Chapter © 2010 South-Western, Cengage Learning Pay, Benefits, and Working Conditions Understanding Pay and Benefits Work Schedules and Unions 6

© 2010 South-Western, Cengage Learning SLIDE 2 Chapter 6 Gross Pay Gross pay is the total amount you even before any deductions are subtracted. When all deductions are taken out of your gross pay, the amount left is your Net Pay Gross Pay – Deductions = Net Pay

© 2010 South-Western, Cengage Learning SLIDE 3 Chapter 6 Gross Pay Calculation Hourly wages Overtime is time worked beyond the regular hours. How many hours are in the normal work week? Overtime rate is ?? times the regular rate (usually!). Regular Pay + Overtime Pay = Gross Pay Hours worked * Rate = Gross Pay

© 2010 South-Western, Cengage Learning SLIDE 4 Chapter 6 Example of Gross Pay Calculations for Hourly Employee Type of PayHoursRateAmount Regular pay×$8.00 per hour= Overtime pay×= Gross pay If a wage earner worked 44 hours this week….. 40 $ $12.00 per hour $48.00 $368.00

© 2010 South-Western, Cengage Learning SLIDE 5 Chapter 6 Salary Salary may be stated as an annual (yearly) amount. Common pay periods Monthly Twice a month Every two weeks Weekly Semi annual Advantage over wage earner???? Salary = Gross Pay

© 2010 South-Western, Cengage Learning SLIDE 6 Chapter 6 Example of Gross Pay Calculations for Salaried Employee Annual Salary ÷ Pay Period per Year = Gross Pay per Paycheck Monthly$24,000÷12=$2,000 Twice a month$24,000÷24=$1,000 Every two weeks$24,000÷26=$ Weekly$24,000÷52=$461.54

© 2010 South-Western, Cengage Learning SLIDE 7 Chapter 6 Deductions Amounts subtracted from your gross pay are called deductions. Some deductions are required by law. Other deductions are optional. Regular Pay + Overtime Pay = Gross Pay Gross Pay – Deductions = Net Pay

© 2010 South-Western, Cengage Learning Payroll Tax Deductions Following taxes have to be withheld from an employee’s paycheck. This is mandatory and required by law. Usually, employers will hire third party companies like ADP to handle payroll processing. Payroll tax deductions include the following Income tax withholding for federal, state and city Federal Insurance Contributions Act (FICA) requires employers to withhold Social Security and Medicare Social Security tax withholding- tax rate is 12.4 percent Employee pays 6.2 and Employer pays 6.2 Medicare tax withholding- tax rate 2.9 percent Employee pays 1.45 and Employer pays 1.45 Calculate how much FICA is withheld for John Doe for wages of $1,000 per week. Social Security: $1,000 x = $62.00 Medicare: $1,000 x = $14.50 Total is $62 + $14.50 = $76.50 SLIDE 8 Chapter 6

© 2010 South-Western, Cengage Learning Voluntary Payroll Deductions Voluntary payroll deductions are withheld from paycheck only if the employee has agreed to certain deductions. Voluntary payroll deductions include the following: Health insurance (medical, dental, and eye-care) Life insurance Pension plan - 401k, 403b (state employees) Employee stock purchase plans (ESPP ) Union Dues Calculate John Does take home pay for a week. He has the following voluntary deductions taken out each week: health insurance, $100; pension plan $25; union dues $25. Figure out his total voluntary deductions = $150 Gross Pay $1, Federal Income Tax $ ( ) - Social Security $ Medicare $ Voluntary deductions $ Net Pay $ **(without federal income tax) SLIDE 9 Chapter 6 In addition to the basic benefits package

© 2010 South-Western, Cengage Learning Net Pay Net pay is what the person gets to take home to use as they want or need to. A person should plan on paying certain bills first before spending their money on other things. Such as: housing (rent or a mortgage payment), food, and utilities (water, gas, electricity, phone, garbage service, etc.). Once these bills are paid then the person can use their money on things like going to the movies, eating out, buying new clothes, etc. SLIDE 10 Chapter 6

© 2010 South-Western, Cengage Learning SLIDE 11 Chapter 6 Self-Employed Requirements Self employed pays twice, because you are the employer and the employee! The total tax rate is 15.3 percent of gross income. Social Security tax is 12.4 percent Medicare tax is 2.9 percent

© 2010 South-Western, Cengage Learning BENEFITS AND INCENTIVES What is the # 1 benefit we all want????? SLIDE 12 Chapter 6

© 2010 South-Western, Cengage Learning SLIDE 13 Chapter 6 Insurance Most large companies provide group insurance plans for all employees. Common types of insurance plans Group health insurance (#1 request) Group life insurance Group dental insurance Group vision insurance Why do you want Group Insurance???

© 2010 South-Western, Cengage Learning SLIDE 14 Chapter 6 Paid Vacation Most businesses provide full-time employees with a set amount of paid vacation time. What is the “normal” amount of time? The amount of vacation time often varies with years of service.

© 2010 South-Western, Cengage Learning SLIDE 15 Chapter 6 Paid Holidays Paid holidays typically include: Christmas, Thanksgiving, Fourth of July, Labor Day, and Memorial Day Other holidays that many companies consider paid holidays are New Year’s Day, Veterans Day, Martin Luther King Day, and Presidents Day. NEW policy---give employees set number of days let them choose when.

