19% PHR
13% SPHR
Any student use of these slides is subject to the same License Agreement that governs the student’s use of the SHRM Learning System materials.
© SHRM 4-1

Davis-Bacon
Act
• Requires prevailing wages/benefits on federal construction projects
Copeland “Anti-
Kickback” Act
Walsh-Healey
Act
Service
Contract Act
• Precludes federal contractors from inducing employees to give up any part of compensation
• Extends prevailing wages to federal suppliers
• Stipulates overtime pay
• Requires prevailing wages/benefits on all federal contracts
© SHRM 4-2

Fair Labor Standards Act
(Wage and Hour Law)
• Applies to organizations with employees who engage in interstate commerce, produce goods for interstate commerce, or handle, sell, or work on goods/materials that have been moved in/produced for interstate commerce.
• Applies to employers with at least $500,000 in annual dollar volume of business.
• Under FLSA, an employer has no ongoing obligations to independent contractors.
© SHRM 4-3

Which of the following factors would indicate independent contractor status?
A. Opportunity for profit and loss
B. Regular oral and written reports presented to a manager
C. Right to end the relationship with the organization at any time without incurring liability
D. Services provided to a single organization
© SHRM 4-4

© SHRM
Behavioral control
Financial control
Type of relationship
4-5

Exempt and Nonexempt Employees
Type of
Employee Importance:
Exempt Excluded from minimum wage and overtime pay requirements of the law.
Nonexempt Are not excluded from minimum wage requirements and are entitled to overtime.
Overtime is guaranteed to employees who are paid less than $23,660 per year or $455 per week.
© SHRM 4-6

An exempt employee must meet three requirements.
Minimum salary
Paid on a salary basis without improper deductions
Exempt duties
4-7 © SHRM

A primary duty is the main or most important duty and is an important part of exemption.
No particular percentage of exempt duties is required under the FLSA.
The lower the total percentage, the greater the legal risk if challenged.
4-8 © SHRM

An employee must:
Have a primary duty of managing an organization, department, or subdivision.
Direct the work of at least two full-time employees or their equivalent.
Have the authority of the employer to hire and fire.
Affect promotion decisions.
© SHRM 4-9

 Requires performance of office or nonmanual work directly related to the management or general business operations of the employer or the employer’s customers.
 Includes the exercise of discretion and independent judgment related to “matters of significance.”
© SHRM 4-10

Learned professionals
• Requires advanced knowledge in a field of science or learning that is acquired by prolonged instruction.
• Work is intellectual in nature and requires exercise of discretion and judgment.
Creative professionals
• Must meet minimum salary requirements.
• Perform work that requires invention, imagination, originality, or talent.
• Perform in a recognized field of creative or artistic endeavor.
© SHRM 4-11

A highly compensated employee must:
 Be paid total annual compensation of
$100,000 or more that includes at least
$455 per week paid on a salary or fee basis.
 Perform one of the duties of an exempt executive, administrative, or professional employee.
© SHRM 4-12

 Must meet the salary minimum with a salary of $455 per week or $27.63 per hour.
 Employee’s pay cannot be subject to deductions inconsistent with the salary basis requirement.
 Primary duties must fall into one of four categories.
© SHRM 4-13

An employee must:
 Have a primary duty involving making sales or obtaining orders and contracts.
 Be customarily and regularly engaged away from the employer’s place of business.
Outside sales employees are not subject to the minimum salary requirements of other exemptions.
© SHRM 4-14

Employers that make improper deductions will lose the exemption if they did not intend to pay on a salary basis.
Example:
An exempt employee is normally not subject to deductions for illness in less than full-day increments. (An FMLA exception may occur.)
© SHRM 4-15

A “safe harbor” exists if:
 The employer has a clearly communicated policy prohibiting improper pay deductions.
 Employees are reimbursed for any improper deductions.
 The organization makes a good-faith effort to comply in the future.
© SHRM 4-16

