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HUMAN RESOURCES MANAGEMENT
CHECK POINT 35: EMPLOYEE BENEFITS

This Check Point Is Available By Subscription Only,
But You Can Still Check Out The Menu Below
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1. Four Categories Of Employee Benefits
2. Non-Working Time Benefits
3. Vacation And Holiday Pay
4. Sick Leave Pay
5. Severance Pay
6. Unemployment Insurance
7. Insurance Benefits
8. Workers Compensation
9. Hospitalization, Medical, And Disability Insurance
10. Life Insurance
11. Retirement Benefits
12. The Social Security Program
13. Pension Plans
14. SEP-IRA Pension Plan
15. Keogh Pension Plan
16. 401 (k) Pension Plan
17. 403 (b) Pension Plan
18. Service Benefits
19. For Serious Business Owners Only
20. The Latest Information Online
 

DO I NEED TO KNOW THIS CHECK POINT?

 

HUMAN RESOURCES MANAGEMENT
CHECK POINT 35: EMPLOYEE BENEFITS

Please Select Any Topic In Check Point 35 Below And Click.

1. Four Categories Of Employee Benefits
2. Non-Working Time Benefits
3. Vacation And Holiday Pay
4. Sick Leave Pay
5. Severance Pay
6. Unemployment Insurance
7. Insurance Benefits
8. Workers Compensation
9. Hospitalization, Medical, And Disability Insurance
10. Life Insurance
11. Retirement Benefits
12. The Social Security Program
13. Pension Plans
14. SEP-IRA Pension Plan
15. Keogh Pension Plan
16. 401 (k) Pension Plan
17. 403 (b) Pension Plan
18. Service Benefits
19. For Serious Business Owners Only
20. The Latest Information Online
 

DO I NEED TO KNOW THIS CHECK POINT?

 

WELCOME TO CHECK POINT 35

TUTORIAL 1 General Management TUTORIAL 2 Human
Resources Management
TUTORIAL 3 Financial Management TUTORIAL 4 Operations Management TUTORIAL 5 Marketing
And Sales Management
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4 9 14 19 24 29 34 39 44 49 54 59 64 69 74 79 84 89 94 99
5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100
 

HOW CAN YOU BENEFIT FROM CHECK POINT 35?

 
The main purpose of this check point is to provide you and your management team with detailed information about Employee Benefits and how to apply this information to maximize your company's performance.
 
In this check point you will learn:
 
• About four categories of employee benefits.
• About the non-working time benefits.
• About vacation and holiday pay benefits.
• About sick leave and severance pay benefits.
• About insurance benefits.
• About workers compensation, hospitalization, medical, disability, and life insurance.
• About retirement benefits.
• About the Social Security Program
• About pension plans, including SEP-IRA, Keogh plans, 401(k) plans and 403(b) plans.
• About service benefits... and much more..
 

LEAN MANAGEMENT GUIDELINES FOR CHECK POINT 41

 
You and your management team should become familiar with the basic Lean Management principles, guidelines, and tools provided in this program and apply them appropriately to the content of this check point.
 
You and your team should adhere to basic lean management guidelines on a continuous basis:
 
Treat your customers as the most important part of your business.
Provide your customers with the best possible value of products and services.
Meet your customers' requirements with a positive energy on a timely basis.
Provide your customers with consistent and reliable after-sales service.
Treat your customers, employees, suppliers, and business associates with genuine respect.
Identify your company's operational weaknesses, non-value-added activities, and waste.
•. Implement the process of continuous improvements on organization-wide basis.
Eliminate or minimize your company's non-value-added activities and waste.
Streamline your company's operational processes and maximize overall flow efficiency.
Reduce your company's operational costs in all areas of business activities.
Maximize the quality at the source of all operational processes and activities.
Ensure regular evaluation of your employees' performance and required level of knowledge.
Implement fair compensation of your employees based on their overall performance.
Motivate your partners and employees to adhere to high ethical standards of behavior.
Maximize safety for your customers, employees, suppliers, and business associates.
Provide opportunities for a continuous professional growth of partners and employees.
Pay attention to "how" positive results are achieved and constantly try to improve them.
Cultivate long-term relationships with your customers, suppliers, employees, and business associates.

