Instructor Manual Part 4 and 5: Chapter 13-18: Human Resource Management, 17e Gary Dessler
Part Four
Compensation
Chapter 13
Benefits and Services
Lecture Outline:
Introduction: The Benefits Picture Today
Policy Issues
Pay for Time Not Worked
Unemployment Insurance
Vacations and Holidays
Know Your Employment Law: Vacations
Sick Leave
Know Your Employment Law: The Family and Medical Leave Act and Other Laws
FMLA Guidelines
Severance Pay
HR Practices around the Globe: Severance Pay in France
Supplemental Unemployment Benefits
Insurance Benefits
Workers’ Compensation
Hospitalization, Health, and Disability Insurance
Know Your Employment Law: Patient Protection and Affordable Care Act of 2010, and other
laws
COBRA
Other Laws
Trends in Employer Health-Care Cost Control
Long-Term Care
Life Insurance
Benefits for Part-Time and Contingent Workers
Retirement Benefits
Social Security
Pension Plans
Know Your Employment Law: Pension Planning Laws
Pensions and Early Retirement
Online Benefits Management Systems
Personal Services and Family-Friendly Benefits
Personal Services
Family-Friendly Benefits
Other Personal Services Benefits
Domestic Partner Benefits
The Strategic Context: Clif Bar
Executive Perquisites
Copyright © 2024 Pearson Education, Inc.
, Chapter 13: Benefits and Services 13-2
Flexible Benefits Programs
The Cafeteria Approach
HR Tools for Line Managers and Small Businesses: Employee Leasing
Flexible Work Schedules
Employee Engagement Guide for Managers
Costco’s Compensation Plan
Chapter Review
Where Are We Now…
The main purpose of this chapter is to explain the third major pay component: employee benefits.
The main topics we discuss are pay for time not worked benefits, insurance benefits, retirement
benefits, personal services and family-friendly benefits, flexible benefits programs, and employee
engagement guide for managers. This chapter will complete our discussion on employee
compensation.
Learning Objectives:
13-1. Name and define each of the main pay for time not worked benefits.
13-2. Describe each of the main insurance benefits.
13-3. Discuss the main retirement benefits.
13-4. Outline the main employees’ services benefits.
13-5. Explain the main flexible benefit programs.
13-6. Explain how to use benefits to improve engagement, productivity, and performance.
Annotated Outline:
I. Introduction: The Benefits Picture Today—benefits are indirect financial and nonfinancial
payments.
A. Policy Issues—the list of policy issues includes what benefits to offer, who receives
coverage, whether to include retirees in the plan, whether to deny benefits to employees
during initial “probationary” periods, how to finance benefits, cost-containment
procedures, and how to communicate benefits’ options to employees. Benefits can be
classified by (1) pay for time not worked; (2) insurance benefits; (3) retirement benefits; (4)
personal services benefits; and (5) flexible benefits. Some benefits are required by law,
while others are discretionary.
II. Pay for Time Not Worked—also called supplemental pay benefits; it is a very costly benefit
because of the large amount of time off most employees receive.
A. Unemployment Insurance—all states have unemployment insurance or compensation acts
(that follow federal guidelines), which provide for weekly benefits if a person is unable to
work through some fault other than their own. All states follow federal unemployment
insurance guidelines.
B. Vacations and Holidays—the number of paid employee vacation days and holidays varies
considerably from employer to employer. Firms have to address several holiday- and
Copyright © 2024 Pearson Education, Inc.
, Chapter 13: Benefits and Services 13-3
vacation-related policy issues. There are a myriad of laws that affect benefits. Vacation and
holiday pay legal issues are discussed.
C. Know Your Employment Law: Vacations—although federal law doesn’t require vacation
benefits, the employer must still formulate its vacation policy with care.
D. Sick Leave—provides pay to employees when they’re out of work due to illness. Most sick
leave policies grant full pay for a specified number of permissible sick days.
1. Cost-Reduction Tactics—employers use several tactics to reduce excessive sick leave
absence. Some repurchase unused sick leave at the end of the year by paying their
employees a sum for each unused sick day. The problem is that legitimately sick
employees may come to work. Many employers use pooled paid leave plans (or
“banks”). These plans lump together sick leave, vacation, and personal days into a
single leave pool.
