1. Ensuring Employee Benefits and Compensation1 2
Human Resources Management and Supervision
OH 12-1

2. Employment Cycle Instructor’s Notes
Suggest that benefits offered by the foodservice operation are of significant interest to potential employees.
After hiring, employees must learn about benefits and receive written plan information.
During the employees’ time at the operation, managers must communicate information about some types of benefits and help employees to take advantage of them.
If applicable, refer students to page 314 to note the type of information that managers should be able to answer about each benefit plan offered by the operation.
Indicate that managers must understand several important concepts about employee benefit plans.

3. Employment Cycle
Benefits offered by the foodservice operation are of significant interest to potential employees.
After hiring, employees must learn about benefits and receive written plan information.
During the employees’ time at the operation, managers must communicate information about some types of benefits and help employees to take advantage of them.
Page 314 are listed information that managers should be able to answer about each benefit plan offered by the operation.
Managers must understand several important concepts about employee benefit plans.
Instructor’s Notes
Suggest that benefits offered by the foodservice operation are of significant interest to potential employees.
After hiring, employees must learn about benefits and receive written plan information.
During the employees’ time at the operation, managers must communicate information about some types of benefits and help employees to take advantage of them.
If applicable, refer students to page 314 to note the type of information that managers should be able to answer about each benefit plan offered by the operation.
Indicate that managers must understand several important concepts about employee benefit plans.

4. Basics of Employee Benefits Plans
Federal law requires most types of plans to have a plan administrator who is responsible for administering the plans.
Employee benefit plans describe the non-wage compensation an employee is eligible to receive.
Employees must enroll for benefit plans.
Plan providers offer the benefits.
A participant is a member of a plan; a beneficiary is entitled to receive benefits under the plan.
Instructor’s Notes
Group plans provide essentially the same benefit to multiple people. Example—a life insurance plan offered to all company employees.
Individual plans provide a benefit for one person or family. Example—a person buys a life insurance policy from an independent insurance agent not affiliated with an employer or union.
Federal law requires most types of plans to have a plan administrator who is responsible for administering the plans.
Indicate that there are numerous types of employee benefits that can be offered.

5. Employee Benefit Programs Mandated by Federal Government
Family and medical leave
Healthcare coverage after termination (if covered before termination)
Military leave
Social Security
Unemployment insurance
Workers’ compensation
Instructor’s Notes
Explain that, in addition to mandated employee benefits, many operations also provide numerous other benefit options.

6. Common Voluntary Benefits
Uniform benefits
Uniforms and dress codes provide a professional look that impacts the customers’ impression of the operation.
Proper uniforms also provide some measure of personal protection.
Meal benefits
Many operations provide meal benefits by offering meals to employees at a reduced or no cost.
Instructor’s Notes
Uniforms and dress codes provide a professional look that impacts the customers’ impression of the operation.
Proper uniforms also provide some measure of personal protection.
Many operations provide meal benefits by offering meals to employees at a reduced or no cost.
Indicate that healthcare plans are another common voluntary benefit.

7. Common Voluntary Benefits— Healthcare Plans
Common types
Fee-for-service plans: Fee-for-service plans are administered by insurance companies that directly pay service providers, such as physicians, or reimburse plan participants.
Preferred provider organizations (PPOs): Preferred provider organizations discount the cost of their services in exchange for more patients and timely payment..
Instructor’s Notes
Typically, employers offer two or more group healthcare plans from which their employees choose one, and both employers and employees share the premium.
Fee-for-service plans are administered by insurance companies that directly pay service providers, such as physicians, or reimburse plan participants.
Preferred provider organizations discount the cost of their services in exchange for more patients and timely payment.
The cost of healthcare through a health maintenance organization is almost entirely prepaid by premiums, and service providers are part of the HMO.
Some employers establish flexible spending account programs that allow employees to contribute a certain amount of income before taxes to their individual account that is used to pay certain medical expenses not covered by the employee’s healthcare plan.
Explain that another common voluntary employee benefit is an employee assistance program.

8. Common Voluntary Benefits— Healthcare Plans
Common types continued:
Health maintenance organizations (HMOs): The cost of healthcare through a health maintenance organization is almost entirely prepaid by premiums, and service providers are part of the HMO.
Some employers establish flexible spending account programs that allow employees to contribute a certain amount of income before taxes to their individual account that is used to pay certain medical expenses not covered by the employee’s healthcare plan.
Instructor’s Notes
Typically, employers offer two or more group healthcare plans from which their employees choose one, and both employers and employees share the premium.
Fee-for-service plans are administered by insurance companies that directly pay service providers, such as physicians, or reimburse plan participants.
Preferred provider organizations discount the cost of their services in exchange for more patients and timely payment.
The cost of healthcare through a health maintenance organization is almost entirely prepaid by premiums, and service providers are part of the HMO.
Some employers establish flexible spending account programs that allow employees to contribute a certain amount of income before taxes to their individual account that is used to pay certain medical expenses not covered by the employee’s healthcare plan.
Explain that another common voluntary employee benefit is an employee assistance program.