© 2010 South-Western, Cengage Learning SLIDE 16 Chapter 6 Sick Pay vs. Personal Days Sick pay an allowance of days each year for illness, with pay as usual. (customary to receive three to ten days a year) What is an example of legitimate illness? Some employers allow personal days so that employees can attend to important matters without calling in “sick” when they aren’t sick.

© 2010 South-Western, Cengage Learning SLIDE 17 Chapter 6 Leaves of Absence Some employers allow employees to temporarily leave their jobs (without pay) and return to their jobs at a later time. There are often restrictions on the reason for a leave, such as having children or completing education. Disadvantage: Unpaid Advantage: Job security

© 2010 South-Western, Cengage Learning SLIDE 18 Chapter 6 Pension and Savings Plans Pension plans are funded by the employer. Retired employees receive a monthly check. Employees become vested (entitled to the full retirement account) after a specified period of time, such as five years.

© 2010 South-Western, Cengage Learning SLIDE 19 Chapter 6 Employer-Sponsored Retirement Savings Plans Common plans 401(k) for private employers 403(b) for government employers Employees put money in these accounts. The employer may also (but is not required to) contribute money to the employee’s account.

© 2010 South-Western, Cengage Learning SLIDE 20 Chapter 6 Employee Services Employee services can include: Child Care Employee discounts Social and recreational programs Free parking Tuition reimbursement for college courses Wellness programs Counseling for employee problems

© 2010 South-Western, Cengage Learning SLIDE 21 Chapter 6 Profit Sharing Profit sharing is a plan that allows employees to receive a portion of the company’s profits at the end of the corporate year. The more profits the company makes, the more the company has to share with employees.

© 2010 South-Western, Cengage Learning SLIDE 22 Chapter 6 Bonuses and Stock Options Bonuses are incentive pay based on quality of work done, years of service, or company sales or profits. Stock options give employees the right to buy a set number of shares of the company’s stock at a fixed price.

© 2010 South-Western, Cengage Learning SLIDE 23 Chapter 6 OTHER BENEFITS (PERKS) Company car Mileage allowance Daily allowance to cover hotel, meals, and other travel expenses Cell phone Laptop

© 2010 South-Western, Cengage Learning GE Benefits T- Mobile Hampton Roads Sanitation District (HRSD) SLIDE 24 Chapter 6

© 2010 South-Western, Cengage Learning FLEXIBLE WORK ARRANGEMENTS SLIDE 25 Chapter 6

© 2010 South-Western, Cengage Learning SLIDE 26 Chapter 6 Flextime Flexible scheduling, or flextime, is a work schedule that allows employees to choose their working hours within defined limits. Core time period Negotiated starting and ending times

© 2010 South-Western, Cengage Learning SLIDE 27 Chapter 6 Compressed Workweek A compressed workweek is a work schedule that fits the normal 40-hour workweek into less than five days. The typical compressed workweek is ten hours a day for four days, followed by three days off.

© 2010 South-Western, Cengage Learning SLIDE 28 Chapter 6 Job Rotation Employees “rotate” from one task to another. Advantages of job rotation include: Gives employees variety in their and allows them to use different skills Reduces boredom and burnout, leading to greater job satisfaction Allows for free exchange of information and ideas Keeps work flowing when one worker is absent

© 2010 South-Western, Cengage Learning SLIDE 29 Chapter 6 Job Sharing Job sharing is a job design in which two people share one full-time position. They split the salary and benefits according to each person’s contributions. Do you know anyone with this option??

© 2010 South-Western, Cengage Learning SLIDE 30 Chapter 6 Permanent Part-time Many employees choose to work only part time (16–25 hours a week). Companies can save on salary and benefits by hiring permanent part-time employees.

© 2010 South-Western, Cengage Learning SLIDE 31 Chapter 6 Telecommuting Advances in technology have made telecommuting possible. Telecommuters can work at home or on the road and stay in contact with their manager and coworkers through , fax, cell phone, and other technologies. Could you do this???

© 2010 South-Western, Cengage Learning SLIDE 32 Chapter 6 Labor Unions A labor union is a group of people who work in the same or similar occupations,who are joined together for a common purpose and for the benefit of all employees in these occupations. Name some…

© 2010 South-Western, Cengage Learning Examples International Brotherhood of Electrical Worker United Auto Workers International Union of Operating Engineers National Education Association of the United States National Education Association of the United States American Postal Workers Union American Nurses Association SLIDE 33 Chapter 6

© 2010 South-Western, Cengage Learning SLIDE 34 Chapter 6 Functions of Unions Recruit new members Engage in collective bargaining Support political candidates who support members’ interests Provide support services for members

© 2010 South-Western, Cengage Learning SLIDE 35 Chapter 6 Collective Bargaining The main function of unions is collective bargaining (negotiations between employers and a group of employees aimed at reaching agreements to regulate working conditions) Terms of the contract set working conditions, wages, overtime rates, hours of work, and benefits. What is unfair in collective bargaining?

© 2010 South-Western, Cengage Learning SLIDE 36 Chapter 6 Professional Organizations Consists of people in a particular occupation that requires considerable training and specialized skills. Establish and maintain professional standards Administer exams, accreditations, and admission requirements Professional organizations also collect dues from members and provide support services. Name some…..

© 2010 South-Western, Cengage Learning Examples American bar associations National Education Association National Business Education Association Business Teachers Association of New York State National Health Career Association American Medical Association National Board for Certified Counselors American Counseling Association Boston Society of Architects American Business Women's Association American Society of Hispanic Economists SLIDE 37 Chapter 6