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PHR Study Prep Chapter 6 (Reed)
Terms in this set (117)
the exchange of payment from an employer for the services provided by its employees
costs that the org incurs for the benefit of employees, such as cash comp, 401(k), medical care premiums, pension plans, and PTO, stock options, Employee Stock Ownership Programs (ESOPs), and incentive plans.
non-tangible rewards given to employees by a company, including both intrinsic and extrinsic rewards. Can be relationships with coworkers, work-life balance, etc.
encourages individual employee self-esteem, such as satisfaction from a challenging assignment (internal)
encourages an individual self-esteem externally
Total Rewards Philosophy
a high-level mission statement used to guide the development and implementation of comp/benefits programs to attract, motivate, and retain employees.
a principle that calls for comp measures that ensure an employee's inputs (job duties) align with what he receives (outputs) to be fair/equitable. Inputs can be KSAs, outputs being base pay and benefits.
private letter ruling
allows the IRS to explain the repercussions for that particular situation/company.
an org's approach where comp is used to shape culture and behavior by rewarding performance that moves the org closer to achieving goals (established by leaders). Creates a high-performance culture.
Line of Sight
employees know outright how their performance affects their pay
an org's approach where seniority and longevity are rewarded with comp, usually seen through pension plans, stock options, and PTO accrual.
used to determine how resources are best used with total rewards in attracting, motivating, and retaining employees on an on-going basis.
the highest level of ethical responsibility, legally-validated, requiring the utmost trust/confidence not to breach based on self-interest, conflicting duties, or profiting personally
businesses who employ 2+ employees and have $500K+ annual sales; or hospitals, schools, government.
businesses whose daily work "involves interstate commerce," essentially everyone not covered by the Enterprise Coverage.
FLSA standard for measuring if a position qualifies for exemption, as determined by the salary-level and salary-basis test
Salary Level Test
FLSA duties' test that states an employees must be paid a minimum of $455 per week, or $23,660 annually to be classified as exempt.
Salary Basis Test
FLSA duties' test that requires salaried employees comp can't be reduced because of variations in the quantity/quality of work.
the regular, predetermined rate of pay for a week (or longer).
the time an employee works that is "suffered/permitted" by the employer.
compensatory time (comp time)
in lieu of cash payment, public employee (only) option that allows pay to be converted to PTO for OT at 1.5x
"engaged to wait"
condition of OT status whereby employees have been asked to wait for an assignment, such as reading a book before a meeting concludes
"waiting to be engaged"
condition of OT status whereby employee is not conditionally requested to wait, such as arriving early for work
condition of compensable time where employee must remain at the worksite while waiting for assignment, qualifying for pay.
actual practice requirement, improper deduction
condition where an employer improperly deducts money from salaried employees
"Safe Harbor" provision
provision for payroll errors that offsets loss of exemption with improper deductions, can be rectified if employee is reimbursed, reassured in good faith, and allowed to use a complaint system mechanism.
Child Labor law
FLSA provision ensuring children must be 14+ for nonfarming/nonhazardous work, 16+ in farming, and 18+ in hazardous role.
Positive Time Reporting
time-keeping system where employees record the actual hours they've worked along with PTO. Best for nonexempt employees.
time-keeping system in which only changes to regular schedules are recorded. Better for exempt workers.
amount of comp that the employer/employee agree will be paid
comp structure based on employee's performance and measurement, usually including promotions. Akin to the comp philosophy that behavior should be reinforced to align with org's mission/goals.
comp structure characterized by pay decisions based on length of time employees have been in a position, representative of an entitlement comp philosophy.
serve as comp incentives for employees in uncomfortable/inconvenient assignments, providing additional pay for work beyond the minimum. (such as hazard pay, on-call pay, etc)
Shift that runs from 4pm to 12am
shift that runs from 12am to 8am
additional comp provided to those who work outside the day shift. 1. Calculated by taking total comp (regular + OT) pay and adding THIS (total comp * 10%) to total.
pay differential option where employees are given higher wage for coming back in after finishing a shift
Reporting Pay (or Reporting Premium)
pay differential option where an employee receives pay after reporting in to work and leaving when no work is available, paid some minimum amount.
pay differential option for dangerous or extremely uncomfortable working conditions, such as chemicals, radiation, etc like with firefighters. Factored into OT pay.
pay differential option used to ensure employees in different locations are paid at competitive rates for their labor market.
