Chapter 6 Pay, Benefits, and Working Conditions

Lesson 6.1 Understanding Pay, Benefits, and Incentives

Gross Pay, Deductions, and Net Pay Gross pay: total amount earned before any deductions Hourly wages: pay rate X number of hours worked Example: if your pay rate is $10/hour and you work 40 hours a week, what is your gross pay? $10 X 40 = 400

Gross Pay, Deductions, and Net Pay Overtime – time worked beyond 40 hours in a work week Overtime pay = (pay rate X 1.5) X number of hours worked over 40 Example: what would your overtime pay be if you earn $10/hour and you worked 2 hours of overtime? Step 1: $10 X 1.5 = $15/hour Step 2: $15 X 2 = $30

Gross Pay, Deductions, and Net Pay Salary – stated as a yearly amount – Usually do not earn additional pay for overtime Pay is determined by dividing the annual salary by the number of pay periods in a year Example: salary = $24,000/year Paychecks are issued every 2 weeks 52 weeks/year divided by 2 = 26 paychecks/year $24,000/26 = $923.08

Gross Pay, Deductions, and Net Pay Deductions – amounts subtracted from gross pay – Required deductions: federal income tax, social security tax, unemployment tax – Voluntary deductions: insurance, retirement accounts, savings accounts, union dues Figure 6-1, p. 120

Gross Pay, Deductions, and Net Pay Net Pay – the amount left after all deductions are taken from your gross pay – Also called ‘take-home pay’ – Regular wages/salary + overtime = gross pay – Gross pay – deductions = net pay Figure 6-1

Gross Pay, Deductions, and Net Pay Determining state tax withholding: – Use the appropriate tax withholding table and find the amount of tax based on the person’s wages and number of allowances Use figures 6-2 & 6.3 to determine the amount of state tax to be withheld

Gross Pay, Deductions, and Net Pay Determining federal tax withholding: – Use the appropriate tax withholding table and find the amount of tax based on the person’s wages and number of allowances Use figures 6-2 & 6.4 to determine the amount of federal tax to be withheld

Gross Pay, Deductions, and Net Pay Other deductions: Social Security – 6.2% of income up to a maximum of $87,900 (income in 2004) $ X 6.2% = $17.11 Medicare – 1.45% of all income earned $ X 1.45% = $4.00 Social Security and Medicare are paid by both the employee and employer

Gross Pay, Deductions, and Net Pay Self-employed requirements: – Must file quarterly tax return for federal income tax – Since they are both employee and employer they must pay both contributions to Social Security and Medicare Social security: 6.2% X 2 = 12.4% Medicare: 1.45% X 2 = 2.9% 12.4% + 2.9% = 15.3% (self-employment tax)

Lesson 6.2 Work Arrangements and Organizations

Flexible Work Arrangements Altered Workweeks – Flextime – Compressed workweek Job rotation Job sharing Permanent part-time and telecommuting

Altered Workweeks Flextime Compressed workweek

Flextime Employees choose working hours Core time period All employees must be present Peak hours for business activity Usually between 10 AM and 3 PM

Compressed Workweek Normal 40 hour week in less than 5 days Usually work 10 hours a day for 4 days

Job Rotation Employees trained for more than 1 task Employees rotate from task to task Reduces boredom and burnout Reduces impact of worker time off

Job Sharing 2 people share a full-time position Split salary and benefits Reduces absenteeism and tardiness Lowers fatigue Improves productivity

Permanent Part-Time and Telecommuting Permanent part-time – Companies save salary and benefits – Employees enjoy job security and freedom – Benefits parents of small children and elderly Telecommuting – Employees work at home or on the road – Communicate through , fax, cell phone – Engage in computer related, data entry work

Labor Unions and Professional Organizations Labor Union – a group of people in similar occupations organized for the benefit of all employees in these occupations – Functions of Unions – Types of Unions – Professional Organizations

Functions of Unions Recruit new members Engage in collective bargaining Support political candidates Provide support services to members

Collective Bargaining Negotiating terms of employment for members – Employment contract Wages, overtime rates, work hours, and benefits Grievance procedure for complaint against management Seniority rights – Last workers hired are first to be fired – Seniority = Job security

Types of Unions Craft unions – practice a craft or trade – Bricklayers, carpenters, or plasterers – Exist in building, printing, and maritime trades Industrial unions – skilled, semiskilled, or unskilled workers in particular industries – AFL-CIO, Teamsters, and United Auto Workers – Steel, auto, rubber, and glass industries

Professional Organizations Organization of people in a particular occupation requiring considerable training and specialized skills American Bar Association – Lawyers American Medical Association – Doctors National Education Association - Teachers

Professional Organizations, con’t Establish and maintain professional standards Publish professional journals Provide pension, retirement and insurance benefits to members Lobbying – influence public officials Administer exams, accreditations and admission requirements