E. HR as a Profit Center: Controlling Sick Leave
F. Know Your Employment Law: The Family and Medical Leave Act and Other Laws—
FMLA stipulates that: (1) private employers of 50 or more employees must provide eligible
employees up to 12 weeks of unpaid leave for their own serious illness, the birth or
adoption of a child, or the care of a seriously ill child, spouse, or parent; (2) employers may
require employees to take any unused paid sick leave as part of the 12-week leave provided
in the law; (3) employees taking leave are entitled to receive health benefits while they are
on unpaid leave; and (4) employers must guarantee employees the right to return to their
previous or equivalent position with no loss of benefits at the end of the leave; however, the
law provides a limited exception from this provision. Vague interpretations of the law have
resulted in leaves sometimes being approved even when they were not legitimate.
G. FMLA Guidelines—managers who want to avoid granting nonrequired FMLA leaves must
understand the law.
H. Severance Pay—a one-time payment when terminating an employee, severance is
considered a humanitarian gesture and good public relations. Most managers expect
employees to give them at least one or two weeks’ notice if they plan to quit; it therefore
seems appropriate to provide at least one or two weeks’ severance if an employee is being
dismissed. A severance plan may be subject to ERISA if the employer has a legal
obligation to make severance payments, as is the case under some union contracts. Even
voluntary plans could become subject to ERISA if the employer identifies it as a plan
established or maintained by the employer in employee handbooks.
I. HR Practices around the Globe: Severance Pay in France—French labor law is complex
and, aimed mostly at protecting employees’ rights.
J. Supplemental Unemployment Benefits—these benefits supplement the employee’s
unemployment compensation and help the person maintain his/her standard of living for a
time while he/she is out of work due to layoffs, reduced workweeks, and relocations. They
are becoming more prevalent in union agreements.
III. Insurance Benefits
A. Workers’ Compensation—refers to the sure, prompt income and medical benefits provided
in work-related accidents to the victims or their dependents, regardless of fault. Every state
has its own workers’ compensation law and administrative commission, and some run their
own insurance programs. Most states require employers to carry workers’ compensation
Copyright © 2024 Pearson Education, Inc.
, Chapter 13: Benefits and Services 13-4
insurance. Neither the state nor the federal government contributes any funds for workers’
compensation.
1. How Benefits Are Determined—workers’ compensation can be monetary or medical.
Monetary awards are based on a formula regarding the disability involved and the
worker’s average weekly wages. Some disabilities or losses also receive monetary
awards based on a schedule of those losses.
2. Controlling Workers’ Compensation Costs—the costs of insurance premiums depend
on the number and dollar amount of claims, thus minimizing such claims is important.
Some ways to reduce such claims is to screen out accident-prone workers, reduce
accident-causing conditions in facilities, institute effective safety and health programs,
and comply with government standards on these matters. Many firms institute
rehabilitation programs to get injured employees back on the job as fast as possible,
since workers’ compensation costs accumulate as long as the person is out of work.
B. Hospitalization, Health, and Disability Insurance—these benefits are aimed at providing
protection against hospitalization costs and loss of income arising from accidents or illness
occurring from off-the-job causes. They are offered by most employers because medical
care and insurance are so expensive. Employer health and hospitalization plans must
comply with the Americans with Disabilities Act. Accidental death and dismemberment
coverage provides a lump-sum benefit in addition to life insurance benefits when death is
accidental. Disability insurance provides income protection for loss of salary due to illness
or accident.
1. A health maintenance organization (HMO) is a medical organization consisting of
several specialists operating out of a community-based health-care center.
2. Preferred provider organizations (PPOs), a cross between HMOs and the traditional
doctor/patient arrangement, are groups of health-care providers that contract to provide
medical care services at a reduced fee. The costs of mental health treatment are rising
because of widespread drug and alcohol problems. There is an increase in the number
of states requiring employers to offer a minimum package of mental health benefits.
3. The Mental Health Parity Act of 1996 sets minimum mental health-care benefits at the
national level.
C. Know Your Employment Law: Patient Protection and Affordable Care Act of 2010, and
other laws—The Patient Protection and Affordable Care Act requires employers with at
least 50 full-time-equivalent employees offer minimum levels of affordable health-care
coverage or pay a penalty. States also run health insurance exchanges for health insurance.
D. COBRA—the Consolidated Omnibus Budget Reconciliation Act requires most private
employers to continue to make health benefits available to separated employees and their
families for a time, generally 19 months after separation. The former employee must pay
for the coverage.
E. Other Laws—there are other laws that are pertinent as well: the Employee Retirement
Income Security Act of 1974 (ERISA), the Newborn Mother’s Protection Act of 1996, the
Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Americans with
Disabilities Act, and the Genetic Information Nondiscrimination Act of 2008 (GINA).
F. Trends in Employer Health-Care Cost Control—many employers are changing their
medical plans and using cost-containment specialists to reduce health-care costs. Also,
consumer education is among the most important initiatives in health administration.