Variable Comp (or Pay for Performance or Incentive Pay)
type of comp structure designed to reward org and individual results. Provides line-of-sight between performance and reward.
Group pay incentive program which involves employees and managers together to share benefits of success.
developed my Mitchell Fein, a group incentive plan that takes the baseline productivity costs from the output to calculate group's performance. (Increased sales - production costs = bonus)
created by Joseph Scanlon, a group incentive plan where employees receive a portion of cost savings, requiring transparency around finances and metrics.
group incentive plan aimed at sharing company returns with employees. Similar to the Scanlon plan, but is allocated pre-tax based on individual contributions towards goals.
Employee Stock Ownership Plan (ESOP)
defined-contribution plan that allows employees to own stock, as a tax-deductible trust.
Employee Stock Purchase Plan (ESPP)
group incentive pay plan designed to allow employees to use an after-tax payroll deduction to purchase discounted company stock.
type of special bonus incentive that requires an employee to stay for pre-determined time or forfeit bonus amount
additional comp for performance above expectations, paid in addition to employee's base salary. Often discretionary.
Salary Administration (Comp or Pay Administration)
follows the company's comp philosophy, which relies specifically on accurate job-analysis as a means for orgs to develop pay structures and administer them on an on-going basis.
initial process of developing pay structures used to determine the value of jobs relative to others in the company. On-going process, before formal creation, as duties change, etc. Key component.
a job evaluation method that requires evaluators to compare the values of jobs to one another. Not great for large companies with highly complex jobs. The more advanced skillset required, the higher the rank and therefore value.
job evaluation method that involves identifying key benchmark positions, and classified according to value on a vertical scale.
jobs common to orgs regardless of size/industry (accountants, assistants)
value system for jobs relative to one another in the org
second step in developing pay structures, occurs when a new job is created to determine pay level for a position. Job is reviewed, salary survey is selected, compensation components (base, bonus, etc) are considered, and then a salary range is recommended.
used to gather comp and benefits data that reflects current trends in a labor market.
difference between midpoints of consecutive grades, generally narrower for lower grades and broader for higher-level roles -- considered median in data from salary surveys.
situation that occurs when new employees are hired at a higher rate of pay than incumbents with similar KSAs, which can be rectified with salary adjustments for incumbent population.
focal review period
annual review period where all employees are reviewed at the same time
non-traditional pay structure focused on employee KSAs, where increased ability shows an increase in pay. Develops on the idea that the higher the ability, the higher the pay potential and the lower need for multiple other employees.
splits positions in the company into a few specific pay ranges, which includes a variety of jobs. Leads to greater collaboration by limiting employee focus on hierarchy, reduces bureaucracy.
federally mandated benefits which include SS, Medicare, unemployment insurance, family/medical level, worker's comp, and COBRA.
Social Security Act (SSA)
provides benefit for elderly, disabled, and a surviving family members upon death of an employee.
provides medical/hospital insurance benefits for the elderly, paid via taxes from the "Federal Insurance Contributions Act" to the IRS. Eligibility at 67.
Family and Medical Leave Act
provides benefit support to employees caring for seriously ill family members, new children, or themselves by protecting employees from adverse employment actions and retaliation when requesting leave. Applies to ALL public orgs and private employers with 50+ employees with worksite within a 75-mile radius.
key employee classification
designated in top 10% highest paid employees, and salaried.
In loco partenis legal precedent
legal standing which states an FMLA covered dependent does not need to be a legal or biological child, just one who is cared for on a daily basis
FMLA-related function where employers require certification from health-care provider, proving ability to return to work.
traditional pension plan where employer provides a specific benefit on retirement, not managed individually.
individual plan in which the fund amount is known, but the amount of benefit isn't because it depends on investment returns earned. X dollars put into a 401(k) but return not readily known due to fluctuations in stock market.
one that exists because of a participant's service, unconditional and legally enforceable.
Party in Interest
fiduciary, person, or entity providing services to plan, employer/org, or relatives of any of the previous parties.
person designated by plan sponsor to manage a plan.
entity who establishes the benefit plan.
benefits plan that meets ERISA requirements and provides tax advantages for employees AND employers.
Nonqualified Retirement Plan
benefits plan where benefits exceed limitations of qualified plans (ERISA) or don't meet IRS requirements for favorable tax treatment.
