Total compensation personnel law
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TOTAL COMPENSATION & PERSONNEL LAW. for: Women In Agriculture by: Sarah Sanders Smith Assistant Professor Organizational Leadership & Supervision Purdue University North Central. Compensation. How to determine, in a particular geographical area, farm wage scales

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Total compensation personnel law



Women In Agriculture


Sarah Sanders Smith

Assistant Professor

Organizational Leadership & Supervision

Purdue University North Central


  • How to determine, in a particular geographical area, farm wage scales

  • Pay leader, pay follower or market value?

  • What benefits must employers provide (ie: required by law)?

  • What optional (discretionary) benefits should be considered?

Intrinsic vs extrinsic
Intrinsic vs. Extrinsic

  • Intrinsic Compensation: Employees’ psychological mindsets that result from performing their jobs

  • Extrinsic Compensation: Both monetary and non-monetary rewards

  • This session’s focus?

    Extrinsic Compensation

Types of extrinsic comp
Types of Extrinsic Comp

  • Core Compensation (base pay)

  • Adjustments to Core Compensation

    • Cost-of-living Adjustments (COLA)

    • Seniority Pay (length of service)

    • Merit Pay (job performance)

    • Incentive Pay (goals, objectives)

    • Person-focused Pay (new k, s, a’s)

Types of extrinsic comp1
Types of Extrinsic Comp

  • Legally Required Benefits

    • Social Security

    • Unemployment Compensation

    • Workers’ Compensation

    • FMLA

  • Discretionary Benefits

    • Companies “choose” to offer or not

Components of a total compensation program external environment internal environment


Components of a Total Compensation ProgramExternal EnvironmentInternal Environment




Wages Salaries Commissions Bonuses

Indirect (Benefits)

Legally Required Benefits Social Security Unemployment Compensation Workers’ Compensation Family & Medical Leave

Voluntary Benefits Payment for Time Not Worked Health Care Life Insurance Retirement Plans Employee Stock Option Plans Supplemental Unemployment Benefits Employee Services Premium Pay Unique Benefits

The Job

Skill Variety Task Identify Task Significance Autonomy Feedback

Job Environment

Sound Policies Competent Employees Congenial Coworkers Suitable Status Symbols Working Conditions

Workplace Flexibility Flextime Compressed Work Week Job Sharing Flexible Compensation Telecommuting Part-time Work Modified Retirement

Determinants of individual financial compensation
Determinants of Individual Financial Compensation

  • Organization

  • Labor market

  • Job

  • Employee

The organization s ability to pay
The Organization’s Ability to Pay

Organization’s assessment of its ability to pay is important factor in determining pay levels

The labor market as a determinant of financial compensation
The Labor Market as a Determinant of Financial Compensation

  • Compensation surveys

  • Expediency

  • Cost of living

  • Labor unions

  • Economy

  • Legislation

Http www cnr berkeley edu ucce50 ag labor

“About 40% to 70% of costs in production agriculture are related to labor costs. Thus, it seems that effective management of these costs plays a vital role in the competitiveness of agricultural producers.”

Compensation surveys
Compensation Surveys related to labor costs.

  • What are other farms paying?

  • What are other employers who would hire our workforce paying?

  • Geographic area of survey

  • “Benchmark” Jobs

Compensation surveys1
Compensation Surveys related to labor costs.

  • Some are free, some are fee

  • Don’t be afraid to look around…

  • Bureau of Labor Statistics


    • Layoffs, Unemployment Rates, CPI, Inflation Calculator

  • WorkOne

Expediency related to labor costs.

  • Can you start tomorrow at 3:30 AM?

  • Can you start yesterday?

  • Beware of expediency and its affect on decision-making

Cost of living
Cost of Living related to labor costs.

  • If an employee makes $10/hour and you give them a 50 cent raise, what percent increase did they receive???

  • Answer: 5%

  • Not!!!

  • The “Real Wage” increase must account for inflation

Cost of living and real wage
Cost of Living and Real Wage related to labor costs.

  • IF the inflation rate in your area is 2%

  • THEN the Real wage increase is the amount of the raise – inflation

  • A 5% increase – 2% cost of inflation = “real” pay increase of 3%

  • How to determine inflation?

    • CPI – Bureau of Labor Statistics, or…

Inflation calculator
Inflation Calculator related to labor costs.

The job as a determinant of financial compensation
The Job as a Determinant of Financial Compensation related to labor costs.

  • The job itself continues to be a factor, especially for those employers who have internal pay equity as a primary consideration

  • Organizations pay for the value they attach to certain duties, responsibilities, and other job-related factors such as working conditions

Compensation policies
Compensation Policies related to labor costs.

  • Pay leaders – pay higher wages and salaries

  • Market rate, or going rate – pay what most employers pay for same job

  • Pay followers – pay below market rate because poor financial condition or believe they do not require highly capable employees

Legally required benefits
Legally Required Benefits related to labor costs.

  • Social Security

  • Unemployment Compensation

  • Workers’ Compensation

  • FMLA

Internal revenue code irc
Internal Revenue Code (IRC) related to labor costs.

  • FICA = Federal Insurance Contributions Act:

    • Finances Social Security Old-Age

    • Survivor and Disability Insurance programs

    • (OASDI)

  • FUTA = Federal Unemployment Tax Act

    • Unemployment taxes

Calculating unemployment compensation
Calculating Unemployment Compensation related to labor costs.

