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139 Cards in this Set
- Front
- Back
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Compensation
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The total of all rewards provided employees in return for their labor.
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Direct financial compensation
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Pay that a person receives in the form of wages, salary, bonuses, and commissions.
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Indirect financial compensation
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All financial rewards that are not included in direct compensation.
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Equity
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The perception by workers that they are being treated fairly.
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External equity
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Payment of employees at rates comparable to those paid for similar jobs elsewhere.
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Internal equity
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Payment of employees according to the relative values of their jobs within an organization.
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Employee equity
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A condition that exists when individuals performing similar jobs for the same firm are paid according to factors unique to the employee, such as performance level or seniority.
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Team equity
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Payment of more productive teams in an organization at a higher rate than less productive teams.
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Compensation policy
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Polices that provide general guidelines for making compensation decisions.
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Labor market
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The geographic area from which employees are recruited for a particular job.
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Compensation survey
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A means of obtaining data regarding what other firms are paying for specific jobs or job classes within a given labor market.
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Benchmark job
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A well-known job in the company and industry and one performed by a large number of employees.
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Cost-of-living allowance (COLA)
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An escalator clause in a labor agreement that automatically increases wages as the U.S. Bureau of Labor Statistics’ cost-of-living index rises.
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Job evaluation
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That part of a compensation system in which a company determines the relative value of one job in relation to another.
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Job evaluation ranking method
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A method in which the raters examine the description of each job being evaluated and arrange the jobs in order according to their value to the company.
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Classification method
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A job evaluation method in which classes or grades are defined to describe a group of jobs.
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Point method
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An approach to job evaluation in which numerical values are assigned to specific job components, and the sum of these values provides a quantitative assessment of a job’s relative worth.
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Job pricing
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Placing a dollar value on the worth of a job.
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Pay grade
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The grouping of similar jobs to simplify the job-pricing process.
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Wage curve
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The fitting of plotted points on a curve to create a smooth progression between pay grades (also known as the pay curve).
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Pay range
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A minimum and maximum pay rate for a job, with enough variance between the two to allow for a significant pay difference.
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Broadbanding
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A compensation technique that collapses many pay grades (salary grades) into a few wide bands in order to improve organizational effectiveness.
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Merit pay
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Pay increase given to employees based on their level of performance as indicated in the appraisal. The increase is added to the employee’s base pay.
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Bonus (lump sum payment)
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A one-time award that is not added to employees’ base pay.
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Piecework
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An incentive pay plans in which employees are paid for each unit produced.
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Seniority
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The length of time that an employee has worked in various capacities with the firm.
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Profit sharing
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A compensation plan that results in the distribution of a predetermined percentage of the firm’s profits to employees.
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Gainsharing
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Plans designed to bind employees to the firm’s productivity and provide an incentive payment based on improved company performance.
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Scanlon plan
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A gainsharing plan that provides a financial reward to employees for savings in labor costs that result from their suggestions.
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Stock option plan
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An incentive plan in which managers can buy a specified amount of stock in their company in the future at or below the current market price.
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Perquisites (perks)
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Special benefits provided by a firm to key executives to give them something extra.
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Fair Labor Standards Act of 1938 (FLSA)
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The federal legislation that established overtime wage requirements and defined specific exempt occupations.
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Vacancy
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A budgeted position in which no employee is currently appointed.
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Full-Time Employment
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employment of an individual for 40 hours per week.
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Reclassification
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a change in the classification (job title) of a position resulting from a job audit (job analysis).
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Pay Plan
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the document that outlines pay ranges for all classified job titles.
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Perquisites or Perks
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Non cash incentives given to a firm’s executives
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Job evaluation
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Assessment of the relative worth of jobs to a firm
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Benchmark jobs (aka key jobs)
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Jobs that are characterized by stable tasks and stable jobs specifications
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Davis-Bacon Act 1931
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This act requires contractors and subcontractors on federally funded construction projects in excess of $2000 in the U.S. to pay wages and benefits at least equal to those prevailing in the area where the work is performed.
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Walsh-Healey Act, 1936
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This 1936 act extended the concept of prevailing wage to manufacturers and suppliers of goods for federal government contracts in excess of $10,000.
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Copeland “Anti-kickback” Act, 1934
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This act prohibits federal contractors from receiving kickbacks from employees or subcontractors for wages earned on federal projects.
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Walsh-Healey Act, 1936
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This act requires that time and a half be paid for work exceeding eight hours a day and 40 hours a week for manufacturers and suppliers of goods for federal government contracts in excess of $10,000
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FLSA Fair Labor Standards Act, 1938
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This 1938 act is the broadest piece of labor legislation in the U.S., designed to protect workers and address conditions that burdened the American economy during the Great Depression
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20-factor
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The IRS has a ___-factor test to determine whether workers are employees or independent contractors.
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Exempt employees
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These types of employees are excluded from FLSA minimum wage and overtime pay requirements
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Non-exempt
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These types of employees are covered by the FLSA regulations for minimum wage and overtime pay requirements.
