Comp And Benefits (Ch 6) - Part 3

Front 1

Labor market

Back 1

Comprised of any sources from which an organization recruits new employees; a single organization may find itself recruiting from several different of these depending on the availability of skills for different positions

Front 2

Line of sight

Back 2

Occurs when employees know that their performance, good or bad, Impacts their pay.

Front 3

Merit increases

Back 3

Increased in a performance-based system based on demonstrated performance

Front 4

Midpoint progression

Back 4

he difference between the midpoints of consecutive grades. Generally narrower for lower grades, increasing for higher grades. Typically, the ranges from 12—15 percent at lower grades to 25 percent at higher grades.

Front 5

Monetary compensation

Back 5

Includes any costs the organization incurs for the benefit of employees, such as all forms of cash compensation, 401(k) matching, medical care premiums, pension plans, and paid time off. Include benefits that support the organization’s culture such as stock options, employee stock ownership programs (esops), and incentive plans.

Front 6

Money purchase plan

Back 6

Uses a fixed percentage of employee earnings to defer compensation. This type of plan works well for organizations with relatively stable earnings from year to year because the percentage is fixed and, once established, contributions must be made every year. The contribution limits arc the same as the limits for profit-sharing plans.

Front 7

Nonexempt

Back 7

Must be paid at least the minimum wage for all compensable time and according to flsa regulations

Front 8

Non-forfeitable claim

Back 8

A Claim that exists because of a participant’s service, they are unconditional and legally enforceable.

Front 9

Non-monetary compensation

Back 9

Include nontraditional work—life balance benefits such as telecommuting, onsite childcare, and flex time. Also, the relationship employees have with their supervisors, recognition of accomplishments.

Front 10

Nonqualified retirement plan

Back 10

The benefits exceed the limitations of qualified plans or do not meet other IRS requirements for favorable tax treatment. These plans are not required to include all employees, so may provide additional benefits to officers, shareholders, executives, supervisors, or other highly compensated employees.

Front 11

Nonqualified stock options

Back 11

Can be used for consultants and external members of the board of directors as well as for employees. The organization receives a tax deduction when the options are exercised, and employees pay tax on any gain they realize from the sale. Income from the stock is treated as compensation, and when the stock is sold there are further tax implications.

Front 12

Old age, survivors, and disability

Back 12

A part of the Social Security Act of 1935. Paid to qualified workers upon retirement or disability or to their surviving dependents in the event of a worker’s death.

Front 13

Older Worker Benefit Protection Act (OWBPA)

Back 13

Congress passed this in response to a Supreme Court decision that placed limitations on the Age Discrimination in Employment Act (ADEA). It amends the ADEA to include a prohibition on discrimination against older workers in all employee benefit plans unless any age-based reductions are justified by significant cost considerations. This amendment allows seniority systems as long as they do not require involuntary terminations of employees based on their age and extends ADEA protections to all employee benefits. (1990)

Front 14

Omnibus Budget Reconciliation Act (OBRA)

Back 14

In this bill, changes were made to employee benefit programs in addition to the cap on executive pay discussed in the Executive Compensation, which require that health plans honor court-issued qualified medical child support orders for dependent children of employees. Other changes in this amendment require that group health plans provide coverage for dependent adopted children when those children are placed for adoption in a covered employee’s home. (1993)

Front 15

On-call pay

Back 15

Entitlement for employees required to remain at the worksite while waiting for an assignment

Front 16

Organization incentives

Back 16

Commonly used to increase productive, foster teamwork, and share financial rewards with employees.

Front 17

Overtime

Back 17

One and one half times the regular hourly wage rate for all compensable time worked that exceeds 40 hours in a work week (also commonly known as time-and-a-half)

Front 18

Partially self-funded plan

Back 18

These plans utilize stop-loss insurance to prevent a single catastrophic claim from devastating the claim fund. The employer agrees on a preset maximum coverage amount that be paid from the claim fund for each participant before the insurance company begins to pay the claim.