  • Two Methods

  • WorkOne will evaluate for you what is the most economically feasible

  • Pay per case, or…

  • Pay a set premium

Unemployment compensation
Unemployment Compensation related to labor costs.

  • When it is a true “layoff”, the answer is easy

  • A termination often triggers an investigation

  • How do you “win”?...

  • Documentation and timely response to inquiries!!!

Workers compensation
Workers’ Compensation related to labor costs.

  • Train in an understandable manner

  • NIOSH FACEWeb case examples

  • Offer light duty

  • Always obtain a full release for all employees who are coming back to full duty

  • You can consider self-paying to a predetermined dollar amount to decrease premium cost!

FMLA related to labor costs.

  • “Covered” employers must grant “eligible employees” up to a total of 12 work weeks of unpaid leave during any 12-month period for one or more of the following reasons:

    • for the birth and care of the newborn child

    • for placement with the employee of a son or daughter for adoption or foster care;

    • to care for an immediate family member (spouse, child, or parent) with a serious health condition; or

    • To take medical leave when the employee is unable to work because of a serious health condition.

FMLA related to labor costs.

  • “Covered Employer” = 50 or more employees in a 75 mile radius

  • “Eligible Employee” =

    • (1) Has been employed by the employer for at least 12 months, and

    • (2) Has been employed for at least 1,250 hours of service during the 12-month period immediately preceding the commencement of the leave, and

    • (3) Is employed at a worksite where 50 or more employees are employed by the employer within 75 miles of that worksite.

Fmla what s new
FMLA – What’s New??? related to labor costs.

  • Military related family leave

  • As Amended by Section 585 of the National Defense Authorization Act for FY 2008:

    “an eligible employee who is the spouse, son, daughter, parent, or next of kin of a covered servicemember shall be entitled to a total of 26 workweeks of leave during a 12-month period to care for the servicemember. The leave described in this paragraph shall only be available during a single 12-month period.”

Discretionary benefits

Discretionary Benefits related to labor costs.

Income Protection

Disability Insurance

Life Insurance

Retirement Plans

Health Protection Programs

Paid Time-Off

Accommodation and Enhancement

Employer costs for c b s
Employer Costs for C&B’s related to labor costs.

  • Private Industries

    • Total comp avg = $27.31 / hour

    • Wages and salaries = $19.12 / hour

    • Benefits = $8.18 / hour (30 %)

    • Life, health and disability = $2.22/hour

    • Legally required (Soc Sec, Medicare, unemployment, workers’ comp) = $2.19/hour

    • Paid leave (holidays, vacation, sick) = $1.91/hour

Cost advantage
Cost Advantage related to labor costs.

  • Employers may be able to purchase benefits at a lower cost than individuals

  • Example: Health Insurance?

  • More covered lives = decreased risk

  • High risk folks have less impact on large groups

  • “Economies of Scale”

Less expensive discretionary benefits
Less Expensive Discretionary Benefits related to labor costs.

  • Disability Insurance

  • Life Insurance

  • Paid Time Off

  • 401(k)

  • Unique Benefits

    • Aflac

    • Prepaid Legal

    • The Turkey Dinner

The eeoc and benefits
The EEOC and Benefits related to labor costs.

  • Equal Pay Act – 1963

    • “wages” includes benefits

  • Title VII of the Civil Rights Act - 1964

    • “compensation” includes benefits

  • Age Discrimination in Employment Act – 1967

    • specific reference to benefits

    • early retirement programs must be voluntary

Personnel law concerns for agricultural employers
Personnel Law Concerns for Agricultural Employers: related to labor costs.

  • How to write a legally defensible job description

  • Hispanic workers: legal or not?

  • Q&A…ask what’s on your mind!

Job analysis the basic tool
Job Analysis: THE Basic Tool! related to labor costs.

  • What physical and mental tasks does the worker accomplish?

  • When is the job to be completed?

  • Where is the job to be accomplished?

  • How does the worker do the job?

  • Why is the job done?

  • What qualifications are needed to perform the job?

Job analysis the basic human resource management tool
Job Analysis: related to labor costs. THE Basic Human Resource Management Tool

  • Human Resource Planning

  • Recruitment

  • Selection

  • Training and Development

  • Performance Appraisal

  • Compensation and Benefits

  • Safety and Health

  • Employee and Labor Relations

  • Legal Considerations

  • Job Analysis for Teams




Job Descriptions

Job Analysis

Job Specifications




Job analysis methods
Job Analysis Methods related to labor costs.

  • Questionnaires

  • Observation

  • Interviews

  • Employee recording

  • Combination of methods

O net online
O*Net Online related to labor costs.

Legal defensibility
Legal Defensibility related to labor costs.

  • Avoid words like “young”, “energetic”

  • If employment tests are used, make sure they are job related

  • Publish open positions in a variety of locations that also reflect the workforce

  • Always strive to hire for “Best Fit” for the job

Hispanic workers
Hispanic Workers related to labor costs.

  • Must accept ID that “reasonably appears” valid

  • Checking Soc Sec Numbers…you must check ALL to avoid litigation

  • The “no match” letter…then what do you do?

First step the no match letter
First Step: The “No Match Letter” related to labor costs.

  • Offer the employee a reasonable time frame to come forward with valid identification

  • A couple of days will usually suffice

Now it is your turn
Now it is Your Turn… related to labor costs.



Opportunities for Improvement?

Thank You!

Sarah Sanders Smith

Office: (219) 785-5684

Cell: (219) 363-4739

E mail: [email protected]