9. Common Voluntary Benefits— Employee Assistance Programs (EAPs)
EAPs provide counseling and other services to individuals and families to help them deal with problems that impact their ability to work effectively.
When a person decides to seek help through an EAP, he/she contacts the EAP to make an appointment.
If EAP is suggested in corrective action, it cannot be required that an employee use EAP, only that inappropriate behavior must be corrected.
In the text, page 323, you can review a list of employee problems that may be addressed in an EAP
Instructor’s Notes
If applicable, refer students to page 323 to review the list of employee problems that may be addressed in an EAP.
Typically, when a person decides to seek help through an EAP, he/she contacts the EAP to make an appointment.
Managers must know about this program and provide information to applicable employees.
Indicate that retirement benefits are also made available to many foodservice employees.

10. Common Voluntary Benefits— Retirement Benefits
Retirement benefits provide regular payments to employees who retire because of age.
Defined benefits (DB)
The employee is guaranteed certain payments upon retirement (the final value of the benefit is defined).
Defined contribution (DC)
Payments are made into an account owned by the employee (the employer’s or employee’s contribution is defined).
Instructor’s Notes
Defined benefits are traditional pension plans paid for by the employer and are becoming less popular today.
Examples of defined contribution plans include 401(k) plans, Keogh plans, and individual retirement accounts.
Employees typically contribute a percentage of their pretax income to a defined contribution account, and employers match a portion of that contribution.
If applicable, refer students to Exhibit 12g (page 326) to see an example of the value of investing tax-deferred income into a retirement plan.
Note that both types of retirement benefits have several things in common.

11. Common Elements of Retirement Benefits
Both have rules for eligibility.
Benefits belong to the employee and cannot be revoked even if the employee leaves before retirement.
Instructor’s Notes
Rules of eligibility address the number of hours (or days) per year and the number of years that an employee must work to be entitled to retirement benefits.
Calculations for the amount of benefits are based on salary, length of employment, and number of hours worked.

12. Saving for Retirement
This young employee is probably not thinking about retirement. However, he should recognize the importance of financial independence after retirement and begin saving for it now.
Instructor’s Notes
To comply with retirement and health benefit laws, managers must understand three federal laws.

13. Employee Retirement Income Security Act (ERISA)
Protects employee pensions and healthcare plans from incompetent, unethical, and unfair administration
ERISA helps ensure that benefits promised to employees will be available when the employees need them.
Participants must receive notification about changes in the plan.
Instructor’s Notes
ERISA requires that a designed plan administrator provide employees with certain documents related to their plans.
If applicable, refer students to the summary plan description (SPD) on page 329 in the chapter. Participants must also receive notification about changes in the plan.
State that another federal law provides further protection.

14. Consolidated Omnibus Reconciliation Act (COBRA)
Extends healthcare coverage for people who would otherwise lose healthcare insurance
COBRA enables eligible people to continue their employer’s healthcare group plan for a limited time if they pay their own and the employer’s share of the cost, plus, sometimes, an administrative fee.
Exhibit 12i (page 330) list of events that qualify an employee for continuation of coverage under COBRA.
COBRA also requires plan administrators to communicate specific information to qualified beneficiaries. Exhibit 12j, page 331,reviews communication requirements for plan administrators.
Instructor’s Notes
COBRA enables eligible people to continue their employer’s healthcare group plan for a limited time if they pay their own and the employer’s share of the cost, plus, sometimes, an administrative fee.
If applicable, refer students to Exhibit 12i (page 330) in the chapter to note events that qualify an employee for continuation of coverage under COBRA.
COBRA also requires plan administrators to communicate specific information to qualified beneficiaries. (If applicable, refer students to Exhibit 12j to review communication requirements for plan administrators.)
Note that a third federal law also relates to healthcare concerns.

15. Health Insurance Portability and Accountability Act (HIPAA)
Helps ensure that people do not lose access to healthcare because of preexisting conditions, other health status factors, or limits on plan enrollment periods.
Instructor’s Notes
Review the three main functions of HIPPA on page 332.
A preexisting condition is a medical condition for which a person has sought medical treatment before applying to join a healthcare plan.
Exclusion periods exclude preexisting conditions from coverage for a specified time after enrollment and are allowed as long as they are applied equally to all plan participants.
Under HIPPA, when a person joins a plan, he or she cannot be charged a higher rate because of a preexisting condition or health factor.
HIPPA requires healthcare plans to provide former plan participants with a document showing that a person was covered under the plan, and the starting and ending dates of coverage. (If applicable, refer students to Exhibit 12m on page 334 to review a sample certificate of group healthcare plan coverage.)
Explain that HIPAA allows people to enroll in group healthcare plans at certain times other than open enrollment periods. If applicable, refer students to special enrollment rules that apply in these situations that are listed on pages 334–335 in the chapter.
Ask students to answer the following questions.

16. Health Insurance Portability and Accountability Act (HIPAA)
Three main functions:
To give people the right to add family members to their group healthcare plan at times other than open enrollment, under certain circumstances
To protect people from being excluded from healthcare plans or denied coverage because of a preexisting conditions
To protect people from discriminatory pricing or treatment under a plan because of preexisting condition or other health status facors
Instructor’s Notes
Review the three main functions of HIPPA on page 332.
A preexisting condition is a medical condition for which a person has sought medical treatment before applying to join a healthcare plan.
Exclusion periods exclude preexisting conditions from coverage for a specified time after enrollment and are allowed as long as they are applied equally to all plan participants.
Under HIPPA, when a person joins a plan, he or she cannot be charged a higher rate because of a preexisting condition or health factor.
HIPPA requires healthcare plans to provide former plan participants with a document showing that a person was covered under the plan, and the starting and ending dates of coverage. (If applicable, refer students to Exhibit 12m on page 334 to review a sample certificate of group healthcare plan coverage.)
Explain that HIPAA allows people to enroll in group healthcare plans at certain times other than open enrollment periods. If applicable, refer students to special enrollment rules that apply in these situations that are listed on pages 334–335 in the chapter.
Ask students to answer the following questions.