1. FOUR CATEGORIES OF EMPLOYEE BENEFITS

EMPLOYEE BENEFITS

Business owners and managers must become familiar with various types of employee benefits which a company could offer to its employees to enhance organizational performance.

Employee Benefits represent another method of additional compensation designed to attract suitable employees to the company. The main objective of this method is to ensure the long-term retention of employees.

If you don't have employees in your business then this check point is not applicable to you. However, if you do have employees, you would like to know about various types of benefits which your company can offer your employees to ensure high level of motivation and to satisfy their basic needs. This will subsequently cause your employees to become more engaged, motivate them to be more productive and able to contribute to the continuous growth of your organization. For this reason you need to become familiar with various issues related to employee benefits.

All employee benefits can be classified into the following four categories illustrated below. (30)

FOUR CATEGORIES OF EMPLOYEE BENEFITS


Non-Working
 Time Benefits

Insurance
Benefits

Retirement
Benefits

Service 
Benefits

 

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Financial Post:

What Incentives Should You Offer Employees By Jill Earthy, Financial Post.
What Incentives Should You Offer Employees By Jim Treliving, Financial Post.
What Incentives Should You Offer Employees By Paul Godfrey, Financial Post.
What Incentives Should You Offer Employees By D. Patchell-Evans, Financial Post.

© 2011 Financial Post. All rights reserved.

2. NON-WORKING TIME BENEFITS

NON-WORKING TIME BENEFITS

The first category, Non-Working Time Benefits, includes all additional compensation to employees for time not worked. All non-working time benefits may be classified into the following four categories illustrated below. (30)

FOUR NON-WORKING TIME BENEFITS


Vacation And
Holiday Pay

Sick Leave
Pay

Severance
Pay

Unemployment
Insurance

 

ADDITIONAL INFORMATION ONLINE

Please watch these excellent videos professionally narrated and produced by Financial Post:

What Incentives Should You Offer Employees By A. Lacavera, Financial Post.
What Incentives Should You Offer Employees By Mike Holmes, Financial Post.
What Incentives Should You Offer Employees By Mark McEwan, Financial Post.
What Incentives Should You Offer Employees By Catherine Swift, Financial Post.

© 2011 Financial Post. All rights reserved.

3. VACATION AND HOLIDAY PAY

VACATION AND HOLIDAY PAY

Vacation And Holiday Pay are probably among the most costly employee benefits offered by a company.

The extent of the vacation and holiday pay depends upon the company's policy with regard to the length of vacation period allowed to employees and the number of paid public holidays. Some companies also pay the Lost Wages of employees who serve on juries or reserve military duties.

Paid Vacations generally vary from one week per year to four weeks or more, depending upon the employee's seniority and period of service with the company. It is essential to formulate the company's policy regarding the vacation period and to develop a suitable plan. Some plans, for example, prescribe a gradual accumulation of vacation time such as one hour of vacation for each week of service.

The number of Paid Public Holidays may vary from five to thirteen and generally include the following holidays, as outlined below. In addition, many companies offer one or more Paid Personal Holidays and three to four days pay for Bereavement Leave, when needed. (30)

 PAID PUBLIC HOLIDAYS

4. SICK LEAVE PAY

SICK LEAVE PAY

Sick Leave Pay provides the employee with compensation during absence from service as a result of illness. Employers generally allow up to 12 days of absence per year on account of illness, i.e. on average one day for each month of service.

Sometimes, employers compensate employees for being healthy and not using the sick leave pay. This policy, however, may not produce the desired results since it can motivate certain employees to come to work while sick.

Finally, many companies offer Maternity Leave Pay to expecting mothers for a specific period of time, depending upon the company's policy. (30)

5. SEVERANCE PAY

SEVERANCE PAY

Severance Pay may be offered to employees upon termination of their employment. This is a one-time payment that may vary from a few days' wages to as much as six months of salary.