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$23,660
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Under current rules, most workers with a quoted salary of less than $______ per year are guaranteed overtime protection and are classified as nonexempt employees
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FLSA Fair Labor Standards Act, 1938
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This act is commonly referred to as the Wage and Hour Law
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Hourly
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Any employee quoted and compensated on an ____ basis is automatically considered a nonexempt employee.
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Primary duty
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The main or most important duty of a job, including the exercise of discretion and independent judgment with respect to matters of significance.
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Matters of significance
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The level of importance or consequence of the work performed.
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$455
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Under current rules, most workers with a quoted salary of less than $___ per week are guaranteed overtime protection and are classified as nonexempt employees
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White-collar employees
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Bona fide executives, administrative and professional employees, highly compensated employees, certain computer employees and outside sales employees are commonly referred to as what type of employees?
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Highly compensated employees
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Type of employees with salaries of $100,000 or more per anniversary, calendar, or fiscal year who must also perform at least one of the job duties of an exempt executive, administrative or professional.
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1.5 times their regular rate
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All nonexempt workers must be paid overtime at what rate?
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Workweek
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This is any fixed, recurring period of 168 hours
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Comp-Time or Compensatory Time
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In general, overtime must be paid in cash, however, public-sector employers may grant this instead of cash?
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$5.15
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This is the hourly Federal minimum wage as of September 1, 1997.
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FLSA
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To be covered by FLSA private-sector employers must be engaged in interstate commerce or retail service firms must have two or more employees and gross sales of at least $500,000 per year.
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Willful
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Under FLSA penalties for violations can include up to three years of back pay for these types of violations
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$2.13
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Employers of tipped employees must pay a cash wage of at least this per hour if they claim a tip credit against their minimum wage obligation
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Portal-to-Portal Act, 1947
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General rules for hours worked are defined by this act
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Portal-to-Portal Act, 1947
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According to this act, if the employer restricts an employee’s activities and does not allow any personal business, then the hours are included in overtime.
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Employee Commuting Flexibility Act of 1996
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This 1996 amendment to the Portal-Portal Act clarifies that commuting time is not paid work time, even when the employer is using a company vehicle.
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Travel pay
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Pay typically paid to nonexempt workers for the time they spend traveling to or between work assignments.
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Portal-to-Portal Act, 1947
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This FLSA act does not require employers to pay overtime when an employee is off the premises and on call, but this act does?
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Equal work
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This is defined by four factors, equal skills, equal effort, equal responsibility and equal working conditions
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Portal-to-Portal Act, 1947
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According to this act certain types of preparatory and concluding activities must be compensated such as putting on safety gear, cleaning equipment etc.
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Portal-to-Portal Act, 1947
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According to this act an employer does not have to pay an employee when the employee arrives t work early and is waiting for the workday to begin, however, the employee cannot be doing casual work without pay.
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Employee Commuting Flexibility Act of 1996
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According to this act travel from home to a customer’s site in response to an emergency call after the regular workday is work time
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Equal Pay Act of 1963
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This act prohibits unequal pay for equal or ‘substantially equal’ work performed by men and women
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Merit Increase
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An increase to an individual’s base pay rate based on performance.
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Job Classification
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A group of positions sufficiently alike in respect to their duties and responsibilities to justify a common name and similar treatment in selection, compensation, and other employment processes.
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Skill-based Pay
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A person-based remuneration system based on the repertoire of jobs an employee can perform rather than the specific job that the employee may be doing at a particular time.
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Well-pay
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Extra pay for not taking sick leave.
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Exempt Employee
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An employee who is not covered by the provisions of the Fair Labor Standards Act. Most professional, administrative, executive, and outside sales jobs fall into this category.
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$500,000
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To be covered by the FLSA a business must have annual gross sales of over how much money?
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Time and a half
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The FLSA requires that nonexempt employees be paid what rate over the standard wage for each hour they work over 40 hours a week.
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Piece-Rate System
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Pay Compression
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Occurs when pay differences between individuals becomes small.
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Green-Circled
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An incumbent paid below the range set for the job.
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Fair Labor Standards Act (1938)
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Aka the Wage and Hour Law
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Portal-to-Portal Act (1947)
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This act defined the general rules for hours worked and the determination of on-call/standby time, preparatory/concluding activities, waiting time and meals and breaks.
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Total compensation
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All forms of financial returns that employees receive from their employers
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Direct financial compensation
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Pay received in the form of wages, salaries, bonuses, and commissions
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Indirect financial compensation
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All financial rewards not included in direct compensation
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base pay
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The basic monetary compensation that an employee receives, usually as a wage or salary.
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Wages
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Payments calculated on the amount of time worked
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Salary
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Consistent payments made each period regardless of the number of hours worked in the period.
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Variable Pay
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Compensation linked to individual, team, or organizational performance.
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External equity
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Firm's employees are paid comparably to workers who perform similar jobs in other firms
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Internal equity
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Exists when employees are paid according to relative value of their jobs within same organization
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Equity Theory
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A pay fairness theory that states that people form equity beliefs by comparing their outcome/ input ratio to that of a referent other
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J Stacy Adams
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Who proposed Equity theory?