17. Mandatory Benefits—Social Security
A federal pension program providing
Retirement benefits
Survivor benefits
Disability benefits
Medicare
Both employers and employees pay for Social Security benefits through a payroll tax.
Instructor’s Notes
Both employers and employees pay for Social Security benefits through a payroll tax. The value of one’s Social Security benefit depends in large part on how much income the employee earned, and when the payroll benefit period begins.
If applicable, ask students to review the information about the full retirement age for social security benefits found in Exhibit 12n (page 337).
Note that unemployment insurance is a second mandatory benefit.

18. Mandatory Benefits— Unemployment Insurance
Provides a temporary reduced level of income to employees who lose their jobs involuntarily.
Some employees are typically not eligible for unemployment insurance including those who
Are fired
Turn down a job offer of suitable work
Go on strike or do not work because of a labor dispute
Accept certain types of income such as workers’ compensation, retirement or Social Security pension, or Social Security payments
Workers’ compensation is a third mandatory benefit.
Instructor’s Notes
The federal government requires unemployment insurance, but it is implemented by states who have their own rules about the amount and length of benefits to be paid.
Note that some employees are typically not eligible for unemployment insurance including those who
Are fired
Turn down a job offer of suitable work
Go on strike or do not work because of a labor dispute
Accept certain types of income such as workers’ compensation, retirement or Social Security pension, or Social Security payments
Indicate that workers’ compensation is a third mandatory benefit.

19. Workers’ Compensation
Kitchens can be dangerous places to work if equipment is improperly operated and/or if operating procedures are not consistently followed.
Instructor’s Notes
Workers’ compensation is a system of providing financial compensation to employees or their survivors when an individual is injured at work, becomes sick because of the work environment, or dies from a workplace situation.
Workers’ compensation is “no fault”—employers are financially responsible to take care of injured or ill employees regardless of who (employee or employer) causes the illness.
Foodservice operations typically purchase workers’ compensation insurance to pay for any claims.
Indicate that the Family and Medical Leave Act (FMLA) is another mandatory program that provides benefits to many employees.

20. Workers’ Compensation
Workers’ compensation is a system of providing financial compensation to employees or their survivors when an individual is injured at work, becomes sick because of the work environment, or dies from a workplace situation.
Workers’ compensation is “no fault”—employers are financially responsible to take care of injured or ill employees regardless of who (employee or employer) causes the illness.
Foodservice operations typically purchase workers’ compensation insurance to pay for any claims.
Instructor’s Notes
Workers’ compensation is a system of providing financial compensation to employees or their survivors when an individual is injured at work, becomes sick because of the work environment, or dies from a workplace situation.
Workers’ compensation is “no fault”—employers are financially responsible to take care of injured or ill employees regardless of who (employee or employer) causes the illness.
Foodservice operations typically purchase workers’ compensation insurance to pay for any claims.
Indicate that the Family and Medical Leave Act (FMLA) is another mandatory program that provides benefits to many employees.

21. Mandatory Benefits—Family and Medical Leave Act (FMLA)
Allows qualified employees to take up to twelve weeks of continuous or intermittent unpaid leave in a twelve-month period for certain medical or family-care situations.
FMLA requires employees to allow unpaid leave when employees
Have a serious medical condition
Must take care of a child, spouse, or parent with a serious medical condition
Have a newborn child or adopted child
Instructor’s Notes
FMLA requires employees to allow unpaid leave when employees
Have a serious medical condition
Must take care of a child, spouse, or parent with a serious medical condition
Have a newborn child or adopted child
If the employee has health insurance through the employer, the employer must continue to provide this benefit during the leave, and the employee must pay any premiums that he/she would normally pay, including healthcare insurance premiums.
Employers must comply with FMLA if they have fifty or more full-time employees who live within seventy to seventy-five miles of the business.
To be eligible for FMLA benefits, covered employees must have worked for the operation for one year and a minimum of 250 hours in the previous 12-month period.
Indicate that a military leave of absence must also be provided for applicable employees.

22. Mandatory Benefits—Family and Medical Leave Act (FMLA)
If the employee has health insurance through the employer, the employer must continue to provide this benefit during the leave, and the employee must pay any premiums that he/she would normally pay, including healthcare insurance premiums.
Employers must comply with FMLA if they have fifty or more full-time employees who live within seventy to seventy-five miles of the business.
To be eligible for FMLA benefits, covered employees must have worked for the operation for one year and a minimum of 250 hours in the previous 12-month period.
Military leave must also be provided for applicable employees
Instructor’s Notes
FMLA requires employees to allow unpaid leave when employees
Have a serious medical condition
Must take care of a child, spouse, or parent with a serious medical condition
Have a newborn child or adopted child
If the employee has health insurance through the employer, the employer must continue to provide this benefit during the leave, and the employee must pay any premiums that he/she would normally pay, including healthcare insurance premiums.
Employers must comply with FMLA if they have fifty or more full-time employees who live within seventy to seventy-five miles of the business.
To be eligible for FMLA benefits, covered employees must have worked for the operation for one year and a minimum of 250 hours in the previous 12-month period.
Indicate that a military leave of absence must also be provided for applicable employees.

