Compensation and Employment Law Flashcards
What are 2 ways to classify compensation?
Direct & Indirect
What is direct compensation?
Direct compensation involves monetary payments to employees for time worked or results obtained.
What is indirect compensation?
Indirect compensation involves expenditures made by an employer on behalf of all employees and is typically referred to as “fringe benefits.”
Components of direct compensation
Base salary
Premium payments (overtime, shift differentials, longevity pay.)
Contingent programs (incentive plans or achievement award, merit pay)
Components of indirect compensation
Protection programs -
(Social Security, Worker’s Compensation, Unemployment Compensation, pension plans, health, dental, vision, life, accidental death and long term disability insurance.)
Paid Leave -
(vacations, holidays, jury duty, sick leave, military leave.)
Which of the following is NOT direct pay?
A. Long term incentive pay
B. Cash given as recognition and achievement awards
C. Differential Pay
D. Deferred pay
D
Which of the following is not indirect compensation?
A. Legally required benefits
B. Pay programs for selected employees
C. Income replacement programs
D. Flexible benefit plans
B
What are the key components of a compensation and classification system?
Job Analysis
Job Descriptions
Salary Surveys
Job Evaluations
Pay Structures
Policies and Regulations
What is job analysis?
Job analysis is the process of gathering and analyzing data regarding all aspects of a position, including the following:
Tools, materials, equipment
Methods or processes
Specific duties
Critical tasks
Outcomes of job for which employee will
be held accountable and evaluated
Behaviors, Skills, Knowledge, Experience
What methods are used in Job Analysis?
Questionnaire - open-ended and highly
structured
Interview
Observation
Work Diary
Behavioral event interview
What is the first and most important step in conducting job analysis?
Communicate with employees
What are we doing and why? Role of the employees Final product
What is developed using the results of job analysis?
Job description
What aspects of a position do job descriptions summarize?
Tasks, Responsibilities, Requirements
What is job evaluation?
The process of determining the worth or value of a job, among and within job categories in an organization
What 2 things must be done first before job evaluation?
Job analysis and producing an accurate job description
How does job analysis, job descriptions, and job evaluation relate to FLSA?
These processes determine whether or not a position is exempt from FLSA overtime requirements
What features make up a good job description?
- Job code and title
- Purpose of position
- Essential duties
- Minimum Qualifications
- Physical / Mental Qualifications
- KSA’s
What are KSA’s?
Knowledge, Skills, Abilities
What components of a job description is critical in maintaining compliance with the ADA?
Essential Functions
Physical and mental requirements
What are the benefits of a good job description?
Promote employee ownership and
interactive management
Document the evolution of job duties
Evaluate employee performance
Promote legal compliance
Maintain a consistent salary structure
What are duty statements also known as?
Essential functions
True or false: A duty statement should focus on primary, current, normal, daily duties and responsibilities of a position, as well as incidental duties, employee’s qualifications, or temporary assignments.
False - A duty statement should NOT focus on incidental duties, employee’s qualifications or temporary assignments.
Well written duty statements contain __________ ___________ which accurately describe what is being done.
Action verbs
A duty statement should be __________ based to allow for alternate means of performing duty, technology changes, employee and supervisor preferences and accommodations of workers with disabilities.
Outcome
Duty statements contain 3 parts:
Action verb, Object of the verb, Purpose
The ADA describes a qualified individual with a disability as
A person with a disability who can fulfill, with or without reasonable accommodation, the requisite skill, experience, education, and other job related requirements, and who can perform the ESSENTIAL FUNCTIONS of such position.
What are 5 types of physical demand of a job?
Strength
Movement
Auditory
Taste / Smell
Vision
What aspects of a job should be described in a good job description?
Mental functions, Relations with Others, Physical demands (strength, movement, auditory, taste / smell, vision), Environmental conditions / Physical surroundings, Equipment used, Hazards
Recent complaints filed with the EEOC under the ADA indicate what essential job responsibilities should be included in a job description.
Hours of work
Attendance requirements
Internal working relationships
Communicate
Stress
Flexibility
Business necessity
What is achieved through classifying and evaluating a job?
Objective evaluation of positions - focus on job content, not personal abilities, classification according to duties and responsibilities
Achieving internal equity - determine relative value of all positions, pay employees in accordance with degree of difficulty or complexity of job
What is the first step of job evaluation?
Job audit
What does a job audit involve?
Meeting with incumbents, co-workers, supervisors, department heads, etc.
Reviewing the class specification
Internal research or study of other class specifications for compensation
Overall analysis to form a classification recommendation
What are 2 types of systems for classifying and evaluating a job?
