PAY, BENEFITS & WORKING
CONDITIONS
STARTING A NEW JOB
 Union?
 Sick Pay, Bereavement Leave, Holidays, Paid Vacation
 Pension plan/Retirement
 Insurance
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Health
Dental
Vision
Life
 Child Care Facilities?
 Job sharing?
2 TYPES OF PAY
 Hourly
 Salary
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
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
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)
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
SOCIAL SECURITY/MEDICARE
 FICA – Federal Insurance Contributions Act – (Social Security & Medicare)
 OASDI – Old Age, Survivors, Disability Insurance (Social Security)
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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
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
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”
Gross
$475.00
Deductions
OAISD
Medicare
Fed. Inc. Tax
$29.45
6.89
45.00
Total Deductions
81.34
Net Pay
$393.66
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%)
BENEFITS AND INCENTIVES
 Benefits – Forms of employee compensation in addition to pay
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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
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
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
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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
CHILD CARE, SICK PAY, LEAVES OF
ABSENCE
 Some companies provide on-site child-care facilities or even coverage of childcare 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
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
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
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
PENSION AND SAVINGS PLANS
 Pension plans for retirement
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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
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
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
WORK ARRANGEMENTS
 Altered workweeks
 Job rotation
 Job sharing
 Telecommuting
ALTERED WORKWEEKS
 Flextime – allow employees to choose their working hours within defined limits
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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)
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
JOB SHARING
 Job sharing – two people share one full-time position
 Split salary and benfits
 Nice for people who want to work part-time
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