23. Mandatory Benefits—Uniformed Services Employment and Reemployment Rights Act
Protects employees from workplace discrimination based upon an obligation to, application for, or interest in military service.
While on military leave, USERRA requires the employer to continue all of the employee’s benefits as if the employee were not on leave. Note: employers must communicate information about USERRA to their employees.
USERRA poster illustrated in Exhibit 12r (page 343).
Instructor’s Notes
The main purpose of USERRA is to ensure that military personnel are not penalized when they return to work from military duty.
While on military leave, USERRA requires the employer to continue all of the employee’s benefits as if the employee were not on leave. Note: employers must communicate information about USERRA to their employees. (If applicable, refer students to the USERRA poster illustrated in Exhibit 12r (page 343).

24. Keeping Current on Benefits and Related Laws
This manager and employee must know about many work- related concerns. The wide array of voluntary and mandatory employee benefits that (seemingly) always change are high on this list.
Instructor’s Notes
1. Indicate that it is important to keep current on benefits and related laws.

25. Keeping Current on Benefits and Related Laws continued
Benefit laws are numerous and complex.
Noncompliance can be expensive (or worse!).
All managers must be trained in employee benefits, policies, procedures, and workplace laws.
Instructor’s Notes
In larger operations, human resources staff may assume responsibility for informing employees about changes as they occur.
Managers in all sizes of operations must follow policies to help employees receive the benefits to which they are entitled.
If applicable, ask students to review the list of ways that managers can update their knowledge about changes in benefits laws that are noted in the chapter (page 345).
Note that managers must help ensure that legal wages are paid to all employees.

26. Ensuring Legal Wages Fair Labor Standards Act
Provides minimum wage and overtime pay with exceptions for
Tipped employees minimum wage
Youth minimum wage
Subminimum wage
Instructor’s Notes
Remind students that tipped employees may be paid a lower cash wage when their tips are large enough to ensure that the basic minimum wage is met.
Indicate that minimum wage exceptions are allowed only under very specific circumstances.

27. Legal Wages
Full-time employees are generally expected to work forty hours per week.
Hourly employees receive overtime pay (one and a half times hourly rate).
Employers using tip credits must notify the employees and show that cash wages and tips equal the minimum wage.
Instructor’s Notes
Explain that use of the tip credit provision is complex. If applicable, ask students to note the list of topics covered by tip credit rules on pages 348–349.

28. Tip Income Details Employees and employers must report tip income.
Employees must report tips at least monthly.
Employers must report tip income from each employee and withhold taxes on tip income.
Instructor’s Notes
If applicable, refer students to Exhibit 12t (page 350) in the chapter to review the IRS Form 8027 used by the employer to report tip income and allocated tips for employees.
Note that employers must allot tip income amounts to employees who reported tips of less than 8 percent of sales.
Indicate that managers must ensure that employees receive the compensation they are due—but no more than they are due.

29. Ensuring Accurate Compensation
Managers must ensure that employees receive a correct paycheck.
Tracking the length of time and dates an employee has worked is also important to ensure proper retirement benefits.
Payroll administrator must ensure that all applicable items are deducted from each employee’s wages and forwarded to the correct agency, company, or account. Special payments due each employee must also be added to the paycheck.
Instructor’s Notes
Indicate that a person, department, or outside company is needed for payroll administration tasks.
Explain that the payroll administrator must ensure that all applicable items are deducted from each employee’s wages and forwarded to the correct agency, company, or account. Special payments due each employee must also be added to the paycheck.
It is necessary to track the number of days worked to determine vacation days.
Length-of-service information must be communicated to benefit plan administrators.
Note that the way the above and related tasks is done relates to the operation’s payroll system.

30. Ensuring Accurate Compensation
It is necessary to track the number of days worked to determine vacation days.
Length-of-service information must be communicated to benefit plan administrators.
Outside companies can be contracted to provide payroll administration tasks.
Instructor’s Notes
Indicate that a person, department, or outside company is needed for payroll administration tasks.
Explain that the payroll administrator must ensure that all applicable items are deducted from each employee’s wages and forwarded to the correct agency, company, or account. Special payments due each employee must also be added to the paycheck.
It is necessary to track the number of days worked to determine vacation days.
Length-of-service information must be communicated to benefit plan administrators.
Note that the way the above and related tasks is done relates to the operation’s payroll system.

31. Payroll System
A method for recording and tracking employees’ time and issuing paychecks
Managers must ensure that employees report the correct number of hours.
Methods range from manual timecards to electronic card readers.
Instructor’s Notes
In most payroll systems, managers must sign off on their employees’ time reports to verify information accuracy.
With computerized payroll systems, information may be electronically routed to those needing it, and data for numerous payroll calculations can be tracked and calculated as necessary.
If applicable, refer students to Exhibit 12v (page 352) in the chapter to note reasons why it is important to verify time reported by salaried workers.
Indicate that there are several payroll administration options.

