Comp And Benefits Flashcards
What does FLSA cover
Minimum wage Overtime Child Labour Exempt status Record keeping
Who is an exempt person
Professional - College degree Executives Supervisor Managers/Administrators - customers/money Outside sales
If you make under $23,000 are you exempt
Or non exempt
Non exempt
EPA
Equal pay act
Equal pay for equal work regardless of sex
COBRA
Consolidated Omnibus Budget Reconciliation Act
FMLA
Family medical leave act
Up to 12 weeks unpaid time off for birth of a child, adoption, or sick family member.
HIPAA
Health insurance affordability and portability act
What is the overtime threshold in the EU
48
What is the working time directive
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How many days a year are workers in China allowed to visit a spouse living elsewhere?
30 for spouse
How many days a year are workers in China allowed to visit parents living elsewhere?
20 days
What is the going rate?
The approach linking the expat comp to local market.
Types of global Comp
Fixed term
Short term
Local market rate
Host based
What is the balance sheet approach
Make the employees purchasing power the same in home as host
Most widely used
Equalizes the cost
In UK it’s called the build up system
Most widely used approach
Modified balance sheet approach examples
Examples
Mixed comp approach
Better of home or host
Localization approach to comp
Comp designed for ppl who are going to live in the country for a long time
What is COLA
Cost of living allowance
Hardship premium
Additional funds because of where you are living. Country could be very underdeveloped and you will be expected to live in unfavorable conditions.
Foreign service premium
Money people receive while they are out on assignment.
Most common allowance.
Tax equalization
Protects expats form higher tax bc of a foreign assignment.
As hockey approach
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Laissez faire
Hands off approach - company does not help.
Tax protection
We run a hypothetical tax calculation for both the home and host countries.
Employer pays the additional tax deductions.
The employee could potentially lower their taxes in that country and could benefit from it that much more.
Double tax treaties
Expat taxes at reduced rate or exempt form income taxes on certain items.
Totalization agreement
Eliminates double taxation for social security benefits.
Allows workers to qualify for benefits based
In combined covered from multiple countries.
Split payroll
Stabilizes people’s pay. Some money in local pay and some in host pay.
Performance driven Management incentives
Incentive pay at risk Based on overall success Of the organization
Usually large portion of total compensation
Long term mgmt incentive
Deferred comp
Rolling incentive plans
Examples of perquisites
Non cash compensation - Country club, first class travel, company cars.
Golden parachute
Protection if they lose their job
Silver parachute
Mid level mgmt
Golden handcuffs
Incentives to get ppl to stay and if they leave they need to return it.
Incentive stock option plan
Employees opp to purchase shares of company stock.
Employee stock purchase plan ESP
Shares purchased at a discount. No income tax on grant only when you sell.
What is the strike price
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Phantom stock
Stocks instead of cash bonus
- predetermined date for cash out
Stock appreciation rights
SAR
right to monetary equiv. Or actual shares
ESOP
Employee stock ownership plan
What is ESOP
Gives employees shares of stock in the company.
Designed to increase employees effort, commitment, and loyalty.
US gov mandated benefits:
Workers comp Social security Unemployment insurance FMLA COBRA
Canada mandated benefits
Health insurance
Unemployment insurance
Retirement
China benefits
Unemployment
Home leave
UK benefits
Family leave
Pension
HI
India benefits
Paid holidays
Illness leave
Pension
Workers comp
Defined benefits pension plan
Promise of retirement
Benefit determines by formula
Monthly income for life
Defined contribution pension plan
Account in employees name
Balance determines by fund performance
Profit sharing
Discretionary employer contribution based on profits
Money purchase plans
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401K
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FLSA
Fair Labour standard act
Has nothing to do with vacation, sick or pay that was go I worked day.
To qualify for FMLA how many hours and length of service do you have to have.
12 months + 1250
Hours
Explain the FMLA benefits
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NDAA
National defense authorization act
Explain the NDAA
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Caregiver leave
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26 weeks of unpaid leave
Active Duty Leave
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Name strategic objectives for a global comp. plan
Consistency with strategy
Retain emps
Cost effective and easy to administer
Expats objectives for their compensation
Lessen the financial concern
Personal needs met
Career advancement
Can you pay people under the age of 21 is less then minimum wage in the UK?
Yes
Does FLSA extend outside of the US?
NO
Are flexible working hours for families mandated in the UK?
