Pay, Benefits and Working Conditions

Understanding Benefits and Pay/ Work Schedules and Unions

Mr. Ritchie

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Understanding Pay and Benefits a. Gross Pay, Deductions, and Net Pay i. Gross Pay: is the total amount you earn before any deductions are taken out. ii. Deductions: the amount of money taken out of your paycheck iii. Net Pay: Gross pay Deductions b. Gross Pay Calculation i. Gross Pay with overtime 1. Overtime: the time that you work beyond the regular hours 2. Overtime rate is 1.5 times the regular rate a. Regular Pay + Overtime= Net Pay c. Example of Gross Pay Calculation for Hourly Employee Hours 40 X 4X Rate $8.oo Amount

Type of Pay Regular Pay Overtime Pay Gross Pay

d. Salary i. Salary is the annual amount divided into equal amounts to be paid each pay period ii. Common Types of Pay Periods 1. Monthly 2. Bi- Monthly 3. Every Two Weeks 4. Weekly

Annual Salary Monthly Twice a Month Every Two Weeks Weekly $24, 000 $24,000 $24, 000 $24, 000

Pay period per Year 12 24 26 52

= Gross Pay Check Per year 2,000 1,000 923.08 461.54

e. Deductions i. Subtractions from your gross pay ii. Some deductions are required by law 1. Social Security Tax 2. Federal Income Tax iii. Other Deductions are optional f. Net Pay i. Net pay is the total after all deductions are taken out of gross pay 1. Paycheck Amount 2. Take Home Pay 3. Amount you can spend as you wish g. Self-Employed Requirements i. Estimated tax payments quarterly (4x/year) ii. Social Security tax and Medicare tax 1. 15.3% is the total Social Secuirty and Medicare tax, including employer matching contributions, paid by people working for themselves 2. The total tax rate is 12.4% of gross income a. SS- 12.4% b. Medicare- 2.9% h. Benefits and Incentives i. Types 1. Profit Sharing 2. Paid Vacation 3. Child Care 4. Sick Pay 5. Leaves of Absence 6. Insurance 7. Bonuses/ Stock options 8. Pension and Savings Plan 9. Travel Expenses ii. Profit Sharing

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1. Profit Sharing is a plan that allows employees to receive a portion of the companys profit at the end of the year 2. The more the company makes, the more the employee gets 3. Profit Sharing is considered incentive pay because it encourages people to work harder Paid Vacation 1. Most Businesses provide full time employees with a set of amount of paid time 2. This means when you take a vacation you get paid 3. The amount of time varies with years of service Paid Holidays 1. Paid Holidays: Christmas, Thanksgiving, 4th of July, Labor Day, and Memorial Day 2. Others: New Years Day, Veterans, MLK, Presidents 3. Sometimes when people have to work holidays they get paid double the regular amount Employee Services 1. Employee Services are the extras that companies offer ti improve morale and working conditions 2. Examples: Employee Discount, Social Program, Free Parking, Tuition Reimbursement, Counseling Child Care 1. On-site child care facilities 2. Coverage of child care expenses as part of benefit package Sick Pay 1. Many businesses also provide an allowance of paid days off for illness 2. It is customary to receive 3 10 days a year Leave of Absence 1. Some employers allow employees to temporarily leave their jobs (without pay) and return to their jobs at a later time

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2. There are usually restrictions on the reason for a leave, such as having children or completing education 3. Advantage: Job Security 4. Disadvantage: Unpaid Personal Days 1. Some employers allow for personal days so employees can attend important matters without calling in and faking sick Insurance 1. Most large companies provide group insurance plans for all employees a. A few plans are paid for by employer as part of employer compensation b. Most plans require that employees pay for part of coverage 2. Common Types of Insurance Plans a. Group Health b. Group Life c. Group Dental d. Group Vision Bonuses and Stock Options 1. Bonuses are incentive pay based on quality of work done, years of service, or company sales or profits 2. Stock Options give employees the right to buy a set number of shares of the companys stock at a fix price Pension and Savings Plan 1. Pension Plans are funded by employers a. They are when a retired person gets a check each month 2. Employees become vested a. Entitled to full retirement after a specified piece of time (i.e. 5 years Employer Sponsored Retirement Savings Plan 1. Common Plans a. 401 (k) for private employers b. 4013 (b) government employees

2. Employees put money in these accounts 3. The employers may also contribute, but dont have to xiv. Travel Expenses 1. Company Car 2. Mileage Allowance 3. Daily Allowance to cover hotel, meals and other travel expenses 4. Expense Reports and Receipts xv. Evaluating Employee Benefits 1. Benefits generally are not taxable to employees (except bonuses and other benefits paid in cash), yet they provide valuable coverage and advantages 2. Generally large companies provide more extensive optional benefits than do small companies 3. In recent years, employee benefits have expanded to meet the needs of different life situations