Sets rate of overtime pay (1.5 times regular pay after 40 hours worked).
Requires overtime on time worked, not time compensated.
Sets workweek as any fixed, recurring period of 168 consecutive hours (7 days 24 hours).
© SHRM 4-17

 If a nonexempt employee works unauthorized overtime, does the employee have to be paid for that time?
 Can an employee who is not paid for his lunch break be expected to sit at his desk and answer emails?
© SHRM 4-18

An employer pays an employee a $40 attendance bonus for working a full 40-hour workweek. If the worker works 45 hours during that week, what will the employee’s gross paycheck be if her hourly rate is $10?
A. $495.00
B. $509.50
C. $515.00
D. $517.25
© SHRM 4-19

To calculate the total pay for the week, you must add the bonus to the hours worked at base pay (45 $10/hour = 450 + $40 bonus = $490). To get the average straight time hourly earnings (ASTHE), the $490 is divided by the total hours worked, 45, to yield $10.89.
Pay calculation:
45 hours base pay ($450) + bonus ($40) = $490.00
ASTHE = $490/45 hours = $10.89
Overtime premium = $10.89 0.5 = $5.45 5 = $27.25
Total gross pay = $517.25
© SHRM 4-20

• Overtime usually must be paid in cash.
• Public-sector employers may grant compensatory time off.
• Public employees can accumulate
“comp” time. Must be earned at a rate of not less than 1 ½ hours for each hour for which OT is required.
Presently, compensatory time is not allowed for private-sector nonexempt employees.
© SHRM 4-21

Restrict hours and conditions of employment for minors.
Age
Under age 14
Ages
14-15
Ages
16-17
© SHRM
FLSA Regulations

Prohibited from most nonfarm work

May be employed by parents

Certain jobs permitted (e.g., actors, newspaper carriers)

During school hours: 3 hours/day, 18 hours/week

During school vacations: 8 hours/day, 40 hours/week

Work hours restricted

Prohibited from hazardous jobs

No other restrictions
4-22

Raised minimum wage to $7.25 per hour in three phases
Provides $2.13 per hour cash wage if claiming a tip credit
© SHRM 4-23

• Employees younger than 20 years old during first 90 days of employment
• Tipped employees ($2.13/hour plus tips must equal minimum wage)
• Full time students employed in retail, service, agriculture or institutions of higher education (ER must obtain a
DOL certificate under the Full-time student program)
• Student learners at least 16 years old and employed on a part-time basis pursuant to a bona fide vocational training program (ER must obtain student learner DOL certificate)
• Workers impaired by physical or mental disability (DOL certificate required)
© SHRM 4-24

• An employer who violated the FLSA’s overtime requirements is liable to an employee in the amount of the unpaid overtime compensation as well as an additional equal amount
• Statute of limitation is two years
• Employee entitled to recover reasonable attorney fees
• Criminal penalties of not more than $10,000 and 6 months imprisonment may be imposed for willful violations
© SHRM 4-25

• When state and federal laws differ, which law takes precedence?
© SHRM 4-26

• Amends FLSA and defines general rules for hours worked.
• Provides guidelines on:
– On-call/standby time.
– Preparatory/concluding activities.
– Waiting time.
– Meals and breaks.
– Training time (4 conditions).
– Travel time
© SHRM 4-27

Day
Friday
Activity
Travels to conference and works en route
Saturday Works at conference
Sunday Travels from conference and does not work en route
Paid time
Unpaid time
Total Paid
Hours
7 8 9 10 11 12 1 2 3 4 5 6 7
AM PM
Normal Work Hours
Time
5
12
4
© SHRM 4-28

Mandates equal pay for equal work.
Skills Effort
© SHRM
Responsibility
Working
Conditions
4-29

• Law does not address
• Deals with pay differentials between men and women who perform comparable –but not equal- work.
• Looks at different jobs that men and women hold that require comparable skills, effort, responsibility and working conditions.
© SHRM 4-30

• Seniority
• Merit System
• Difference in quality or quantity of work
• Geographic work differential
• Any factor other than gender
© SHRM 4-31

