Pay, Benefits, and Working Conditions

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# Pay, Benefits, and Working Conditions - PowerPoint PPT Presentation

Pay, Benefits, and Working Conditions. Chapter #1. Understanding Pay, Benefits, and Incentives. Section #1.1. Section Goals. Compute payroll deductions and net pay. Identify optional and required employee benefits and recognize their value. Gross Pay, Deductions, and Net Pay.

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Chapter #1

### Understanding Pay, Benefits, and Incentives

Section #1.1

Section Goals
• Compute payroll deductions and net pay.
• Identify optional and required employee benefits and recognize their value.
Gross Pay, Deductions, and Net Pay
• Gross pay includes your regular pay plus overtime wages earned during that pay period.
• Gross Pay:
• The total amount you earn before any deductions are subtracted.
• Overtime:
• Time worked beyond the regular hours.
Calculating Gross Pay (Hourly)
• Determine the number of hours you worked during the pay period.
• Multiply your hourly wage by the number of hours worked to calculate your gross pay amount.
Example: Calculating Gross Pay (Hourly)
• M.J. Smith works for \$6.50 an hour. They worked 40 hours during this pay period. What is M.J.’s gross pay for this pay period?

\$6.50 x 40 = \$260.00

Calculating Gross Pay with Overtime
• Determine the number of regular time hours you worked during the pay period.
• Determine your overtime pay rate (hourly wage x 1.5).
• Determine how many overtime hours you worked during the pay period.
• Multiply the number of overtime hours worked by your overtime pay rate.
Example: Calculating Gross Pay with Overtime
• During the next pay period, M.J. Smith worked 40 hours at \$6.50 an hour. In addition to the regular 40 hours worked, she also worked 5 hours of overtime during this pay period. What is her total gross pay with overtime?

\$6.50 x 40 = \$260.00

\$6.50 x 1.5 = \$9.75

\$9.75 x 5 = \$48.75

\$260.00 + \$48.75 = \$308.75

Calculating Gross Pay (Salary)
• Determine how many time you will receive a paycheck during the year.
• Divide your annual salary by the number of pay periods there are during the year.
Example: Calculating Gross Pay (Salary)
• T.S. Jones works for \$24,000 per year. They get paid every two weeks. What is T.S. Jones’s gross pay each pay period?

52 weeks / 2 = 26 pay periods

\$24,000 x 26 = \$923.08

Deductions
• Deductions are subtracted from gross pay to determine net pay.
• Deductions:
• Amounts subtracted from your gross pay.
• Net Pay:
• Gross pay minus deductions.
Calculating Net Pay (Hourly)
• Determine hourly gross pay.
• Add together the amount of each deduction.
• Subtract gross pay from the total amount of deductions.
Example: Net Pay (Hourly)
• M.J. Smith’s gross pay for this pay period was \$260.00. The following deductions were taken out: Federal Tax (\$13.00), Medicare (\$4.48), Savings Account (\$20.00), Health Insurance (\$11.00), Union Dues (\$2.50). What is M.J. Smith’s net pay for this pay period?

\$13.00 + \$4.48 + \$20.00 + \$11.00 + \$2.50 = \$50.98

\$260.00 - \$50.98 = \$209.02

Calculating Net Pay with Overtime
• Determine your total gross pay plus overtime.
• Add together the amount of each deduction.
• Subtract your total gross pay plus overtime from the total amount of deductions.
Example: Net Pay with Overtime
• During the next pay period, M.J. Smith worked 5 hours of overtime which made her total gross pay \$308.75. The following deductions were taken out of her pay: Federal Tax (\$14.50), Medicare (\$5.58), Savings Account (\$20.o0), Health Insurance (\$11.00), Union Dues (\$2.50). What is M.J. Smith’s net pay?

\$14.50 + \$5.58 + \$20.00 + \$11.00 + \$2.50 = \$53.58

\$308.75 - \$53.58 = \$255.17

Calculating Net Pay (Salary)
• Determine the gross pay for each pay period.
• Add together the amount of each deduction.
• Subtract the total amount of deductions from the gross pay amount.
Example: Net Pay (Salary)
• T.S. Jones’s gross pay this pay period was \$923.08. The following deductions were taken out: Federal Tax (\$78.00), Medicare (\$26.88), Savings Account (\$20.00), Health Insurance (\$11.00), Union Dues (\$2.50), Life Insurance (\$3.80). What is T.S. Jones’s net pay for this pay period?

\$78.00 + \$26.88 + \$20.00 + \$11.00 + \$2.50 + \$3.80 = \$142.18

\$923.08 - \$142.18 = \$780.90

Self-Employed Requirements
• Self-employed people pay both the employee and employer portions of social security and Medicare.
• Self-Employment Tax:
• The total social security and Medicare tax, including employer-matching contributions paid by people who work for themselves.
• Self-employed people pay 12.4% of their gross income. for the social security tax and 6.2% of their gross income for the Medicare tax which totals 15.3% of their gross income.
Benefits and Incentives
• Benefits:
• Forms of employee compensation in addition to pay.
• Cafeteria-style plans allow employees to choose the benefits that best meet their needs.
• Benefits in addition to pay may include:
• Profit Sharing:
• Incentive Pay:
• Money offered to encourage employees to strive for higher levels of performance.
• Paid Time Off
• Employee Services
• Insurance Plans
• Bonuses
• Stock Options
• Retirement Plans
• Vested:
• Entitled to the fill retirement account.

### Work Arrangements and Organizations

Section #1.2

Section Goals
• Explain several flexible job arrangements.
• Describe the role of unions and professional organizations in the workplace.
Flexible Work Arrangements
• Flextime, a compressed workweek, job rotation, job sharing, permanent part-time jobs, and telecommuting offer employees flexibility.
• Flextime:
• Allow employees to choose their working hours within defined limits.
• Compressed Workweek:
• A work schedule that fits the normal 40-hour week into less than 5 days.
• Job Rotation:
• Job Sharing:
• A job design in which two people share one full-time position.
Labor Unions
• Labor unions negotiate the terms of work contracts with employers on behalf of their members.
• Labor Union:
• A group of people who work in the same or similar occupations, organized for the benefits of all employees in these occupations.
• Functions of Unions:
• Collective Bargaining:
• The process of negotiating the terms of employment for union members.
• Seniority:
• A policy in which the last workers hired will be the first fired when jobs must be cut.
Professional Organizations
• Professional organizations serve people in highly skilled occupations.
• Professional Organization:
• An organization of people in a particular occupation that requires considerable training and specialized skills.
• These organization maintain standards and keep members current in their fields.
• Lobbying:
• The process of trying to influence public officials to take political action the benefits the profession.
Bibliography
• Ryan, J. (2006). “Managing your personal finances; 5th ed.” Thomson South-western; Mason, Ohio