32. Payroll Administration Options
Many operations outsource payroll administration.
Small operations may use a part-time bookkeeper and/or bookkeeping software.
Instructor’s Notes
Indicate that the “best” system involves considering the size of the organization and the data to be tracked.
If applicable, ask students to review the list of possible data that can be tracked in a payroll system that is listed on pages 353–354 in the chapter.

33. Controlling Labor Costs
Pay rates must be competitive with the local job market.
The operation’s total labor needs must be carefully considered.
Legal aspects of compensation must be considered as wage rates are established.
Instructor’s Notes
Emphasize that many businesses, including those outside of the restaurant industry, often compete for the same employees.
Indicate that minimum wage laws and others prohibiting discrimination in compensation must be followed as wage rates are established.
If applicable, refer students to Exhibit 12w (page 357) to note other federal laws prohibiting compensation discrimination.
Indicate that overtime must be controlled.

34. Controlling Overtime Overtime must be approved before it is incurred.
Employee hours worked should be monitored.
There are times when overtime is needed
Unforeseen needs
Coverage to train employees
Coverage for vacation and time-off
Instructor’s Notes
Indicate that there are times when overtime is needed
Unforeseen needs
Coverage to train employees
Coverage for vacation and time-off
Ask students to answer the following questions.

35. Key Term Review
Annuities—retirement plans in which regular payments continue for a specified period of time
Beneficiary—someone who is entitled to receive a benefit under a plan
Certificate of creditable coverage—document showing that a person was covered under a healthcare plan, and the starting and ending dates of that coverage
Compensation package—combination of benefits, wages, and incentives paid to an employee
Consolidated Omnibus Budget Reconciliation Act (COBRA)—federal regulation that extends healthcare coverage for people who would otherwise lose healthcare insurance after leaving their job
Instructor’s Notes
Annuities—retirement plans in which regular payments continue for a specified period of time
Beneficiary—someone who is entitled to receive a benefit under a plan
Certificate of creditable coverage—document showing that a person was covered under a healthcare plan, and the starting and ending dates of that coverage
Compensation package—combination of benefits, wages, and incentives paid to an employee
Consolidated Omnibus Budget Reconciliation Act (COBRA)—federal regulation that extends healthcare coverage for people who would otherwise lose healthcare insurance after leaving their job
Conventional indemnity plans—same as fee-for-service plans
Deductible—minimum out-of-pocket expenses that employees must pay under their healthcare coverage plan
Defined benefit (DB)—retirement benefit in which the employee is guaranteed certain payments upon retirement
Defined contribution (DC)—benefit that guarantees that certain payments will be paid into an account owned by an employee
Note that there were additional key terms discussed in the chapter. 35

36. Key Term Review
Conventional indemnity plans—same as fee-for- service plans
Deductible—minimum out-of-pocket expenses that employees must pay under their healthcare coverage plan
Defined benefit (DB)—retirement benefit in which the employee is guaranteed certain payments upon retirement
Defined contribution (DC)—benefit that guarantees that certain payments will be paid into an account owned by an employee
Instructor’s Notes
Annuities—retirement plans in which regular payments continue for a specified period of time
Beneficiary—someone who is entitled to receive a benefit under a plan
Certificate of creditable coverage—document showing that a person was covered under a healthcare plan, and the starting and ending dates of that coverage
Compensation package—combination of benefits, wages, and incentives paid to an employee
Consolidated Omnibus Budget Reconciliation Act (COBRA)—federal regulation that extends healthcare coverage for people who would otherwise lose healthcare insurance after leaving their job
Conventional indemnity plans—same as fee-for-service plans
Deductible—minimum out-of-pocket expenses that employees must pay under their healthcare coverage plan
Defined benefit (DB)—retirement benefit in which the employee is guaranteed certain payments upon retirement
Defined contribution (DC)—benefit that guarantees that certain payments will be paid into an account owned by an employee
Note that there were additional key terms discussed in the chapter.

37. Key Term Review continued
Employee assistance programs (EAPs)—provide counseling and other services to individuals and families to help them deal with a range of problems that impede their ability to function effectively at work
Employee benefit plan—program that describes the non- wage compensation or services that an employee is eligible to receive, and the circumstances under which the employee will receive them
Employee Retirement Income Security Act of (ERISA)—federal program designed to protect employee pensions and healthcare plans from incompetent, unethical, and unfair administration
Instructor’s Notes
Employee assistance programs (EAPs)—provide counseling and other services to individuals and families to help them deal with a range of problems that impede their ability to function effectively at work
Employee benefit plan—program that describes the non-wage compensation or services that an employee is eligible to receive, and the circumstances under which the employee will receive them
Employee Retirement Income Security Act of 1974 (ERISA)—federal program designed to protect employee pensions and healthcare plans from incompetent, unethical, and unfair administration
Enrollment—act of an employee signing up for a benefit plan
Exclusion period—length of time that a healthcare plan excludes coverage for preexisting conditions
Family and Medical Leave Act (FMLA)—federal program that gives qualified employees the right to take up to twelve weeks of continuous or intermittent unpaid leave in a rolling twelve-month period
Fee-for-service plans—healthcare plans administered by insurance companies that directly pay service providers or reimburse plan participants 37

