TOTAL COMPENSATION &
PERSONNEL LAW
for:
Women In Agriculture
by:
Sarah Sanders Smith
Assistant Professor
Organizational Leadership & Supervision
Purdue University North Central
Compensation
• How to determine, in a particular
geographical area, farm wage scales
• Pay leader, pay follower or market
value?
• What benefits must employers provide
(ie: required by law)?
• What optional (discretionary) benefits
should be considered?
Intrinsic vs. Extrinsic
• Intrinsic Compensation: Employees’
psychological mindsets that result from
performing their jobs
• Extrinsic Compensation: Both monetary and
non-monetary rewards
• This session’s focus?
Extrinsic Compensation
Types of Extrinsic Comp
1) Core Compensation (base pay)
2) Adjustments to Core Compensation
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Cost-of-living Adjustments (COLA)
Seniority Pay (length of service)
Merit Pay (job performance)
Incentive Pay (goals, objectives)
Person-focused Pay (new k, s, a’s)
Types of Extrinsic Comp
3) Legally Required Benefits
Social Security
Unemployment Compensation
Workers’ Compensation
FMLA
4) Discretionary Benefits
Companies “choose” to offer or not
Components of a Total Compensation Program
External Environment
Internal Environment
Compensation
Financial
Non-Financial
Direct
Indirect (Benefits)
The Job
Wages
Salaries
Commissions
Bonuses
Legally Required Benefits
Skill Variety TaskSound Policies
Social Security
Identify Task
Competent Employees
Unemployment Compensation Significance
Workers’
Congenial Coworkers
Compensation
FamilyAutonomy
&
Suitable Status Symbols
Medical Leave
Feedback
Working Conditions
Voluntary Benefits
Payment for Time Not Worked
Health Care
Life Insurance
Retirement Plans
Employee Stock Option Plans
Supplemental Unemployment Benefits
Employee Services
Premium Pay
Unique Benefits
Job Environment
Workplace Flexibility
Flextime
Compressed Work Week
Job Sharing
Flexible Compensation
Telecommuting
Part-time Work
Modified Retirement
Core Compensation
Determinants of Individual
Financial Compensation
• Organization
• Labor market
• Job
• Employee
The Organization’s Ability to Pay
Organization’s
assessment of its
ability to pay is
important factor in
determining pay
levels
The Labor Market as a Determinant
of Financial Compensation
• Compensation surveys
• Expediency
• Cost of living
• Labor unions
• Economy
• Legislation
“About 40% to 70% of costs in
production agriculture are related
to labor costs.
Thus, it seems that effective
management of these costs plays a
vital role in the competitiveness of
agricultural producers.”
http://www.cnr.berkeley.edu/ucce50/ag-labor/
Compensation Surveys
• What are other farms
paying?
• What are other
employers who would
hire our workforce
paying?
• Geographic area of
survey
• “Benchmark” Jobs
Compensation Surveys
• Some are free, some are fee
• Don’t be afraid to look around…
• Bureau of Labor Statistics
• www.bls.gov
• Layoffs, Unemployment Rates, CPI,
Inflation Calculator
• WorkOne
WorkOne: http://www.workonewestcentral.org/
Expediency
• Can you start tomorrow at 3:30 AM?
• Can you start yesterday?
• Beware of expediency and its affect on
decision-making
Cost of Living
• If an employee makes $10/hour and you
give them a 50 cent raise, what percent
increase did they receive???
• Answer: 5%
• Not!!!
• The “Real Wage” increase must
account for inflation
Cost of Living and Real Wage
• IF the inflation rate in your area is 2%
• THEN the Real wage increase is the
amount of the raise – inflation
• A 5% increase – 2% cost of inflation =
“real” pay increase of 3%
• How to determine inflation?
• CPI – Bureau of Labor Statistics, or…
Inflation Calculator
http://www.bls.gov/
The Job as a Determinant of
Financial Compensation
• The job itself continues to be a factor,
especially for those employers who
have internal pay equity as a primary
consideration
• Organizations pay for the value they
attach to certain duties, responsibilities,
and other job-related factors such as
working conditions
Compensation Policies
• Pay leaders – pay higher wages and
salaries
• Market rate, or going rate – pay what
most employers pay for same job
• Pay followers – pay below market rate
because poor financial condition or believe
they do not require highly capable
employees
Legally Required Benefits
Social Security
Unemployment Compensation
Workers’ Compensation
FMLA
Internal Revenue Code (IRC)
 FICA = Federal Insurance Contributions
Act:
 Finances Social Security Old-Age
 Survivor and Disability Insurance programs
 (OASDI)
 FUTA = Federal Unemployment Tax Act
 Unemployment taxes
Calculating Unemployment
Compensation
• Two Methods
• WorkOne will evaluate for you what is
the most economically feasible
• Pay per case, or…
• Pay a set premium
Unemployment Compensation
• When it is a true “layoff”, the answer is
easy
• A termination often triggers an
investigation
• How do you “win”?...