© SHRM
Module 4 Reinforcement Activity
Case 1: A tenured female associate professor in the industrial technology department is employed at a salary lower than male colleagues who are the same rank and teach similar courses at the same location. She is the second-lowest-paid professor in a department of close to 20, despite the fact that she has a higher rank and more seniority than four male colleagues. Does the scenario violate the Equal Pay Act?
Module 4, Activity 1, Slide 32

© SHRM
Module 4 Reinforcement Activity
Case 1: Tenured female associate professor
She will have a strong case if she alleges discrimination because of the substantial equality of work she is performing.
Module 4, Activity 1, Slide 33

© SHRM
Module 4 Reinforcement Activity
Case 2: A female part-time employee is doing work equal to that of a male full-time employee. In exchange for the flexibility of a part-time position, she is paid a lower hourly rate. Does the scenario violate the Equal Pay
Act?
Module 4, Activity 1, Slide 34

© SHRM
Module 4 Reinforcement Activity
Case 2: Part-time female employee
Unless the wage rate differs because of seniority or performance levels, the female employee will have a strong case if she alleges discrimination.
Module 4, Activity 1, Slide 35

© SHRM
Module 4 Reinforcement Activity
Case 3: A male bartender in a restaurant is paid more than a female bartender for the same job. Under what circumstances would this be legal?
Module 4, Activity 1, Slide 36

Module 4 Reinforcement Activity
Case 3: Male bartender
© SHRM
This would be legal if:
• The male bartender has more seniority.
• The male bartender works a different shift.
• The male bartender has more work experience.
• A bona fide merit system is in place.
• There is a system in place that measures earnings by production.
• There is a legitimate nondiscriminatory reason.
Module 4, Activity 1, Slide 37

Which of the following is true under the
Equal Pay Act?
A. Seniority systems cannot result in pay disparity.
B. Companies should provide all employees with the same working conditions.
C. Employees doing equal work should receive the same pay.
D. Jobs filled primarily by women should have the same salary as similar jobs filled by men.
© SHRM 4-38

© SHRM
Work Opportunity Tax Credit (WOTC)
Federal tax credit to encourage employers to hire targeted groups of job seekers.
Administered by the DOL’s Employment and
Training Administration (ETA) and the IRS.
Includes individuals from 9 categories.
4-39

Additional Compensation Legislation
Lilly Ledbetter
Fair Pay Act
• States that the statute of limitations on pay discrimination lawsuits resets as each allegedly discriminatory paycheck is issued
Dodd-Frank Wall
Street Reform and Consumer
Protection Act
• States required communications related to executive compensation at publicly traded companies
IRS Intermediate
Sanctions
• Provides guidelines regarding the determination of reasonable compensation for executives of nonprofit organizations
© SHRM 4-40

• Determines the relative worth of each job by establishing a hierarchy.
• Follows job analysis, which focuses on job descriptions and specifications.
© SHRM 4-41

© SHRM
Job-to-job comparison
Nonquantitative
Methods
Quantitative
Methods
Job ranking
Factor comparison method
Job-topredeterminedstandard comparison
Job classification
Point-factor method
4-42

Nonquantitative (Whole-Job)
Evaluation
• Establishes a relative order of jobs.
• Does not assign numeric values.
© SHRM
Job ranking
Paired comparison
Job classification
Job-to-job comparison
Job-to-predeterminedstandard comparison
4-43

• Uses a scaling system to evaluate the value of one job is as compared to another.
• Provides a score.
Point-factor method
Factor comparison method
Less complex, commonly used
Most complex, used infrequently
© SHRM 4-44

• Each job receives a total point value, and relative worth can be compared.
• Examples: Guide Chart-Profile (Hay Plan) and the U.S. government Factor Evaluation System (FES).
• Points often determine pay grade assignment.
Job A Job B Job C Job D Job E
220
May 4, 2011
300 400 500 600
Points
700 800 900 1,100
Nov 2, 2011
© SHRM 4-45