Yes
What is pure localization compensation strategy?
No benefits of being an international assignee. You are now being paid as if you were a local.
Higher of host or home
Choice of being paid like a local national or the same as home country.
Is taking IA’s good for your career?
It is not always good for your career. Some work is but not always. People who have roots tend to move up and be promoted in the time others are on assignment.
What is purchasing power parody?
Being able to have the same purchasing power in your host country as your home.
Exchange rate differential
Big Mac Index - price of a big mac in the assignment countries compared to the price of the BM in the home country.
Bonafide resident test
Checking to see if the employee is considered a resident in another country during the year. Ex - Kanchan
Physical presence test
How many days you spent in the US - more than 35 days. If you are there more than 35 days then you have to pay income tax.
What phase is the best to send IA’s out on assignment?
Maturity because they have the most money.
If assignees are leaving in the beginning of assignments and the end what is most likely the reason for this?
Poorly designed compensation packages.
What department is responsible for hardship allowances in the US?
USDOS
Wage price spriral
Cause-and-effect relationship between rising wages and rising prices, or inflation.
Name 4 motivation theories
Maslows
Herzberg’s
Vroom’s expectancy theory
Adam’s equity theory
**Herzberg’s theory of motivation
Pay and benefits don’t have a long term effect but bad pay and benefits can have a serious effect on demotivating people.
Vroom’s theory of expectancy
The better I do the better I should be treated. The worse I do the more I expect to be disciplined, etc.
Adam’s equity theory
Compares themselves to their coworkers pay and workload.
Job Design
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Job description
Summary of the highlights of the job analysis.
Job Analysis
Activities and responsibilities
Relationships with other jobs
Required personal Qualifications
Working conditions
What comes first job analysis or job description?
Job Analysis is always first.
Point factor approach
Points of education
Points for years of experience
Errors in the position
Challenging
Slotting
Very subjective
Slot people into where they think they should be.
Direct pay
Money that is going into a persons pocket
Indirect pay
benefits
Flat rate pay
Everyone gets the same amount of money.
Time based systems
The longer you work there, the more you make.
Automatic step rate system
You get raises based on seniority.
Performance based pay/merit pay
The better you do, the better I will pay you.
Productivity based pay
Similar to performance but it’s based on numbers, piece rate pay system.
Knowledge system
The more you know the more you will make
Broadbanding
Grouping similar positions together and doubling the pay range where the max is usually 200%.
Contracts are rare in the US except for…
Executives
Employee Provident Plan (India)
Largest fund in the world of retirement money in India in the employees name. This is mandatory.
State pension act (UK)
Contribution based - employee and the company pay towards the pension which is given to the government when they retire
Social Security Act (US)
Same as UK.
Money comes from the employee and from the company and it’s invested for the employee for when they retire.
An American worker anywhere in the world needs to have SS taken off and the employer is required to match it.
Canada pension plan
100% country sponsored pension plan. Based on ages and number of years of work but you will still get money even if you never worked.
EU benefits
Compulsory bonuses - 13th month Vacation leave Holidays Acquired rights Severance pay
Ranking
most common job evaluation technique.
Factor comparison
Most complex method of job evaluation and the most difficult to implement.
Red circle rates
when workers pay exceed the maximum of the pay grade.
Forms the basis for the balance sheet approach
Nominal home salary
Disturbance allowance is also known as…
Relocation allowance
Mobility premium/Foreign Service Premium or Expat premium
Incentive money given to an expat to begin and complete an assignment.
Expat allowances
Additional funds that we give to assignees.
Are all premiums:
Hardship
Mobility
Moving
Trends right now are cost control. First thing to cut back is allowances in cost cutting measures.
Mobility premiums
Money that is given for the initial move and so you can move quickly.
Spousal support
Employees spouse has to put career on hold, it’s important to always involve the spouse because they can make or break the assignment.
Language training
Servant
Driver
Allowing the spouse to have membership to clubs
Give the spouse funds to offset the reduction of income
Danger pay
Terrorism, kidnapping, robbery, muggings, some high crime countries people would be given danger pay to incentivize them to take the assignment.
How much does assignees cost while on assignment?
200-300% more
Net to net approach
Take net amount of taxes in home and the net taxes in the host country and compare the disposable income for home and host.
Ensure that the employee has equal PPP after taxes for both home and host.
FUTA and SUTA
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