38. Key Term Review continued
Enrollment—act of an employee signing up for a benefit plan
Exclusion period—length of time that a healthcare plan excludes coverage for preexisting conditions
Family and Medical Leave Act (FMLA)—federal program that gives qualified employees the right to take up to twelve weeks of continuous or intermittent unpaid leave in a rolling twelve-month period
Fee-for-service plans—healthcare plans administered by insurance companies that directly pay service providers or reimburse plan participants
Instructor’s Notes
Employee assistance programs (EAPs)—provide counseling and other services to individuals and families to help them deal with a range of problems that impede their ability to function effectively at work
Employee benefit plan—program that describes the non-wage compensation or services that an employee is eligible to receive, and the circumstances under which the employee will receive them
Employee Retirement Income Security Act of 1974 (ERISA)—federal program designed to protect employee pensions and healthcare plans from incompetent, unethical, and unfair administration
Enrollment—act of an employee signing up for a benefit plan
Exclusion period—length of time that a healthcare plan excludes coverage for preexisting conditions
Family and Medical Leave Act (FMLA)—federal program that gives qualified employees the right to take up to twelve weeks of continuous or intermittent unpaid leave in a rolling twelve-month period
Fee-for-service plans—healthcare plans administered by insurance companies that directly pay service providers or reimburse plan participants

39. Key Term Review continued
Flexible spending accounts (FSAs)—accounts that allow employees to contribute a certain amount of income before taxes to their individual account that can be used to pay medical expenses not covered by the employee’s healthcare plan
Garnishments—employee payments ordered by a court
Group plan—plan that provides essentially the same benefits to multiple people
Health Insurance Portability and Accounting Act (HIPAA)—federal program that helps ensure people do not lose access to healthcare because of preexisting conditions, other health status factors, or limits on a plan’s enrollment period
Instructor’s Notes
Flexible spending accounts (FSAs)—accounts that allow employees to contribute a certain amount of income before taxes to their individual account that can be used to pay medical expenses not covered by the employee’s healthcare plan
Garnishments—employee payments ordered by a court
Group plan—plan that provides essentially the same benefits to multiple people
Health Insurance Portability and Accounting Act (HIPAA)—federal program that helps ensure people do not lose access to healthcare because of preexisting conditions, other health status factors, or limits on a plan’s enrollment period
Health maintenance organizations (HMOs)—healthcare plan in which costs are almost entirely prepaid through premiums, and service providers are part of the HMO
Health savings accounts (HSAs)—same as flexible spending accounts
Individual plan—employee benefit plan that provides a benefit for one person or family
Leave of absence—period of time an employee does not work that is not covered by paid-time-off
Indicate that there were additional key terms discussed in the chapter. 39

40. Key Term Review continued
Health maintenance organizations (HMOs)— healthcare plan in which costs are almost entirely prepaid through premiums, and service providers are part of the HMO
Health savings accounts (HSAs)—same as flexible spending accounts
Individual plan—employee benefit plan that provides a benefit for one person or family
Leave of absence—period of time an employee does not work that is not covered by paid-time-off
Instructor’s Notes
Flexible spending accounts (FSAs)—accounts that allow employees to contribute a certain amount of income before taxes to their individual account that can be used to pay medical expenses not covered by the employee’s healthcare plan
Garnishments—employee payments ordered by a court
Group plan—plan that provides essentially the same benefits to multiple people
Health Insurance Portability and Accounting Act (HIPAA)—federal program that helps ensure people do not lose access to healthcare because of preexisting conditions, other health status factors, or limits on a plan’s enrollment period
Health maintenance organizations (HMOs)—healthcare plan in which costs are almost entirely prepaid through premiums, and service providers are part of the HMO
Health savings accounts (HSAs)—same as flexible spending accounts
Individual plan—employee benefit plan that provides a benefit for one person or family
Leave of absence—period of time an employee does not work that is not covered by paid-time-off
Indicate that there were additional key terms discussed in the chapter.

41. Key Term Review continued
Levies—employee payments taken by a government agency
Life events—events that change a family
Look-back period—six-month time frame for preexisting conditions under the Health Insurance Portability and Accountability Act (HIPAA)
Mandated—types of employee benefits that are required by federal or state governments
Instructor’s Notes
Levies—employee payments taken by a government agency
Life events—events that change a family
Look-back period—six-month time frame for preexisting conditions under the Health Insurance Portability and Accountability Act (HIPAA)
Mandated—types of employee benefits that are required by federal or state governments
Medicare—federally insured healthcare plan for people age 60–65 or older
Open enrollment period—times when employees can change their benefits or coverage under a benefit plan
Overtime—hours worked after which nonexempt employees must be paid 1.5 times their regularly hourly rate. Note: This definition is changed from the less-than-traditional definition found on page 348.
Participant—one who is a member of an employee benefit plan
Indicate that there were additional key terms covered in the chapter. 41

42. Key Term Review continued
Medicare—federally insured healthcare plan for people age 60–65 or older
Open enrollment period—times when employees can change their benefits or coverage under a benefit plan
Overtime—hours worked after which nonexempt employees must be paid 1.5 times their regularly hourly rate. Note: This definition is changed from the less-than-traditional definition found on page 348.
Participant—one who is a member of an employee benefit plan
Instructor’s Notes
Levies—employee payments taken by a government agency
Life events—events that change a family
Look-back period—six-month time frame for preexisting conditions under the Health Insurance Portability and Accountability Act (HIPAA)
Mandated—types of employee benefits that are required by federal or state governments
Medicare—federally insured healthcare plan for people age 60–65 or older
Open enrollment period—times when employees can change their benefits or coverage under a benefit plan
Overtime—hours worked after which nonexempt employees must be paid 1.5 times their regularly hourly rate. Note: This definition is changed from the less-than-traditional definition found on page 348.
Participant—one who is a member of an employee benefit plan
Indicate that there were additional key terms covered in the chapter.

