Legally Required Benefits

1. Legally Required Benefits

2. Types of Benefits • Name the benefits you think should be offered by companies • Which of these benefits are required by law? • Why would a company offer benefits if not required by law? • Employee expectations and satisfaction • Attract, motivate, retain • Competitiveness

3. Legally Required Benefits • Social Security • Workers’ Compensation • Unemployment Compensation • Family Medical Leave Act (FMLA)

4. Social Security • For death, retirement, disability, benefits for dependents of retired/disabled worker, survivor benefits • Employer and employee both pay (~7%) • Current dollars pay current expenses--it is not a savings account • Shortfall expected about 2020 A.D.

5. Social Security: Projected Surpluses and Shortfalls (In billions of dollars) 300 200 Annual Surpluses 100 0 -100 Annual Shortfalls -200 -300 -400 1987 1990 1995 2000 2005 2010 2015 2020 2025

6. Workers’ Compensation • For work related injuries: permanent and temporary total disabilities, permanent partial disability, survivor benefits, medical expenses, rehabilitation • Insurance paid for by employers

7. Exhibit 10-5Primary Obligations of State Workers’ Compensation Programs • 1. Take initiative in administering the law. • 2. Continually review performance of the program and be willing to change procedures and to request the state legislature to make needed amendments. • 3. Advise workers of their rights and obligations and assure that they receive the benefits to which they are entitled. • 4. Apprise employers and insurance carriers of their rights and obligations; inform other parties in the delivery system such as health care providers of their obligations and privileges. • 5. Assist in voluntary and informal resolution of disputes that are consistent with law. • 6. Adjudicate claims that cannot be resolved voluntarily. Source: J.V. Nackley, Primer on workers’ compensation (Washington, DC: The Bureau of National Affairs, 1987).

8. Unemployment Compensation • For subsistence between jobs, employer provides stability • Varies by state • Financed by employers • Experience rating • Eligibility, coverage, duration, amount

9. Exhibit 10-1Eligibility Criteria for Unemployment Insurance Benefits • To be eligible for unemployment insurance benefits, an individual must: • 1. Not have left a job voluntarily • 2. Be able and available to work • 3. Be actively seeking work • 4. Not have refused an offer of suitable employment • 5. Not be unemployed because of a labor dispute (exception in a few states) • 6. Not have had employment terminated because of gross violations of conduct within the workplace

10. Exhibit 10-2Unemployment Benefit Amounts for Selected States WEEKLY BEN. AMOUNT (WBA) MAXIMUM TOTAL BENEFIT INCLUDING EXTENDED BENEFITS MINIMUM BASE PERIOD ANDQUALIFYING WAGES WAITING PERIOD STATE Alabama California Florida $22 min., $180 max. eff. 7/3/94 $40 min., $230 max. $10 min., $250 max. Lesser of 26 times WBA or 1/3 base period wages 26 times WBA, up to 1/2 base period wages 1/2 of weeks worked in base period 1 1/2 items high quarter wages; at least $774.02 $1,300 in high quarter, or $900 in high quarter and total base period wages of 1 1/4 times high quarter wages 20 times claimant’s average weekly wages (at least $20) None One week One week

11. Family Medical Leave Act (FMLA) • 12 “work weeks” of unpaid leave during 12 mo period • Reasons: --Birth or adoption of a child, foster child • Care for close family member with serious health condition • Your own serious health condition makes you unable to perform your job • Firms with 50 or more employees (5% of employers, 60% of workers are covered) • Key exemptions for highly compensated employees • Return to an “equivalent position”