Not a true job evaluation system; can be used to develop a job-worth hierarchy.
Prices jobs in the labor market(s) in which an organization competes.
Uses prevailing rates as the relative
“worth” of the jobs.
© SHRM 4-46

Internal custom
survey outsourced to a consulting firm
External survey outsourced to a consulting firm
External survey conducted by a consulting firm
External published survey data
Internal External
Full control of the survey (e.g., design, administration)
Ability to:

Participate in survey

Provide some input to survey design

Limited participation, if any (e.g., may submit salary data)

No control/no input to survey design
Example:
Local HR association contracts with a compensation firm
Examples:


Mercer
Towers Watson

No participation

No control/no input to survey design

Widely available

May need to purchase survey data
Examples:

DOL surveys

BLS surveys

SHRM surveys
© SHRM 4-47

• Salary data may need to be aged, leveled, and/or factored for geography.
– Aging uses movement in market rates to adjust outdated salary data.
– Leveling adjusts salaries when surveyed jobs are similar but not identical to jobs in the organization.
– Since wage rates will vary by location, the organization should factor for geography any national salary survey data.
© SHRM 4-48

Frequency distributions and tables sort salary data.
• Frequency distribution
− Lists the grouped data, from lowest to highest.
Mean
Salary
Number of
Incumbents
• Frequency table
− Shows the number of incumbents who receive a particular salary.
$55,000
$60,000
$65,000
$70,000
$75,000
2
1
2
5
1
© SHRM 4-49

Salary Data: Measures of Central
Tendency
Unweighted average gives equal weight to every salary.
Annual
Salary
# of
Incumbents
Total
Salary
Weighted average considers the number of people who receive each salary.
$55,000
$60,000
$65,000
$70,000
$75,000
2
5
2
1
1
$110,000
60,000
130,000
350,000
75,000
Median is the middle number in the range.
Totals 11 $725,000
Mode is the most frequently occurring wage.
Unweighted Average = $65,000
Weighted Average = $65,909
© SHRM 4-50

Module 4 Reinforcement Activity
$20,000
$25,000
$30,000
$35,000
$50,000
$55,000
$30,000 $40,000 $55,000
$30,000 $40,000 $60,000
What is the mode of the salaries listed?
What is the median salary?
© SHRM Module 4, Activity 2, Slide 51

Module 4 Reinforcement Activity
Compensation Computation the salaries listed?
What is the
$30,000 median salary?
$20,000
$25,000
$30,000
$30,000
$30,000
$35,000
$20,000 $30,000 $50,000
$40,000
$25,000 $35,000 $55,000
$40,000
$30,000 $40,000 $55,000
$50,000
$30,000 $40,000 $60,000
$55,000
$60,000
$60,000
© SHRM Module 4, Activity 2, Slide 52

Module 4 Reinforcement Activity
Position
Grade 5
Salary
$26,000
Staff
5
Grade 6 $30,000 2
Grade 7 $40,000 3
What is the unweighted average of the salaries?
What is the weighted average?
© SHRM Module 4, Activity 2, Slide 53

Module 4 Reinforcement Activity
Position
Grade 5
Salary
$26,000
Staff
5
Grade 6 $30,000 2
Grade 7 $40,000 3
What is the unweighted average of the salaries?
$26,000
$30,000
$40,000
$96,000/3 =
$32,000
© SHRM
What is the weighted average?
$26,000 * 5 = $130,000
$30,000 * 2 = $60,000
$40,000 * 3 = $120,000
$310,000/10
$31,000
Module 4, Activity 2, Slide 54

• Show how groups relate to each other.
• Show if an organization leads, lags, or matches the job market.
0%
1st quartile
$55,000
Entry wage
$60,000
2nd quartile
50%
3rd quartile
$65,000
Midpoint
4th quartile
100%
$70,000 $75,000
Maximum wage
© SHRM 4-55