Front 19

Participant

Back 19

an employee who has met the eligibility requirements for the plan.

Front 20

Party in interest

Back 20

A fiduciary, a person or entity providing services to the plan, an employer or employee organization, a person who owns 50 percent or more of the business, relatives of any of the above, or corporations that are involved with the plan in any of these functions.

Front 21

Pay differential

Back 21

Provides additional pay for work that is considered beyond the minimum requirements of the job. Examples include overtime, shift pay, on-call pay, call-back pay, reporting pay, hazard pay, and geographic pay.

Front 22

Pay equity

Back 22

Ensures what an employee brings to the job (inputs) and what the employee receives (outcomes) are fair and equitable when compared to both the internal factors and external conditions.

Front 23

Pay openness

Back 23

The degree of secrecy that exists around pay issues.

Front 24

Pay range

Back 24

The spread between the minimum and maximum pay for the job grade. Can be stated as an hourly amount for workers paid on an hourly basis or a monthly, semimonthly, biweekly, or annual amount for salaried workers.

Front 25

Pension Protection Act (PPA)

Back 25

The main locus of this act is to require employers to fully fund their pension plans to avoid future cash short falls in the plans as employees retire. Beginning in 2008, companies have seven years to bring their plans into compliance; for those who don’t comply, the act provides a penalty in the form of a 10 percent excise tax. The act also specifies funding notices that must be provided by defined benefit plans. (2006)

Front 26

Performance-based pay

Back 26

May include merit increases or promotions. Based on how well individual employees perform against the company’s process for measuring performance

Front 27

Performance-based philosophy

Back 27

Organizations which use compensation to shape a key component of the corporate culture and employee behavior, by rewarding performance or behavior that moves the organization closer to achieving the goals established by its leaders.

Front 28

Perquisites

Back 28

Often referred to as perks, additional benefits that provide comfort and luxury to the work and/or personal environment, usually intended for senior management and executives

Front 29

Phantom stock

Back 29

Used in privately held companies to provide the benefits of employee ownership without granting stock. Can generate the kind of payoffs that stock options or restricted stock can yield.

Front 30

Plan administrator

Back 30

The person designated by the plan sponsor to manage the plan.

Front 31

Plan sponsor

Back 31

The entity that establishes the plan. This may be a single employer, a labor organization, or, in the case of a multiemployer plan, a group representing the parties that established the plan.

Front 32

Point factor methodology

Back 32

Provides organizations with a system of points that are assigned to the position being evaluated. Based on the total number of points a position receives, a pay grade/range is assigned to the position.

Front 33

Portal to portal act

Back 33

Clarified what was considered to be compensable work time and established that employers are not required to pay for employee commute time. This act requires employers to pay nonexempt employees who perform regular work duties before or after their regular hours or for working during their lunch period. (1947)

Front 34

Positive time reporting

Back 34

Employees record the actual hours they are at work along with vacation, sick, or other time off, and exception reporting, in which only changes to the regular work schedule are recorded, such as vacation, sick, or personal time

Front 35

Private letter ruling

Back 35

The IRS issues a private letter ruling in response to an organization's request for guidance on specific circumstances. The ruling applies only to the specific circumstances described in the request and does not establish precedent for other organizations.

Front 36

Procedural justice

Back 36

How fair an internal process and procedure are in determining pay scales are perceived to be

Front 37

Profit-sharing plans

Back 37

Also known as discretionary contributions, profit-sharing plans allow employers to contribute deferred compensation based on a percentage of company earnings each year. A maximum contribution of 25 percent may be made for an individual employee each year.

Front 38

Protected health information (PHI)

Back 38

Patient information that must be kept private, including physical or mental conditions, information about health-care given, and payments that have been made.

Front 39

Prudent person standard of care

Back 39

A common law concept that requires all actions he undertaken with “the care, skill, prudence, and diligence. . . that a prudent man acting in like capacity would use, as defined in ERISA itself.