Severance pay also depends upon the notice period given to the employee. Thus, it may be feasible to offer an extended notice period to a particular employee in conjunction with reasonable severance pay. Such a gesture may further allow the employee to find a new job and terminate his or her present employment with minimal difficulties. (30)

6. UNEMPLOYMENT INSURANCE

UNEMPLOYMENT INSURANCE

Unemployment Insurance is designed to provide eligible employees with weekly unemployment benefits. The premium for this insurance is usually levied on employers in most states as Federal Unemployment Insurance Tax or FUTA Tax

FUTA Tax is levied in accordance with Federal Unemployment Tax Act (FUTA), which is a part of the U.S. Social Security Program.  FUTA Tax is assessed based upon the experience rating of a particular company. (31)

ADDITIONAL INFORMATION ONLINE

You can obtain additional information current FUTA Tax from Internal Revenue Service online.

Note:

Please consult with your accountant regarding your current rates.

7. INSURANCE BENEFITS

INSURANCE BENEFITS

The second category, Insurance Benefits, includes all additional compensation designed to cover various hazards commonly shared by employees. All insurance benefits may be classified into the following three categories illustrated below. (30)

RANGE OF INSURANCE BENEFITS


Workers
 Compensation

Hospitalization,
 Medical 
And Disability
 Insurance

Life 
Insurance

8. WORKERS COMPENSATION

WORKERS COMPENSATION

Workers Compensation Laws are designed to provide employees with a secure, prompt income and medical benefits in case of work-related injury or illness. These benefits are paid to accident victims and their dependents regardless of fault. In order to be eligible for Workers Compensation, it is necessary to prove that an accident took place while the worker was on the job.

In this event, the benefits will be paid to the employee in the form of cash or medical coverage, or both, for a period not exceeding 800 weeks. The amount of monetary compensation depends upon the degree of the employee's disability and, usually varies between 50% and 75% of the worker's average wage.

Workers Compensation Insurance is generally handled by the state administrative commission. It is, however, the employer's responsibility to arrange appropriate coverage through suitable insurance companies. Moreover, employers are required to make regular payments into special workers compensation funds to provide coverage for their employees. (32)

Note:

Please consult with your local Workers Compensation Office representative regarding updated information.

ADDITIONAL INFORMATION ONLINE

You can obtain additional information about Workers Compensation Laws and other related issues online:

U.S. Department Of Labor

Workers Compensation

Cornell Law School - Workers Compensation Laws

9. HOSPITALIZATION, MEDICAL AND DISABILITY INSURANCE

HOSPITALIZATION, MEDICAL AND DISABILITY INSURANCE

Hospitalization, Medical, And Disability Insurance are among the most important benefits offered to employees. This insurance provides protection in the event of the employee's hospitalization, incurring of medical costs or of a disability arising from off-the-job causes.

Employers have the option of selecting and purchasing a suitable insurance policy from various organizations, e.g. life or casualty insurance companies such as Blue Shield or Blue Cross. Most health insurance policies cover, at least, basic medical, surgical, and hospitalization expenses for all eligible members of a particular group.

All employees aged 65 and over are, in any event, covered by the federally funded Medicare Health Insurance Plan (Part A And Part B).

Note:

Please consult with your insurance broker regarding updated information concerning the above.

WHAT IS AN HMO?

The Health Maintenance Organization (HMO) Act Of 1973 was designed to promote an alternative health care plan to employees.

An HMO is a medical organization that offers membership to employers and provides a comprehensive medical service to its employees for a nominal fee. The HMO also charges a fixed annual membership fee per employee from employer. Employers in locations having HMO accessibility which offer health insurance must include the HMO as one of their health plan options. (33)

WHAT IS A PPO?

Another type of organizations, which are actively involved in providing employees with a broad range of medical and hospitalization services are known as Preferred Provider Organizations (PPOs).

The PPOs, in fact, fall in between indemnity insurers and HMOs. Under a PPO there is a direct contractual relationship between and among employers, health care providers, and third party payers.

WHAT IS COBRA?

Employers with 20 or more employees are subject to requirements imposed by The Consolidated Omnibus Budget Reconciliation Act (COBRA).This act requires employers to inform employees and their families of their rights to continued health benefits (usually for 18 months) at the employee's expense. This expense may include a small administrative fee.