Establish pay grades.
• Group jobs that have the same relative internal or external worth.
• Pay the same rate or within the same pay range.
Set pay ranges.
• Set upper/lower bounds of possible compensation for individuals whose jobs fall in a pay grade.
• Market data from surveys used to determine a midpoint.
© SHRM 4-56

• Subtract the range minimum from range maximum and then divide by the range minimum
• Typical range spread:
Nonexempt positions 40%
Exempt positions 50%
Executive positions 60%
© SHRM 4-57

• When pay ranges are based on the target market rate, compa-ratios are an indicator as to how actual wages match, lead or lag behind the target markets
© SHRM 4-58

• Divide the pay rate of an employee by the midpoint of the range.
• Given a range of $16 to $20 an hour, a midpoint of $18, and a salary of $16 an hour, the compa-ratio is:
$16 ÷ $18 = .89 or 89%.
• Compa-ratios below 1.00 mean wages are below the midpoint; compa-ratios greater than
1.00 mean wages exceed the midpoint.
© SHRM 4-59

• What are the reasons that might cause the compa-ratio to be below 100%
© SHRM 4-60

An employee earns $9 an hour, and the pay range is $8 to $12. What is the compa-ratio?
A. 66%
B. 80%
C. 90%
D. 111%
© SHRM 4-61

• Combines several salary grades or job classifications.
Management
$50,000
Supervisory
110%
$105,000
Technical
$22,000
Service Experts
$17,000
124%
$38,000
209%
$68,000
© SHRM 4-62

Broadbanding Advantages and
Disadvantages
Advantages
• Provides wider ranges.
• Reduces the number of job grades.
• Supports de-layering.
• Provides more autonomy to line managers.
• Enhances employee mobility.
Disadvantages
• Reduces the value of ranges.
• Affords less control.
• Creates overly broad ranges.
•
Difficult to maintain perception of equity.
• Reduces the opportunity for promotion.
• Can lead to divergence from the market.
© SHRM 4-63

© SHRM
Completing paychecks
Record keeping and retention
Payroll systems
4-64

Develop a pay determination system that helps attract, motivate, and retain employees.
© SHRM
Most employees receive base pay in the form of an hourly wage or salary.
4-65

• Employees receive the same rate of pay, regardless of performance or seniority.
• Typically used for elected jobs in the public sector or union hourly positions.
• Generally corresponds to target market survey data for the job.
• There may be a training wage in a flatrate job.
© SHRM 4-66

• Rate is based on longevity.
• Pay increases occur on a predetermined schedule.
– Automatic step-rate
– Step-rate with variabilitybased performance
– Combination step-rate and performance
2
1
© SHRM
3
4
5
4-67

Performance-Based/Merit Pay
System
• Individual performance is the basis for pay.
• Increases are tied to performance and job mastery.
• Employers must be able to defend performance appraisal methods and differences in salary increases.
© SHRM 4-68

Pay is determined by employee’s output.
• Straight piece-rate
− Base wage rate plus additional compensation for output
• Differential piece-rate
− One piece rate up to the standard and a higher rate after the standard is exceeded
• Works best in assembly and manufacturing situations.
© SHRM 4-69

• Employee’s characteristics determine pay.
• Superior knowledge or skill mastery is rewarded.
– Knowledge-based (scientists whose pay is based on knowledge in a field or domain)
– Skill-based (machine operators cross-trained on a variety of production equipment)
– Competency-based (professionals who excel at defined competencies)
© SHRM 4-70

A window manufacturer guarantees its installers a base wage plus an extra $25 for each job completed to specifications.
The employer is using a
A. merit pay system.
B. productivity-based system.
C. competency-based system.
D. flat-rate system.
© SHRM 4-71

Red-circle rates
• Rates above the range maximum
Green-circle rates
Pay compression
• Rates below the range maximum
• Small differences in pay regardless of experience, skills, level, or seniority
© SHRM 4-72

• When can red circle rates happen?
• What can cause green circled rates?
• When does a pay compression occur?
© SHRM 4-73