Employee Retirement Income Security Act (ERISA)
federal law regulating private pensions and some welfare programs
Summary Plan Description (SPD)
ERISA consideration that provides pension plan participants with info about the provisions, policies, and rules.
employee who has met the eligibility requirement for the plan and subscribes to plan.
point in which an employee owns the contributions made by their employer.
participant becomes 100 percent vested after specific period (max 5 years)
participants must wait a period of time before funds are vested in full
graded vesting (aka graduated or gradual vesting)
establishes a schedule that provides for partial vesting each year. Must allow for 20% after 3 years and each year after that, up to 7 years.
a person, corporation, or other legal entity that holds assets on behalf of, in trust for, a pension fund.
prudent person standard of care
ERISA-related common law concept that requires all actions be taken with care, skill, and diligence that a prudent man acting would in that capacity.
federally mandated Health/Welfare benefits program that requires orgs with 20 employees to provide health-plan continuation coverage under various circumstances.
federally mandated benefits-support program which prohibits discrimination on the basis of health status and limits restrictions on pre-existing conditions.
Deferred Comp Benefits
tax-deferred retirement plans such as IRAs, 401(k)s, and pension plans.
provides pension for employees based on a formula, computed by salary, and length of service with a company.
Cash-Balance Plan (CBP)
considered a hybrid between defined-benefit and defined-contribution plans, where benefits are determined by using a hypothetical personal pension account, increased by a set rate. Considered a "portable" plan.
Profit-Sharing Plans (discretionary contributions)
form of defined-contribution plan that allows employers to contribute deferred comp based on percentage of company earnings. Up to 25% per employee.
form of defined-contribution plan that uses a fixed percentage of employee earnings to defer comp. Best for companies with stable earnings over time.
defined-contribution plan with similarities to a defined-benefit/money-purchase plan, where contribution amounts are calculated to reach a predetermined benefit amount by retirement.
person who earns $115K, owns 5% of company, is in top 20% paid.
nonqualified deferred-comp plans that provide retirement income for officers, directors, and high-comp employees
Excess Deferral Plans
allows org to make contributions to nonqualified plan in order to reduce impact of discrimination testing.
Health Maintenance Organization (HMO)
Medical insurance that acts as a managed-care plan focusing on preventative care and controlling health costs. Uses gatekeepers via specialist referrals.
Preferred Provider Organization (PPO)
medical insurance that uses a network of health-care providers for patient services but does not require gatekeeper referrals for specialists.
Point of Service (POS)
medical insurance that includes network physicians but allows for referrals outside of network.
Exclusive Provider Organizations (EPO)
Medical insurance that consists of a network and includes a hospital. These physicians may only see those covered.
Physician Hospital Organization (PHO)
medical insurance that requires physicians to join with a hospital and rely on the structure to develop, market, and negotiate services/contracts.
medical insurance plan that places no restrictions o doctors/hospitals. Most expensive option.
any indirect comp paid on behalf of employees when in excess of $50K
health benefits cost management plan where employer assumes risk for claim and pays all claims
partially self-funded plan
health benefits cost management plan that employs stop-loss insurance to prevent single catastrophic claims from depleting the claim fund.
administrative-services only (ASO) plan
health benefits cost management plan that provides claim-management services only.
health purchasing alliances (HPA)
health benefits cost management plan that works with other employers in the area
employees' earning before taxes
court ordered or tax levy funds mandated to be deducted from an employee's paycheck involuntarily (child support). Mandated by Title 3 of the Consumer Credit Protection Act (CPPA).
the remaining amount in an employee's paycheck after all legally mandated deductions have been made, such as federal income tax, social security, etc. Special garnishment rules may apply to this amount "after taxes" up to 25% of employee earnings for debt, and up to 50% for child-support.
right to purchase an employer's stock at a certain price (the strike price) at a future date for a specified amount of time.
stock price amount based on market price at the time of issue.
incentive stock options (ISO)
stock options that can be offered only to employees, favorable for employees because they don't face tax options.
Nonqualified stock options
stock options available for employees, outside members of the BoD, and consultants. Not as favorable as ISOs.
common stock offered to employees, executives and HPEs as well. Considered golden handcuffs.
stock offered in privately held companies to provide employees benefit without granting actual stock.
THIS SET IS OFTEN IN FOLDERS WITH...
PHR Study Prep Chapter 7 (Reed)
PHR Study Prep Chapter 8 (Reed)
PHR Study Prep: Chapter 2 (Reed)
PHR Study Prep: Chapter 4 (Reed)
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