• Documentation and timely response to
inquiries!!!
Workers’ Compensation
•
•
•
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Train in an understandable manner
NIOSH FACEWeb case examples
Offer light duty
Always obtain a full release for all
employees who are coming back to full
duty
• You can consider self-paying to a
predetermined dollar amount to
decrease premium cost!
FMLA
• “Covered” employers must grant “eligible
employees” up to a total of 12 work weeks of
unpaid leave during any 12-month period for
one or more of the following reasons:
• for the birth and care of the newborn child
• for placement with the employee of a son or
daughter for adoption or foster care;
• to care for an immediate family member (spouse,
child, or parent) with a serious health condition; or
• To take medical leave when the employee is
unable to work because of a serious health
condition.
FMLA
• “Covered Employer” = 50 or more employees
in a 75 mile radius
• “Eligible Employee” =
• (1) Has been employed by the employer for at
least 12 months, and
• (2) Has been employed for at least 1,250 hours of
service during the 12-month period immediately
preceding the commencement of the leave, and
• (3) Is employed at a worksite where 50 or more
employees are employed by the employer within
75 miles of that worksite.
FMLA – What’s New???
• Military related family leave
• As Amended by Section 585 of the National
Defense Authorization Act for FY 2008:
“an eligible employee who is the spouse, son,
daughter, parent, or next of kin of a covered
servicemember shall be entitled to a total of 26
workweeks of leave during a 12-month period
to care for the servicemember. The leave
described in this paragraph shall only be
available during a single 12-month period.”
Discretionary Benefits
Income Protection
Disability Insurance
Life Insurance
Retirement Plans
Health Protection Programs
Paid Time-Off
Accommodation and Enhancement
Employer Costs for C&B’s
• Private Industries
• Total comp avg = $27.31 / hour
• Wages and salaries = $19.12 / hour
• Benefits = $8.18 / hour (30 %)
• Life, health and disability = $2.22/hour
• Legally required (Soc Sec, Medicare,
unemployment, workers’ comp) = $2.19/hour
• Paid leave (holidays, vacation, sick) = $1.91/hour
Cost Advantage
• Employers may be able to purchase benefits
at a lower cost than individuals
• Example: Health Insurance?
• More covered lives = decreased risk
• High risk folks have less impact on large
groups
• “Economies of Scale”
Less Expensive Discretionary
Benefits
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•
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Disability Insurance
Life Insurance
Paid Time Off
401(k)
Unique Benefits
• Aflac
• Prepaid Legal
• The Turkey Dinner
The EEOC and Benefits
• Equal Pay Act – 1963
• “wages” includes benefits
• Title VII of the Civil Rights Act - 1964
• “compensation” includes benefits
• Age Discrimination in Employment Act – 1967
• specific reference to benefits
• early retirement programs must be voluntary
Personnel Law Concerns for
Agricultural Employers:
• How to write a legally defensible job
description
• Hispanic workers: legal or not?
• Q&A…ask what’s on your mind!
Job Analysis: THE Basic Tool!
1. What physical and mental tasks does
the worker accomplish?
2. When is the job to be completed?
3. Where is the job to be accomplished?
4. How does the worker do the job?
5. Why is the job done?
6. What qualifications are needed to
perform the job?
Job Analysis:
THE Basic Human Resource Management Tool
Tasks
Responsibilities
Duties
Human Resource
Planning
Recruitment
Selection
Training and
Development
Job
Descriptions
Job
Analysis
Performance Appraisal
Compensation and
Benefits
Job
Specifications
Safety and Health
Employee and Labor
Relations
Knowledge
Skills
Abilities
Legal Considerations
Job Analysis for Teams
Job Analysis Methods
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Questionnaires
Observation
Interviews
Employee recording
Combination of
methods
O*Net Online
Legal Defensibility
• Avoid words like “young”, “energetic”
• If employment tests are used, make
sure they are job related
• Publish open positions in a variety of
locations that also reflect the workforce
• Always strive to hire for “Best Fit” for the
job
Hispanic Workers
• Must accept ID that “reasonably
appears” valid
• Checking Soc Sec Numbers…you must
check ALL to avoid litigation
• The “no match” letter…then what do
you do?
First Step: The “No Match Letter”
• Offer the employee a reasonable time
frame to come forward with valid
identification
• A couple of days will usually suffice
Now it is Your Turn…
Questions?
Concerns?
Opportunities for Improvement?
Thank You!
Sarah Sanders Smith
Office: (219) 785-5684
Cell: (219) 363-4739
E mail: ssmith@pnc.edu