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Entitlement Philosophy
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Assumes that individuals who have worked another year are entitled to pay increases, with little regard for performance differences.
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Pay-for-Performance Philosophy
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Requires that compensation changes reflect individual performance differences.
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Meet the Market
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Attempting to balance employer costs and the need to attract and retain employees. “aka market rate or going rate”
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Lag the Market
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Paying all that the firm can afford. Taking advantage of the abundant supply of potential employees in a loose labor market. “aka pay followers”
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Lead the Market
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Paying for higher qualified, more productive workers. “aka pay leaders”
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Knowledge-based pay
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A system of salary differentiation based on the formal education, related experience or specialized training a professional employee has that qualifies the individual to deal with specific subject matter, or work effectively in a specific field
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Skill-based Pay
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A person-based remuneration system based on the repertoire of jobs an employee can perform rather than the specific job that the employee may be doing at a particular time.
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The Fair Labor Standards Act (FLSA)
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This act establishes minimum wage, overtime pay, recordkeeping, and child labor
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$5.15
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According to the the Fair Labor Standards Act (FLSA) covered nonexempt workers are entitled to a minimum wage of not less than ___ an hour
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The Fair Labor Standards Act (FLSA)
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This is the most significant law affecting compensation
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Fair Labor Standards Act (FSLA) of 1938
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This act set minimum wage requirement sets wage floor
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Fair Labor Standards Act (FSLA) of 1938
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This act requires overtime payments for non-exempt employees
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Fair Labor Standards Act (FSLA) of 1938
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This act exempts highly-paid computer workers
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Fair Labor Standards Act (FSLA) of 1938
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This act requires overtime (1½) pay for hours over 40 hours
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Exempt Employees
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Employees to whom employers are not required to pay overtime under the Fair Labor Standards Act.
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Non-exempt Employees
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Employees who must be paid overtime under the Fair Labor Standards Act.
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Hourly
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Any employee quoted and compensated on this basis is automatically considered a nonexempt employee.
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Overtime
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Non-exempt employees must be paid this for all hours worked over 40 regular hours in a workweek
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Compensatory Time Off (Comp Time)
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Hours off regular work time given to an employee in lieu of payment for extra time worked.
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Davis-Bacon Act of 1931
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First national law to deal with minimum wages
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Davis-Bacon Act of 1931
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This act required payment of “prevailing wage” by firms engaged in federal construction projects
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Davis-Bacon Act of 1931
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This act requires contractors and subcontractors on federally funded construction projects in excess of $2000 in the U.S. to pay wages and benefits at least equal to those prevailing in the area where the work is performed.
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Walsh-Healy Public Contracts Act
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This act requires that time and a half be paid for work exceeding eight hours a day and 40 hours a week for manufacturers and suppliers of goods for federal government contracts in excess of $10,000
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McNamara-O’Hara Service Contract Act
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This 1936 act extended the concept of prevailing wage to manufacturers and suppliers of services for federal government contracts in excess of $10,000.
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Copeland “Anti-kickback” Act, 1934
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This act prohibits federal contractors from receiving kickbacks from employees or subcontractors for wages earned on federal projects.
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Equal Pay Act of 1963
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Requires that men and women be paid the same for performing substantially similar jobs with limited non-gender exceptions (e.g., merit and seniority).
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Portal-to-Portal Act, 1947
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According to this act, if the employer restricts an employee’s activities and does not allow any personal business, then the hours are included in overtime.
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Portal-to-Portal Act, 1947
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General rules for hours worked are defined by this act
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Employee Commuting Flexibility Act of 1996
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This 1996 amendment to the Portal-Portal Act clarifies that commuting time is not paid work time, even when the employer is using a company vehicle.
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IRS
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Makes revenue and private-letter rulings that interpret tax legislation
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Private-letter rulings
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Type of IRS ruling that addresses only specific a taxpayer or organizations requesting the ruling
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Revenue rulings
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Type of IRS ruling that is published as general guidelines to all taxpayers or organizations
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Job Evaluation
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Formal, systematic means to identify the relative worth of jobs within an organization.
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Ranking
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This method of job evaluation is one of the simplest to administer
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Benchmark job
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A standard job used to make pay comparisons, either within the organization or to comparable jobs outside the organization, to develop or validate a job-worth hierarchy.
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Market Pricing
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Use of pay survey data to identify the relative value of jobs based on what other employers pay for similar jobs.
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Job Family
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A group of jobs having common organizational characteristics.
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Broad banding
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The practice of using fewer pay grades having broader pay ranges that in traditional systems
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Red-Circled Employees
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An incumbent (current jobholder) who is paid above the range set for the job.
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Green-Circled Employees
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An incumbent who is paid below the range set for the job.
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Pay Compression
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A situation in which pay differences among individuals with different levels of experience and performance in the organization becomes small.
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Benchmark job
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A standard job used to make pay comparisons, either within the organization or to comparable jobs outside the organization
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Compensable factors
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Elements of a job for which the organization is willing to pay.
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Piece-Rate System
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One in which an employee is paid for each unit of production.
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