© SHRM
Pay adjustment matrix
General pay increase
COLAs
Seniority
Lump-sum increases
Marketbased increases
4-74

Based on when an employee works.
Except for overtime, FLSA does not require differential pay.
Examples:
• Shift pay
• Emergency-shift pay
• Premium pay
• Hazard pay
• On-call or call-back pay
• Reporting pay
• Travel pay
© SHRM 4-75

• Differentials for labor costs
• Differentials to attract workers to certain locations
• Differentials for foreign pay
© SHRM 4-76

• Paying for performance beyond expectations.
• Motivates employees to perform at higher levels.
• May be a factor when determining overtime pay.
Research tax ramifications before implementing any incentive pay plan.
© SHRM 4-77

• Must be in concert with other organizational programs
• Must be in employee’s line of sight
• Must have a sunset clause
• Must incorporate short and long term perspectives
© SHRM 4-78

• Improve individual performance.
• Kept separate from base pay.
© SHRM
Cash awards
Provide extra cash compensation based on performance
Examples: lump sum awards, piece rates, commissions
Noncash award programs
Merit awards used to recognize performance, special contributions, length of service
Examples: gifts, awards, trips, prizes
4-79

• Gainsharing
– Organization shares a portion of the gains realized from group effort.
• Scanlon, Rucker, and Improshare
• Group performance
– Group is rewarded for meeting or exceeding performance standards.
• Typically, each person receives the same amount as a percentage of pay or flat dollar award.
© SHRM 4-80

Organization-Wide Incentive Pay
Plans
Profit-sharing plans
• Allow employees to share in profits.
• Include cash and deferred profit sharing.
Performancesharing plans
• Use predetermined criteria and standards to measure results.
• Create a fund for incentive awards.
• Can be based on factors such as customer satisfaction and quality.
4-81 © SHRM

• Encourage employees to share in the success of the organization.
• Stock may be purchased or earned.
• Organization may facilitate stock purchase through payroll contributions.
• Organization may structure stock purchase as a form of ERISA-governed qualified retirement plan (ESOP).
– Nonleveraged ESOPs
– Leveraged ESOPs
© SHRM 4-82

SPHR only
Stock option plans (ISOs and NQSOs)
Stock purchase plans
Phantom stock
Restricted stock grants
Restricted stock units
Performance grants
© SHRM 4-83

Straight salary
More time is spent on service than sales.
There is a long sales cycle.
© SHRM
Straight commission
Use when:
Goal is to increase volume and control costs.
Salary plus commission
Organization needs to reward behaviors that support strategy.
Plan needs to be adaptable.
4-84

Compensation for Professionals
Dual career ladder
Allows senior technical personnel to earn as much as management personnel.
Maturity curves
Correlate pay with time spent in the field.
Used for teachers, engineers, and technical personnel.
© SHRM 4-85

Setting ranges
• Setting upper and lower compensation bounds.
• Using comparatios to evaluate if policies are being implemented appropriately.
Budgeting
• Top-down approach is best at controlling costs.
© SHRM
Auditing
• Monitoring of expenditures.
4-86

Benefits of Qualified Deferred
Compensation Plans
Allow organizations to recruit and retain employees.
Allow people to retire, creating opportunities for others.
© SHRM
Provide tax deferrals for plan participants if plans comply with ERISA and IRS Code.
4-87

Characteristics of Qualified Plans
• Under ERISA, plans must:
– Be in writing and be communicated to employees.
– Be established for exclusive benefit of employees/beneficiaries.
– Satisfy rules concerning eligibility, vesting, and funding.
– Not favor officers, shareholders, or HCEs.
© SHRM 4-88

© SHRM
•
• Benefit amount is
Benefit amount is
•
• Employer funds the
•
• Insured by the PBGC.
PBGC.
Career-average formula formula
Final-pay
4-89

