2 times the regular rate of pay

Some businesses are exempt from this requirement.Some businesses are exempt from this requirement.www.dol.gov/esa/regs/compliance/whd/hrg.htm

Salary:Salary: If you work for salary, you generally If you work for salary, you generally

work regular hours but you will NOT work regular hours but you will NOT receive additional pay for overtime receive additional pay for overtime workwork

Salary is stated as an annual (yearly) Salary is stated as an annual (yearly) amount.amount.

DeductionsDeductions

Deductions are amounts subtracted Deductions are amounts subtracted from your gross pay.from your gross pay.

Required deductions:Required deductions:- Social Security (FICA) and MedicareSocial Security (FICA) and Medicare- Federal Income TaxFederal Income Tax- State Income TaxState Income Tax

Optional deductions:Optional deductions:

Credit union paymentCredit union payment Health insuranceHealth insurance Dental insuranceDental insurance Union duesUnion dues Accidental deathAccidental death Life insuranceLife insurance

Regular Wages + Overtime = Gross Pay

or Salary = Gross Pay

Gross Pay – Deductions = Net Pay

Benefits & IncentivesBenefits & Incentives

Benefits are forms of employee Benefits are forms of employee compensation in addition to pay.compensation in addition to pay.

Ex. Insurance, retirement savings Ex. Insurance, retirement savings plans, paid sick leave, vacations, plans, paid sick leave, vacations, profit sharingprofit sharing

Profit SharingProfit Sharing – plan that allows – plan that allows employees to receive a portion of the employees to receive a portion of the company’s profits at the end of the company’s profits at the end of the corporate year. corporate year.

Incentive pay – money offered to Incentive pay – money offered to encourage employees to strive for encourage employees to strive for higher levels of performancehigher levels of performance

Paid Vacations and HolidaysPaid Vacations and Holidays

Most business provide full-time employees Most business provide full-time employees with a set amount of paid vacation time.with a set amount of paid vacation time.

Businesses also provide full-time employees Businesses also provide full-time employees with paid time off for holidays.with paid time off for holidays.Ex. Christmas, Thanksgiving, Fourth of July, Ex. Christmas, Thanksgiving, Fourth of July, Labor Day, and Memorial Day.Labor Day, and Memorial Day.

Employees required to work may receive paid Employees required to work may receive paid time and a half or double time.time and a half or double time.

Employee ServicesEmployee Services are extras that are extras that companies offer in order to improve companies offer in order to improve employee morale and working employee morale and working conditions.conditions.

Ex. Employee discounts, tuition Ex. Employee discounts, tuition reimbursement for college courses, reimbursement for college courses, day-care centers, counseling for day-care centers, counseling for employees, etc.employees, etc.

Child CareChild Care – Many companies provide – Many companies provide on-site child-care facilities as well as on-site child-care facilities as well as coverage of child-care expenses.coverage of child-care expenses.

Sick PaySick Pay – Many businesses provide – Many businesses provide an allowance of days each year for an allowance of days each year for illness, with pay as usual. Customary illness, with pay as usual. Customary to receive 3-10 days a year as “sick to receive 3-10 days a year as “sick days” without deductions from pay.days” without deductions from pay.

Leaves of AbsencesLeaves of Absences – Allows – Allows employees to leave their jobs employees to leave their jobs (without pay) for certain reasons. (without pay) for certain reasons. This gives job security and your job is This gives job security and your job is protected.protected.

InsuranceInsurance

Most large companies provide group Most large companies provide group insurance plans for full-time insurance plans for full-time employees. Some companies pay all employees. Some companies pay all premiums, others pay a portion. premiums, others pay a portion. Employees may elect to have spouse Employees may elect to have spouse and dependents covered at their and dependents covered at their expense.expense.

Types of InsuranceTypes of Insurance

Health InsuranceHealth Insurance – typical plan has an – typical plan has an employee paid amount or deductible. employee paid amount or deductible. After deductible has been reached, plan After deductible has been reached, plan pays 80% of most doctor bills, pays 80% of most doctor bills, prescriptions, and hospitalization charges prescriptions, and hospitalization charges and emergency bills. After a certain and emergency bills. After a certain amount is reached, insurance pays 100%.amount is reached, insurance pays 100%.

Alternative is HMO (health maintenance Alternative is HMO (health maintenance organization)organization)

Life InsuranceLife Insurance – Life insurance pays – Life insurance pays a cash benefit to a designated a cash benefit to a designated person, beneficiary, when the person, beneficiary, when the insured dies.insured dies.

Dental InsuranceDental Insurance – Most dental – Most dental plans provide a maximum benefit per plans provide a maximum benefit per year per family member. Preventive year per family member. Preventive is usually covered 100%, other is usually covered 100%, other services generally 80% after services generally 80% after deductible.deductible.

Vision InsuranceVision Insurance – Covers cost of – Covers cost of prescription lenses and eye prescription lenses and eye examinations examinations

Bonuses and Stock OptionsBonuses and Stock Options

Bonuses are incentive pay based on Bonuses are incentive pay based on quality of work done, years of quality of work done, years of service, or company sales or profits.service, or company sales or profits.

Stock-purchase options give Stock-purchase options give employees (usually executives) the employees (usually executives) the right to buy a set number of shares right to buy a set number of shares of the company’s stock at a fixed of the company’s stock at a fixed price by a certain time.price by a certain time.

Pension and Savings PlansPension and Savings Plans

Some employers provide pension plans for Some employers provide pension plans for retirement. Plans are usually funded by retirement. Plans are usually funded by the employer. Employees are the employer. Employees are vestedvested (entitled to the full retirement account) (entitled to the full retirement account) after a specified period of time.after a specified period of time.

Cafeteria-style employee benefit programs Cafeteria-style employee benefit programs allow workers to base their job benefits on allow workers to base their job benefits on personal needs.personal needs.

Flexible Work ArrangementsFlexible Work Arrangements

FlextimeFlextime (flexible schedules) allows (flexible schedules) allows employees to choose their working hours employees to choose their working hours within defined limits. Must be presented within defined limits. Must be presented during specified core time period. during specified core time period. Employees can then choose rest of the Employees can then choose rest of the working hours.working hours.

Compressed workweekCompressed workweek – work scheduled – work scheduled that fits the normal 40-hour week into less that fits the normal 40-hour week into less than five days. than five days. Ex: Four 10-hours days followed by three days Ex: Four 10-hours days followed by three days off.off.

Job rotationJob rotation – a job design in which – a job design in which employees are trained to do more than employees are trained to do more than one specialized task. Employees rotate one specialized task. Employees rotate from one task to another. This reduces from one task to another. This reduces boredom and burnout.boredom and burnout.

Job sharingJob sharing – a job design in which two – a job design in which two people share one full-time position. people share one full-time position. Employees split salary and benefits Employees split salary and benefits according to the amount of each according to the amount of each employee’s contributions.employee’s contributions.

Permanent Part-TimePermanent Part-Time – employees – employees who choose to work only part-time who choose to work only part-time (16-25 hours per week).(16-25 hours per week).

TelecommutingTelecommuting – employees can – employees can work at home or on the road and work at home or on the road and stay in contact with their manager or stay in contact with their manager or co-workers through e-mails, fax, and co-workers through e-mails, fax, and mobile phone.mobile phone.Examples: data entry, web design, Examples: data entry, web design, information processing, software information processing, software development.development.

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