Pay, Benefits, and Working Conditions Chapter 6 Pay, Benefits, and Working Conditions

What is gross pay? Total amount you earn before any deductions. Note – If you are hourly employee, any overtime must be calculated into your gross pay.

Determine Gross Pay Diane worked 40 regular hours and she gets paid $6.50 an hour. What is the procedure to determine her gross pay. answer: $6.50 x 40 hours = $260.00

How many hours is a standard work week? If you are an hourly worker, any hours over 40 is considered overtime and is calculated at time and a half.. This regulation is stated by the Fair Labors Standard Act

Calculate gross pay for Jim: Jim worked 45 hours in one week. His hourly pay is $6.50 an hour. What is the procedure? 40 hours x $6.50 = $260.00 5 hours x $9.75 ($6.50 x 1.5) = 48.75 Total = $308.75

Let’s look at the pay stub on page 120. Notice the second slip at the bottom, you will see an itemization of Mr. Smith’s deductions. You will see he had a gross pay of ? And a net pay of ? for one pay period. What about Year to date (YTD)?

What were Mr. Smith’s deductions? Federal Withholding Tax, OASD (Social Security) Medicare, Other Deductions How much has he grossed YTD?

Do salary employees receive additional pay for overtime Do salary employees receive additional pay for overtime? (Your gross pay will always be the same as your salary) A salaried employee is often stated at an annual (yearly) amount. In this case, how does one determine amount of pay per pay period?

Take the yearly pay amount and divide it by the number of pay periods Take the yearly pay amount and divide it by the number of pay periods. If someone is paid monthly divide by 12 months. Problem: Dan is paid monthly. What is his gross per pay period?

$24,000 divided by 12 months = $2,000

Some deductions are required and some are voluntary. Look at the pay stub on page 120, where is Mr. Smith’s Other deductions going?

Credit Union, health Insurance, Union Dues, accidental insurance Optional deductions may not be taken out withheld without your written consent except by court order. (federal taxes and social security are not optional deductions)

Regular wages plus OT = ? Gross Pay Gross Pay less deductions = what? Net Pay

Required Deductions include: Federal income tax State income tax Social Security (OASD) (6.2% of gross) Medicare Tax (1.4% of gross pay)

EMPLOYERS MUST CONTRIBUTE MATCHING AMOUNTS INTO EACH EMPLOYEE’S MEDICARE AND SS ACCOUNTS.

Do people who are self-employed have employee deductions and withholdings? No Do they still have to pay Federal, state, and SS taxes? Yes How do they do it?

Instead, they must file estimated tax returns quarterly with payments. How do they determine the amount to file (to pay)? They estimate a year ahead total tax owed and divide by four and make four payments throughout the year.

Self-employed people pay 12 Self-employed people pay 12.4% of gross pay for Social Security (as compared to 6.2% for non-self-employed. They pay 2.95% (1.45 x 2) for Medicare Tax.THE GRAND TOTAL (15.3%) IS CALLED SELF-EMPLOYMENT TAX.

PROFIT SHARING Employees receive a portion of company’s profits at the end of the corporate year. This can be considered as Incentive Pay. Money offered to encourage employees to strive for high levels of performance.

Paid Vacations and Holidays Getting paid for work when you are on vacation. Some employers offer 1 week after one year of employment. Others offer two, possible 3 weeks after years of employment. Many employers pay workers when they are off for holidays.

Employee Services Extras to improve employee morale and working conditions. Can you think of an example? 10% off store merchandise, free parking, YMCA membership, tuition reimbursement, day-care, counseling, wellness centers.

Child Care Providing on-site child care. The textbook suggest future Federal Legislation is likely to make child care more affordable for working parents.

Sick pay It is customary to receive 3 to 10 days a year as sick days for full-time employees.

Leave of Absence A leave of absence (sometimes with pay, sometimes without pay). What are some common reasons for leave of absence? New baby, Medical Leave Act, or completing education. (Sabbatical)

INsurance Group health Dental Vision Life insurance

Health Insurance Deductible employee-paid amout After deductible has been reached (paid), the plan pays 80% of most doctor bills and prescriptions and 100% of hospitalization charges and emergencies.

Life Insurance Beneficiary – A designated person who receives a cash benefit when the insured person dies. Purpose of life insurance – to partially offset the income lost when a wage earner dies.

Dental Insurance Most plans provide a maximum benefit per year per family. (Orthodontia) braces may not be covered. Routine exams and cleanings are often covered at 100%, while most other services are covered at 80%.

Other services like crowns, bridges, and root canals may only be covered at 50%.

Bonuses and Stock Options ▪ Bonuses are incentive pay based on Quality of work Years of servce Company Sales/Profits ▪ Stock Options give employees (usually executives) the right to buy set number of shares of the company’s stock at a fixed price by a certain time.

With stock options the employees benefit as long as what? As long as the stock price goes up.

Pension Plans Pension plans: - Completely funded by employer - Upon retirement, employee receives a monthly paycheck. 401 (K): - Not completely funded by employer - Employee makes contributions to account

Vested – Being entitled to a full retirement account after a specified period of time, such as 5 years.

Travel Expenses While out of town on business, employees often receive daily allowance, motel, meals, and other travel expenses paid for. Some companies require an employee to keep up with receipts to get reimbursed later. Company Car

Generally large companies provide more extensive optional benefits than do small companies Cafeteria-style employee benefits – Programs that allow workers to base their job benefits on personal needs. Flexibility – A married person may opt for increased health insurance and a single person may opt for child-care services.