43. Key Term Review continued
Payroll administrator—person, department, or outside company that ensures employee paychecks are issued
Payroll system—method for recording and tracking employee time and issuing paychecks
Pensions—regular retirement benefits (payments) that continue until the retiree dies
Person-hour—one hour of work done by one person
Instructor’s Notes
Payroll administrator—person, department, or outside company that ensures employee paychecks are issued
Payroll system—method for recording and tracking employee time and issuing paychecks
Pensions—regular retirement benefits (payments) that continue until the retiree dies
Person-hour—one hour of work done by one person
Plan administrator—designated person or entity required by federal law to be responsible for handling administrative tasks for an employee benefit plan
Plan provider—company offering an employee benefit such as an insurance company
Preexisting condition—medical condition for which a person has sought medical treatment before applying to join a healthcare plan.
Preferred provider organizations (PPOs)—healthcare plans in which service providers discount the cost of their services in exchange for more patients and timely payment
Indicate that there were additional key terms discussed in the chapter. 43

44. Key Term Review continued
Plan administrator—designated person or entity required by federal law to be responsible for handling administrative tasks for an employee benefit plan
Plan provider—company offering an employee benefit such as an insurance company
Preexisting condition—medical condition for which a person has sought medical treatment before applying to join a healthcare plan.
Preferred provider organizations (PPOs)— healthcare plans in which service providers discount the cost of their services in exchange for more patients and timely payment
Instructor’s Notes
Payroll administrator—person, department, or outside company that ensures employee paychecks are issued
Payroll system—method for recording and tracking employee time and issuing paychecks
Pensions—regular retirement benefits (payments) that continue until the retiree dies
Person-hour—one hour of work done by one person
Plan administrator—designated person or entity required by federal law to be responsible for handling administrative tasks for an employee benefit plan
Plan provider—company offering an employee benefit such as an insurance company
Preexisting condition—medical condition for which a person has sought medical treatment before applying to join a healthcare plan.
Preferred provider organizations (PPOs)—healthcare plans in which service providers discount the cost of their services in exchange for more patients and timely payment
Indicate that there were additional key terms discussed in the chapter.

45. Key Term Review continued
Premium—monthly fee paid by employers and employees for a healthcare or other benefit plan
Primary care physicians—general practitioners or internists who receive a referral through a health maintenance organization (HMO)
Qualified beneficiary—person entitled to COBRA healthcare continuation coverage
Qualified plan—account an employee can use to keep money from a closed defined contribution account until he/she reaches retirement age
Instructor’s Notes
Premium—monthly fee paid by employers and employees for a healthcare or other benefit plan
Primary care physicians—general practitioners or internists who receive a referral through a health maintenance organization (HMO)
Qualified beneficiary—person entitled to COBRA healthcare continuation coverage
Qualified plan—account an employee can use to keep money from a closed defined contribution account until he/she reaches retirement age
Self-insured—employers who pay for all covered employee healthcare costs without the use of an insurance company
Serious medical condition—illness, injury, impairment, or physical or mental condition that involves inpatient care or continuing treatment by a healthcare provider under the Family Medical Leave Act (FMLA)
Service—days or times spent at work required before an employee is eligible for retirement plan benefits
Social Security—federal pension program in which most nongovernmental employers and employees must participate
Indicate that there were additional key terms in the chapter. 45

46. Key Term Review continued
Self-insured—employers who pay for all covered employee healthcare costs without the use of an insurance company
Serious medical condition—illness, injury, impairment, or physical or mental condition that involves inpatient care or continuing treatment by a healthcare provider under the Family Medical Leave Act (FMLA)
Service—days or times spent at work required before an employee is eligible for retirement plan benefits
Social Security—federal pension program in which most nongovernmental employers and employees must participate
Instructor’s Notes
Premium—monthly fee paid by employers and employees for a healthcare or other benefit plan
Primary care physicians—general practitioners or internists who receive a referral through a health maintenance organization (HMO)
Qualified beneficiary—person entitled to COBRA healthcare continuation coverage
Qualified plan—account an employee can use to keep money from a closed defined contribution account until he/she reaches retirement age
Self-insured—employers who pay for all covered employee healthcare costs without the use of an insurance company
Serious medical condition—illness, injury, impairment, or physical or mental condition that involves inpatient care or continuing treatment by a healthcare provider under the Family Medical Leave Act (FMLA)
Service—days or times spent at work required before an employee is eligible for retirement plan benefits
Social Security—federal pension program in which most nongovernmental employers and employees must participate
Indicate that there were additional key terms in the chapter.