Non-quantitative & Quantitative
What are 4 types of Non-quantitative systems?
Market pricing, whole job ranking, classification, slotting
What are 3 types of quantitative systems?
Point Factor, Point-factor comparison, Matrix Point-factor
What is the classification method?
Consists of grouping jobs into a predetermined number of grades, each having a class specification to use for job comparisons.
Ranking method
Establishing a hierarchy of jobs from lowest to highest based on overall importance to organization
Which method would be most appropriate for a large organization or public sector government agency - classification or ranking method?
- Classification - large, public sector *
Ranking - more appropriate for a small organization lacking in resources
What job evaluation method uses compensable factors to evaluate job worth?
Point method
What job evaluation method uses ranking of jobs on selected compensable factors and then identifies factor weights to develop a score?
Factor Comparison Method
Which job evaluation method is best for producing objective, defensible results and provides good documentation and an audit trail?
A. Classification
B. C & D
C. Point method
D. Factor Comparison
B. Both point method and factor Comparison method
Which job evaluation method is not a true job evaluation system?
Market based
Market based method is most suitable for organizations where it is vital to maintain ____________ _______________ position.
Competitive market
What is a disadvantage of market based method as compared to job content approaches?
Less legally defensible
What factors are used to classify and evaluate a job?
Compensable factors
Individual comparison points vs. set point values
Good job evaluation focuses on what 3 things:
Job duties, tasks, and responsibilities
True or False: Personal attributes of an employee are considered in job evaluation.
False
What is a salary survey?
A salary survey is a standard method of finding out what other organizations pay for specific positions or job categories.
Quantifiable data collected by a salary survey
Base salary
Salary increases
Salary ranges
Starting salary
Incentives/Bonuses
Assignments
Work hours
Non quantifiable data that may be collected by a salary survey
Educational requirements
Geographic location
Hiring Sources
Working conditions
Characteristics of a salary survey
- Include list of participating companies that are reviewed
- Ensure that competitors in the labor market are sufficiently represented.
- Include job descriptions
- Include total compensation information that includes retirement plans, bonuses, incentives, and base pay
What 2 things are established/calculated by developing a pay structure?
Pay grades
Pay ranges
What are job grades?
Used to group jobs that have approximately the same relative internal worth
True or false: All jobs within a particular grade are paid the same rate or within the same rate range.
True
Factors that determine the number of job grades in a pay structure.
Size of organization
Vertical distance between highest and
lowest level job
How finely the organization defines jobs
and differentiates between them
Pay increase and promotion policy of
organization
Slope of pay policy line
Administrative efficiency concerns
Pay Structure Basics
Pay Ranges - set upper & lower bounds
of possible compensation for
individuals for whose jobs fall in the
grade
Pay ranges are created for each job
grade.
Market data from surveys is used to
establish the maximum, minimum,
and midpoint of the pay range
The pay grade will vary depending on
the organization’s promotion policy,
pay increase policy, and other
administrative concerns.
Pay range spread formula
(Maximum - Minimum) / Minimum
Typical range spreads
Non-exempt - 40%
Exempt - 50%
Executive - 60%
Can there be an overlap between pay ranges?
Yes
Overlap between pay ranges makes it possible for an ___________worker in a job in a ___________ grade to be paid MORE than an ______________ worker in a _____________ grade.
Experienced, lower, inexperienced, higher
Who is responsible for maintaining a pay structure?
Human Resources
Committee
Outsource
What are 3 types of reward systems?
Longevity-based
Performance-based
Skilled-based
Which reward system is popular in the public sector?
Longevity-based
Longevity-based reward system
Allows “hands off” management
Can be used in conjunction with other
reward systems
Why is a longevity-based system ineffective as a reward system?
Does not reward performing employees
Does not discourage undesired
behaviors
Performance-based reward system
Pay / bonuses directly linked to
employee’s performance
Rewards performing employees
Can extinguish undesirable behavior
Mechanism for establishing & communicating specific performance goals
In a performance-based reward system, increases are based on __________ of salary range, not on current salary.
Midpoint
In a skilled-based system, pay/bonuses are linked to employee’s ________________.
Abilities
Skilled-based system encourages professional _______________.
Advancement
In a skills based system, employees are rewarded as they ____________ established skill areas.
Master
In a skills based system, desired skills areas must be ___________________.
Pre-established
What 2 things are true of desired skills areas that are pre-established in a skills based system
Must directly support purpose of position or organization
May not be applicable to all positions/units