ADDITIONAL INFORMATION ONLINE

You can obtain additional information about Hospitalization, Medical And Disability Insurance, and other related issues online:

Anthem – Blue Cross Of California ®

Blue Shield Of California ®

Kaiser Permanente ®

U.S. Department Of Labor

10. LIFE INSURANCE

LIFE INSURANCE

Life Insurance is offered by many organizations to their employees.

Companies usually purchase Life Insurance Policies for a group of employees in order to obtain lower rates and more flexible conditions. As a result, employees may have the opportunity of joining a particular life insurance plan regardless of their personal state of health or physical condition.

The employer usually pays the Full Base Premium, thus providing the employee with a life insurance coverage equal to approximately two years of the employee's income. An employee may also contribute to the payment of the insurance premium, if higher coverage is desired. In other instances, the employer and employee split the payment for the base premium in a pre-arranged proportion, e.g. 50%-50%, or 70%-30%.

ADDITIONAL INFORMATION ONLINE

You may wish to evaluate the status of your company’s employees and management regarding various types of insurance coverage and obtain additional information online, including life, disability, health, long-term care insurance and business insurance.

You may obtain such information by requesting a free Business Insurance Worksheet from Lean Business Club. Simply send your e-mail to: Info@LeanBusinessClub.com.

11. RETIREMENT BENEFITS

RETIREMENT BENEFITS

The third category, Retirement Insurance Benefits, includes all additional compensation designed to provide steady income to employees upon retirement. All retirement benefits may be classified into the following two categories illustrated below.

RETIREMENT BENEFITS PROGRAMS AND PLANS

 

The Social Security Program

 

Pension Plans

 

ADDITIONAL INFORMATION ONLINE

You may wish to evaluate the status of your company’s employees and management regarding various types of retirement plans and obtain additional information online.

You may obtain such information from Lean Business Club by requesting a free Retirement Planning Worksheet. Simply send your e-mail to: Info@LeanBusinessClub.com.

12. THE SOCIAL SECURITY PROGRAM

THE SOCIAL SECURITY PROGRAM

The Social Security Program was developed and introduced by the Federal Government in the 1930's. The central part of this program is The Social Security Act Of 1935. Under this act, employer and employees must contribute equal payments to a special fund on a monthly basis.

The Social Security Program offers retirement and disability benefits to all employees who retire at age 62 or thereafter. Furthermore, this program offers survivors' benefits or death benefits to the employee's dependents, regardless of age at death. Finally, this program provides disability payments to employees and their dependents in case of an employee's temporary or permanent disability.

One of the major additions to this program is the provision of hospitalization and medical insurance for persons 65 years old and older. The Social Security Program is financed by taxes on employers, employees, and the self-employed. The magnitude of these taxes is determined in accordance with The Federal Insurance Contributions Act (FICA).

Note:

Please consult with your accountant regarding the current rates.

ADDITIONAL INFORMATION ONLINE

You can obtain additional information about various Social Security Programs and other related issues provided by the Social Security Administration online.

13. PENSION PLANS

Pension Plans include several basic types illustrated below. (34)
 

PENSION PLANS

SEP-IRAs

Keogh Plans

401 (k) Plans

403 (b) Plans

14. SEP-IRA PENSION PLAN

SEP-IRA PENSION PLAN

Simplified Employee Pension Individual Retirement Accounts or SEP-IRAs are very simple plans to set up.

SEP-IRA Plans allow self-employed individuals to put aside a specified amount of their self-employment income. Since the plan does not have a minimum requirement, each self-employed person is free to decide which amount will be suitable (up to the maximum allowable) according to his or her needs.

All contributions to the SEP-IRA account are fully tax-deductible from that individual's personal taxable income.

ADDITIONAL INFORMATION ONLINE

You may find additional information about current SEP-IRAs online:

U.S. Department Of Labor

Internal Revenue Service 

SEP-IRA Plan

Note:

Please consult with your accountant regarding the current rate.

15. KEOGH PENSION PLAN

KEOGH PENSION PLAN

In comparison to SEP-IRAs, Keogh Plans are more complicated in terms of administration and paperwork. 

Keogh Plans, however, are more appealing since they allow one to put aside a larger percentage of the self-employed person's income, namely 20%. In addition, Keogh Plans allow small business owners to maximize contributions relative to employees in two ways, which are not possible with SEP-IRAs.

