Pay, benefits & working conditions

1. Pay, benefits & working conditions

2. Starting a new job • Union? • Sick Pay, Bereavement Leave, Holidays, Paid Vacation • Pension plan/Retirement • Insurance • Health • Dental • Vision • Life • Child Care Facilities? • Job sharing?

3. 2 types of pay • Hourly • Salary

4. Gross Pay • Gross Pay – the total amount you earn before any deductions are subtracted. • Hourly Wages – regular hours worked times pay rate per hour • $10.00 x 40 hours = $400.00 • Regular hours – used to be 8 continuous hours with scheduled breaks plus an unpaid lunch period (8 am – 12 pm(noon); 1:00 pm – 5:00 pm) • Standard work week – used to be 40 hours in 5 –d ay period • Overtime – time worked beyond regular hours • Overtime pay rate – usually 1 ½ regular pay rate, not always • $10.00 x 1.5 = $15.00

5. Gross Pay cont. • 45 hours worked (using standard work hours/week, $10.00/hour and 1 ½ for overtime pay) • 40 x $10.00 = $400.00 • 5 x $15.00 = $75.00 • Gross pay = $475.00 • Gross pay indicated on pay stub • YTD on pay stub = year – to – date

6. Salary • Salaried employee - Works for a salary and not an hourly wage • NO Overtime (OT) • Usually stated as an annual (yearly) amount • Employer divides annual salary into equal amounts to be paid each pay period • $50,000/year paid every 2 weeks • 52 weeks in a year/2 weeks per pay period – 26 pay periods • $50,000/26 pay periods = $1,923.08 (gross pay)

7. Deductions • Deductions – Amounts subtracted from your gross pay • Mandatory – required by law • Social Security/Medicare taxes • Federal income tax • State income tax – some states • Voluntary • Health, Dental, Vision, Life Insurance • Retirement • Health Savings Plan • Deductions also listed on pay stub for current pay period & YTD

8. Social Security/Medicare • FICA – Federal Insurance Contributions Act – (Social Security & Medicare) • OASDI – Old Age, Survivors, Disability Insurance (Social Security) • 6.2% of gross pay • Employee and Employer pays • Maximum taxable earning $117,000 • $475 gross * 6.2% = $29.45 • Medicare (Hospital Insurance) • 1.45% of gross pay • Employee and Employer pays • $475 gross * 1.45% = $6.89

9. Federal income tax • W4 Form – Employee’s Withholding Allowance Certificate • http://www.irs.gov/pub/irs-pdf/fw4.pdf • Tax withholding tables - - http://www.irs.gov/pub/irs-pdf/p15.pdf (pg 47) • Pay period • Marital status • Number of Withholding Allowances • Examples • $475 gross; paid weekly; single, claiming 1 • Single vs. Married • Married with more allowances

10. Net Pay • Net Pay – when all deductions are taken out of gross pay • Net Pay calculation – Gross Pay Minus Total Deductions (amount of your paycheck) • AKA “take-home pay”

11. Self-employed requirements • Federal Income Tax – file estimated tax returns quarterly (4xs per yr.) with payments • Must also pay Social Security and Medicare taxes • Must pay both employee and matching employer contributions to social security and Medicare • Social Security – 12.4% of gross income • Medicare – 2.9% of gross income • Self-employment tax – total Social Security and Medicare tax paid by self-employeed individuals (12.4 + 2.9 = 15.3%)

12. Benefits and incentives • Benefits – Forms of employee compensation in addition to pay • Should be taken into account (evaluated) when considering a new job • Profit Sharing • Paid Vacations & Holidays • Child Care • Sick Pay • Leaves of Absence • Insurance • Bonuses & Stock Options • Pension & Savings Plans • Travel Expenses

13. Profit sharing • Profit sharing – plan that allows employees to receive a portion of the company’s profits at the end of the corporate year • Incentive pay – money offered to encourage employees to strive for higher levels of performance • Links employee compensation with company profit goals, giving employees incentive to work harder and reduce waste