© SHRM
•
• Benefit amount is
•
• based on a formula.
Employer funds the
• person into the fund.
plan and bears the
Benefits are risk.
Insured by the PBGC.
and fund performance.
Flat-dollar formula
Profit-sharing plans
Career-average formula
Cash balance plan
ESOPs
Roth 401(k)/403(b) plans
4-90

Individual retirement accounts (IRAs)
Roth IRAs
Savings Incentive
Match Plan for
Employees
(SIMPLE)
457 plans
Simplified
Employee
Pensions (SEPs)
© SHRM 4-91

• Referred to as qualified tuition programs
(QTPs).
• Federal tax-free way to save money for college.
– College savings plan
• Establishes an account for a future student.
• May be used at any college.
– Prepaid tuition plan
• Locks in future tuition at current price.
• Used at participating in-state public colleges and universities.
© SHRM 4-92

Nonqualified Deferred Compensation
Plans
• Provide additional benefits to key executives.
• Do not qualify for favorable treatment under
ERISA.
• Employees defer reporting income; not subject to the limits placed on qualified plans.
• Employer contributions are not deductible.
• Funds are not protected by ERISA or PBGC.
Examples:
Top hat plans, 457(f) plans, excess deferral plans, rabbi trusts
© SHRM 4-93

Qualified Domestic Relations Orders
(QDROs)
• Create or recognize the right of an alternate payee to receive all or a portion of pension benefits.
• Orders must relate to child support, alimony, or marital property rights and must be made under state domestic relations law.
Related case: Kennedy v. Plan Administrators for
Dupont Savings
© SHRM 4-94

Global Compensation and Benefits
Considerations
SPHR only
• Standardization versus localization
• Culture
•
Competitive labor market
• Collective bargaining, employee representation, and government mandates
• Economic factors
• Taxation
• Laws and regulations
© SHRM 4-95

© SHRM
International Compensation
Approaches
SPHR only
Negotiation/ad hoc
Pure localization
Higher-of-home-or-host-country
Home-country-based balance sheet
Headquarters-based balance sheet
Lump-sum
Cafeteria
4-96

SPHR only
What is the advantage of paying an international assignee a differential between home-country costs and assignment costs?
A. It preserves purchasing power regardless of country of origin.
B. It requires minimal planning and is easy to administer.
C. It is more tax-effective for the employee.
D. It gives the international assignee a choice.
© SHRM 4-97

© SHRM
International Benefit Variations
SPHR only
Benefits that are government-provided
Benefits that are government-mandated
Benefits that are voluntary (discretionary)
Benefits that are market practice
Tax treatment of benefits
4-98

Nonsalary International Benefits
SPHR only
Social security
Paid time off
Retirement
© SHRM
Severance
Health and welfare insurance (health care, disability, and life insurance)
4-99

© SHRM
International social security agreements.
SPHR only
Eliminate dual social security coverage and taxes for employers and workers.
Fill gaps in benefit protection for workers.
4-100

Evaluating the Compensation and Benefits System
• Is it in compliance?
• Is it compatible with the organization’s mission and strategy?
• Does it fit the culture? Is it appropriate for the workforce?
• Is it internally equitable?
© SHRM
• Is it externally competitive?
4-101

• ERISA requires:
– Summary plan description, summary annual report, and summary of material modifications.
– Filing Form 5500 with the DOL.
• Other required communications include:
– FMLA policy.
– COBRA continuation of benefits notice.
– Special HIPAA enrollment rights and privacy rights.
– Medicare Part D notification.
– PPA notice and disclosure requirements for retirement plans.
– Explanation of stock options (SEC regulations).
– Posting of all required federal, state, and local employment laws.
© SHRM 4-102

© SHRM
Communication plans
Direct communication
4-103

Self-Service Technology Benefits
• Reduced administrative work for HR.
• Increased accuracy of employee data.
• Improved timeliness in information and employee transactions.
• Reduced dollars spent on other traditional HR delivery channels
(e.g., paper-based transactions).
• Enhanced reputation as a
“green,” environmentally conscious employer.
© SHRM 4-104