47. Key Term Review continued
Special enrollment periods—times other than open enrollment periods when persons can enroll in group healthcare plan
Subminimum wage—lower-than-minimum wages that the Fair Labor Standards Act (FLSA) allows employers to pay certain people
Summary annual report—report provided to participants and beneficiaries by plan administrators to summarize the annual report filed with the government
Summary of material modification (SMM)—document that explains the changes made to a benefit plan that a plan administrator must provide to participants
Instructor’s Notes
Special enrollment periods—times other than open enrollment periods when persons can enroll in group healthcare plan
Subminimum wage—lower-than-minimum wages that the Fair Labor Standards Act (FLSA) allows employers to pay certain people
Summary annual report—report provided to participants and beneficiaries by plan administrators to summarize the annual report filed with the government
Summary of material modification (SMM)—document that explains the changes made to a benefit plan that a plan administrator must provide to participants
Summary plan description (SPD)—document that explains benefits, identifies the plan administrator, and describes the participants’ rights and responsibilities under the benefits plan
Tax deferred—financial contribution to a retirement benefit plan that involves income before taxes that does not require the taxes be paid until money is withdrawn from the account
Tip allocation—rules that require employers to allot tip income amounts to employees who reported tips of less than 8% of their individual sales
Tipped employees—employees who regularly receive more than a certain amount of tip income each month
Indicate that some final key terms were discussed in the chapter. 47

48. Key Term Review continued
Summary plan description (SPD)—document that explains benefits, identifies the plan administrator, and describes the participants’ rights and responsibilities under the benefits plan
Tax deferred—financial contribution to a retirement benefit plan that involves income before taxes that does not require the taxes be paid until money is withdrawn from the account
Tip allocation—rules that require employers to allot tip income amounts to employees who reported tips of less than 8% of their individual sales
Tipped employees—employees who regularly receive more than a certain amount of tip income each month
Instructor’s Notes
Special enrollment periods—times other than open enrollment periods when persons can enroll in group healthcare plan
Subminimum wage—lower-than-minimum wages that the Fair Labor Standards Act (FLSA) allows employers to pay certain people
Summary annual report—report provided to participants and beneficiaries by plan administrators to summarize the annual report filed with the government
Summary of material modification (SMM)—document that explains the changes made to a benefit plan that a plan administrator must provide to participants
Summary plan description (SPD)—document that explains benefits, identifies the plan administrator, and describes the participants’ rights and responsibilities under the benefits plan
Tax deferred—financial contribution to a retirement benefit plan that involves income before taxes that does not require the taxes be paid until money is withdrawn from the account
Tip allocation—rules that require employers to allot tip income amounts to employees who reported tips of less than 8% of their individual sales
Tipped employees—employees who regularly receive more than a certain amount of tip income each month
Indicate that some final key terms were discussed in the chapter.

49. Key Term Review continued
Tipped employees’ minimum wage—provision of the Fair Labor Standards Act (FLSA) that allows tipped employees to be paid a lower cash wage when their tips are enough to ensure they receive the basic minimum wage
Traditional health insurance—same as a fee-for-service plan
Unemployment insurance—benefit mandated by the Social Security Act that temporarily provides a reduced level of income to employees who lose their job involuntarily
Uniformed Services Employment and Reemployment Rights Act (342 USERRA)—federal law that protects employees from workplace discrimination based on their obligation to, application for, or interest in military service
Instructor’s Notes
Tipped employees’ minimum wage—provision of the Fair Labor Standards Act (FLSA) that allows tipped employees to be paid a lower cash wage when their tips are enough to ensure they receive the basic minimum wage
Traditional health insurance—same as a fee-for-service plan
Unemployment insurance—benefit mandated by the Social Security Act that temporarily provides a reduced level of income to employees who lose their job involuntarily
Uniformed Services Employment and Reemployment Rights Act (342 USERRA)—federal law that protects employees from workplace discrimination based on their obligation to, application for, or interest in military service
Vested—being fully entitled to a benefit
Workers’ compensation—system controlled by state laws that provides financial compensation to employees or their survivors when an employee is injured at work, becomes sick because of the workplace environment, or dies as a result of a workplace situation
Youth minimum wage—provision of the Fair Labor Standards Act (FLSA) that allows employees younger than 20 years of age to be paid a lower minimum wage during their first 90 consecutive days of employment

50. Key Term Review continued
Vested—being fully entitled to a benefit
Workers’ compensation—system controlled by state laws that provides financial compensation to employees or their survivors when an employee is injured at work, becomes sick because of the workplace environment, or dies as a result of a workplace situation
Youth minimum wage—provision of the Fair Labor Standards Act (FLSA) that allows employees younger than 20 years of age to be paid a lower minimum wage during their first 90 consecutive days of employment
Instructor’s Notes
Tipped employees’ minimum wage—provision of the Fair Labor Standards Act (FLSA) that allows tipped employees to be paid a lower cash wage when their tips are enough to ensure they receive the basic minimum wage
Traditional health insurance—same as a fee-for-service plan
Unemployment insurance—benefit mandated by the Social Security Act that temporarily provides a reduced level of income to employees who lose their job involuntarily
Uniformed Services Employment and Reemployment Rights Act (342 USERRA)—federal law that protects employees from workplace discrimination based on their obligation to, application for, or interest in military service
Vested—being fully entitled to a benefit
Workers’ compensation—system controlled by state laws that provides financial compensation to employees or their survivors when an employee is injured at work, becomes sick because of the workplace environment, or dies as a result of a workplace situation
Youth minimum wage—provision of the Fair Labor Standards Act (FLSA) that allows employees younger than 20 years of age to be paid a lower minimum wage during their first 90 consecutive days of employment 50