14. Paid vacation and Holidays • Paid vacation – as it sounds – employee gets paid while on vacation • Common setup: 1 week after 1 year; 2 weeks after 2 years; 3 weeks after 5 years • Paid holidays – paid time off for holidays • Christmas * • Thanksgiving • Fourth of July • Labor Day ** • Memorial Day ** • Sometimes employees required to work a holiday are paid double or more than double regular pay rate *Religious **Depends type of business – agriculture related, manufacturing

15. Child Care, Sick pay, leaves of absence • Some companies provide on-site child-care facilities or even coverage of child-care expenses • Sick pay – allowance of days each year for illness of employee or immediate family member • Leaves of absence – Temporary leave without pay • Maternity/Paternity • Education/Degree/Training

16. Insurance • Health insurance – many employers provide group health insurance plans • Some employers pay for all of the employee’s plan • Most employers – employee pays for part of their own coverage and dependents (spouse/children) • Deductible – employee paid amount of the bill • After deductible is met – a percentage of doctor bills/prescriptions/hospitalization is paid • Choose your deductible plan – lower the deductible – higher the rate for that plan • Life insurance – cash benefit paid to designated person (beneficiary) when insured person dies. • Purpose – partially offset the income lost when wage earner dies

17. Insurance continued • Dental Insurance – maximum benefit per year/per family member • Orthodontia (braces) may not be covered • Routine services – covered 80-100% (exams, cleanings, fillings) • Major services – often covered 50% (root canals, bridges, crowns) • Vision Insurance – cover part or all of eye exams, prescription lenses/contacts – maximum benefit per year/per family member

18. Bonuses and stock options • Bonuses – incentive pay based on quality of work done, years of service, or sales & profits • $100 year-end as reward for no serious on – the – job accidents • Holiday bonus based on years of service • Sales goal met – top-level managers receive bonus equal to percentage of current salaries • Stock-purchase options – gives employees (usually executives) the right to buy a set number of shares of the company’s stock at a fixed price by a certain time • Employees gain as long as stock price goes up • Many types of plans

19. Pension and savings plans • Pension plans for retirement • Funded by employer ** • After retirement – employee receives a monthly check • Might be able to withdraw some funds early • Might be able to retire early if take reduced payments • Vested – when employee is entitled to full retirement account after a specific period of time • Employer-sponsored savings plans (401K/401B) – also retirement plans • Employees contribute – employer might contribute • Early withdrawals – financial penalty – unless (sometimes) for education, first-time home purchase, medical expenses

20. Travel expenses • Jobs requiring travel - companies provide vehicle or mileage allowance if own car is used • Federal government – POV reimbursement - http://www.gsa.gov/portal/content/100715 • While out of town – daily allowance or motel, meals & other expenses paid • Federal government per-diem: http://www.gsa.gov/portal/category/100120 • Some cases – employee pays expenses and is reimbursed later

21. Evaluating employee benefits • Benefits add great value to employee’s position • Many not taxable (except bonuses & others paid in cash) – provide valueable coverage and advantages • Large companies usually have more optional benefits

22. Work Arrangements • Altered workweeks • Job rotation • Job sharing • Telecommuting

23. Altered workweeks • Flextime – allow employees to choose their working hours within defined limits • Usually employees required to be present during specified core time period • Remaining hours can be chosen from around core time • Allows to begin very early, or come later and stay later • Benefits of flexibility – dropping off/picking up school children, medical & other appointments • Compressed workweek – compressing 40-hours into less than 5 days • 4 – 10 hour day (often followed by 3 days off)

24. Job rotation • Job rotation – employees trained to do more than one specialized task then rotate from one task to antoher • Variety – reduces boredom & burnout • Cross training so if someone is absent, another knows the job – keep work flowing

25. Job sharing • Job sharing – two people share one full-time position • Split salary and benfits • Nice for people who want to work part-time

26. Telecommuting • Telecommunity – work at home or on the road and stay in contact with manager and co-workers through e-mail, text, fax, cell phone calls, etc • Advances in technology making this more common • Often associated with computer related work – data entry, Web design, software development