ELEMENTS OF KEOGH PENSION PLANS

Vesting Schedules

 

Social Security Integration

This requires employees to remain with the company for a certain number of years before they obtain the right to their full retirement account. Once employees become fully vested, they own the total fund, and upon leaving the company's employ they may transfer the whole fund to another company's pension plan, or roll the funds over into their individual IRAs.

 

Keogh Plans allows high-income earners in a company to receive higher percentage contributions for their account in comparison to the lower-income employees.

 

ADDITIONAL INFORMATION ONLINE

 
You may find additional information about current Keogh Plans online:
 
Keogh Plan
How Keogh Retirement Plan Work?
 

Note:

Please consult with your accountant regarding the current rate.

16. 401 (k) PENSION PLAN

401 (k) PENSION PLAN

Today, more and more companies offer 401 (k) Pension Plan and Roth 401(k) Pension Plan to employees. This plan generally allows employees to save substantially up to their annual contribution per year, based on current rates. The total amounts paid into this plan are fully tax-deductible from the employee's individual taxable income.

Employers may also contribute to the pension plan, which accumulates in a separate account on a tax-deferred basis. 401 (k) plan can be established for a one-person business – Solo 401(k) Plan, or for a group of owners and employees – Group 401(k) Plan.

Pre-Tax 401(k) Contribution Limits are as follows:

401 (k) PENSION PLAN CONTRIBUTION LIMITS

Year

Employee
Contribution
Limit

Maximum Employer Contribution

Annual Maximum For All Contributions

Catch-Up Contribution Limit (Age 50 Plus)

2011

$16,500

$32,500

$49,000

$5,500

2012

$17,000

$33,000

$50,000

$5,500

2013

$17,500

$33,500

$51,000

$5,500

 

ADDITIONAL INFORMATION ONLINE

 
You may find additional information about current 401(k) Rates online:
 
401kHelpCenter
Retirement Plan Limits
Society For Human Resource Management
 
Note:
 
Please consult with your accountant regarding the current rates.

17. 403 (b) PENSION PLAN

403 (b) PENSION PLAN

403 (b) Pension Plans are designed specifically for non-profit organizations.
If you contribute the maximum basic salary deferral limit, and you qualify for both of the catch-up provisions described below, you have the potential to contribute up to $25,500 to your 403(b) plan during 2012.
 
• Basic salary deferral limit: $17,500 in 2012 - 2013
• 403(b) Lifetime Catch-up: You may be eligible to defer up to an additional $3,000.
• Age 50+ Catch-up: If you are age 50 or older, you may be eligible to defer up to an
  additional $5,500 in 2013.
• Total 2012 contribution limit on combined employee/ employer contributions: 100% of
   your includible compensation or $50,000, whichever is less.
 
Similar to the 401 (k) Plan, all contributions are also completely tax-deductible from the employees' personal taxable income.

 

ADDITIONAL INFORMATION ONLINE

You may find additional information about current 403(b) Rates online:

Fidelity
Retirement Plan Limits

Society For Human Resource Management

How Much Can I Put Into My Retirement Account?
 
Note:
 
Please consult with your accountant regarding the current rates.

18. SERVICE BENEFITS

SERVICE BENEFITS

The final category, Service Benefits, includes all additional compensation offered to employees in the form of services and executive perquisites.

The service benefits may include a broad range of incentives to employees outlined below.

EXAMPLES OF SERVICE BENEFITS

1.

Social or legal counseling.

2.

Subsidized cafeteria.

3.

Subsidized or free employee transportation.

4.

Subsidized or free sports facilities.

5.

Subsidized or free child care or dependent care.

6.

Company car and gas.

7.

Traveling and entertainment allowance.

8.

Low interest or interest-free loans.

9.

Discounts on the purchase of the company's products or services.

10.

Subsidized computers and Internet access.

19. FOR SERIOUS BUSINESS OWNERS ONLY

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Reprinted with permission.

20. THE LATEST INFORMATION ONLINE

 

LESSON FOR TODAY:
The Best Benefit Is Being Healthy And Able
To Get Up In The Morning And Have Things To Do!

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