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Your Hidden Paycheck An Employee Communication Presentation
©SHRM 20082 Introduction Most employers are diligent about providing information to employees on the company’s pay structure and how an individual employee’s pay is calculated. However, many employers fail to communicate to their employees the total value of their compensation which includes the “hidden paycheck” of all the benefits, mandatory and voluntary, to which the employer contributes and sponsors. Periodic personalized documentation to each employee on annual pay and the “hidden paycheck” results in increased awareness and appreciation for the costs of benefits, higher employee morale and retention. This sample presentation is intended for presentation to all employees. It is designed to be presented by an individual who has knowledge of the employer’s benefit programs. This is a sample presentation that must be customized to include and match the employer’s own benefit package.
©SHRM 20083 Agenda During this meeting, we will review: What the term “hidden paycheck” means. The benefits we legally provide to you. The benefits we voluntarily provide to you. The value of all benefits you receive as a percentage of your pay.
©SHRM 20084 What Does the Term “Hidden Paycheck” Mean? HR professionals often use the term “hidden paycheck” to refer to the employer’s contributions to employee benefits of which employees are generally unaware. Statements documenting these contributions are also called “Total Compensation Statements” or “Total Rewards Statements.” Here at [Company Name] we call these statements (fill in for your own company). You will receive your [Statement Title] next [date]. We are having this meeting today to help you better understand the statement when you do receive it.
©SHRM 20085 What Does the Term “Hidden Paycheck” Mean? (cont’d) Your [Statement Title] lists your total annual pay, the amount [Company Name] spends on benefits we legally contribute to, and the amount spent on benefits provided voluntarily. The statement also includes benchmark data on the amount employers spend on benefits as a percentage of payroll and how our company compares to the national average.
©SHRM 20086 Legally Provided Benefits Legally provided or mandated benefits are those required by federal and state laws. These include contributions for: Social Security and Medicare: These are federally mandated and administered benefits. The cost is shared equally by the employer and employee. The maximum wage base for the Social Security tax is set annually; if an employee earns over the amount, the excess is not taxed. The Medicare tax does NOT have a wage base limit; all earnings are subject to this tax.
©SHRM 20087 Legally Provided Benefits (cont’d) Other legally provided benefits are: Workers Compensation This is a state-based program that provides medical treatment, wage loss reimbursement, vocational rehabilitation, and death/burial benefits to victims (or surviving dependents) for industrial accidents and occupational diseases. In most states, the employer is the sole contributor to this program.
©SHRM 20088 Legally Provided Benefits (cont’d) Unemployment Insurance This is a combined federal and state program that began during the Great Depression. Unemployment benefits are awarded to individuals who are ready, willing, and able to work and unable to find suitable work. The cost is shared by the employer and employee. Some states also have disability programs which require contributions from the employer and employee.
©SHRM 20089 Questions? Comments?
©SHRM 200810 Benefits Provided Voluntarily (Note to presenter: Customize for your company!) The benefits that [Company Name] provides voluntarily and that the company and employees share in the cost are: Health insurance Prescription drug insurance Dental insurance Vision insurance Commuter benefits (parking, van pools, mass transit tokens) (Employee contributions for the preceding plans may be made on a pre-tax contribution resulting in lower income taxes)
©SHRM 200811 Benefits Provided Voluntarily (cont’d) The benefits that [Company Name] provides voluntarily and that the company pays 100% of the cost are: Retirement/pension plan (a defined benefit plan) Employer match to employee 401(k) contributions Term life insurance Accidental death and dismemberment insurance Short-term disability insurance Long-term disability insurance Long-term care insurance
©SHRM 200812 Benefits Provided Voluntarily (cont’d) Other benefits that [Company Name] provides voluntarily and that the company pays 100% of the cost are: Incentive bonuses Paid time off: Vacation leave Sick leave Holidays Personal Days Bereavement Leave Paid weather-related emergency closing leave
©SHRM 200813 Benefits Provided Voluntarily (cont’d) Additional benefits that [Company Name] provides voluntarily and that the company pays 100% of the cost are: Tuition assistance (up to $5,250 tax-free per year) Employee assistance program (EAP) On-site fitness center On-site child care Computer purchase assistance Scholarships for children of employees Paid sabbaticals Direct deposit of pay Social gatherings (holiday party, summer picnic)
©SHRM 200814 Benefits Provided Voluntarily (cont’d) In addition [Company Name] sponsors and pays the administration fees for the following benefit plans which employees may participate in by making contributions: 401(k) savings and retirement plan Health savings account Health flexible spending account Dependent care flexible spending account
©SHRM 200815 Value of Benefits as a Percentage of Pay According to the 2008 SHRM Employee Benefits Report, employers spent an average of 39% of an employee’s annual pay on mandatory and voluntary benefits. Of the 39%, 21% was spent on mandatory benefits and 18% on voluntary benefits. [Company Name] spends an average of [use your calculation] of an employee’s annual pay on mandatory and voluntary benefits. Of the (_ %), (_%) is spent on mandatory benefits and (_%) on voluntary benefits.
©SHRM 200816 Questions? Comments?
©SHRM 200817 Summary The term “hidden paycheck” refers to the employer’s contributions to employee benefits of which employees are generally unaware. Statements documenting these contributions are also called “Total Compensation Statements” or “Total Rewards Statements.” These statements list annual pay, the amount the company spends on mandatory benefits, and the amount spend on benefits provided voluntarily. Mandated benefit programs are Social Security, Medicare, Workers Compensation and Unemployment Insurance
©SHRM 200818 Summary (cont’d) Benefit programs offered voluntarily include various types of insurance such as medical, dental, disability and life. Others are bonuses, paid time off, tuition assistance, retirement and flexible spending accounts. According to the 2008 SHRM Employee Benefits Report, employers spent an average of 39% of an employee’s annual pay on mandatory and voluntary benefits.
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