Employees must know the costs of health choices in order to make better decisions. More
Copyright © 2024 Pearson Education, Inc.
Part Four
Compensation
Chapter 13
Benefits and Services
Lecture Outline:
Introduction: The Benefits Picture Today
Policy Issues
Pay for Time Not Worked
Unemployment Insurance
Vacations and Holidays
Know Your Employment Law: Vacations
Sick Leave
Know Your Employment Law: The Family and Medical Leave Act and Other Laws
FMLA Guidelines
Severance Pay
HR Practices around the Globe: Severance Pay in France
Supplemental Unemployment Benefits
Insurance Benefits
Workers’ Compensation
Hospitalization, Health, and Disability Insurance
Know Your Employment Law: Patient Protection and Affordable Care Act of 2010, and other
laws
COBRA
Other Laws
Trends in Employer Health-Care Cost Control
Long-Term Care
Life Insurance
Benefits for Part-Time and Contingent Workers
Retirement Benefits
Social Security
Pension Plans
Know Your Employment Law: Pension Planning Laws
Pensions and Early Retirement
Online Benefits Management Systems
Personal Services and Family-Friendly Benefits
Personal Services
Family-Friendly Benefits
Other Personal Services Benefits
Domestic Partner Benefits
The Strategic Context: Clif Bar
Executive Perquisites
Copyright © 2024 Pearson Education, Inc.
, Chapter 13: Benefits and Services 13-2
Flexible Benefits Programs
The Cafeteria Approach
HR Tools for Line Managers and Small Businesses: Employee Leasing
Flexible Work Schedules
Employee Engagement Guide for Managers
Costco’s Compensation Plan
Chapter Review
Where Are We Now…
The main purpose of this chapter is to explain the third major pay component: employee benefits.
The main topics we discuss are pay for time not worked benefits, insurance benefits, retirement
benefits, personal services and family-friendly benefits, flexible benefits programs, and employee
engagement guide for managers. This chapter will complete our discussion on employee
compensation.
Learning Objectives:
13-1. Name and define each of the main pay for time not worked benefits.
13-2. Describe each of the main insurance benefits.
13-3. Discuss the main retirement benefits.
13-4. Outline the main employees’ services benefits.
13-5. Explain the main flexible benefit programs.
13-6. Explain how to use benefits to improve engagement, productivity, and performance.
Annotated Outline:
I. Introduction: The Benefits Picture Today—benefits are indirect financial and nonfinancial
payments.
A. Policy Issues—the list of policy issues includes what benefits to offer, who receives
coverage, whether to include retirees in the plan, whether to deny benefits to employees
during initial “probationary” periods, how to finance benefits, cost-containment
procedures, and how to communicate benefits’ options to employees. Benefits can be
classified by (1) pay for time not worked; (2) insurance benefits; (3) retirement benefits; (4)
personal services benefits; and (5) flexible benefits. Some benefits are required by law,
while others are discretionary.
II. Pay for Time Not Worked—also called supplemental pay benefits; it is a very costly benefit
because of the large amount of time off most employees receive.
A. Unemployment Insurance—all states have unemployment insurance or compensation acts
(that follow federal guidelines), which provide for weekly benefits if a person is unable to
work through some fault other than their own. All states follow federal unemployment
insurance guidelines.
B. Vacations and Holidays—the number of paid employee vacation days and holidays varies
considerably from employer to employer. Firms have to address several holiday- and
Copyright © 2024 Pearson Education, Inc.
, Chapter 13: Benefits and Services 13-3
vacation-related policy issues. There are a myriad of laws that affect benefits. Vacation and
holiday pay legal issues are discussed.
C. Know Your Employment Law: Vacations—although federal law doesn’t require vacation
benefits, the employer must still formulate its vacation policy with care.
D. Sick Leave—provides pay to employees when they’re out of work due to illness. Most sick
leave policies grant full pay for a specified number of permissible sick days.
1. Cost-Reduction Tactics—employers use several tactics to reduce excessive sick leave
absence. Some repurchase unused sick leave at the end of the year by paying their
employees a sum for each unused sick day. The problem is that legitimately sick
employees may come to work. Many employers use pooled paid leave plans (or
“banks”). These plans lump together sick leave, vacation, and personal days into a
single leave pool.
E. HR as a Profit Center: Controlling Sick Leave
F. Know Your Employment Law: The Family and Medical Leave Act and Other Laws—
FMLA stipulates that: (1) private employers of 50 or more employees must provide eligible
employees up to 12 weeks of unpaid leave for their own serious illness, the birth or
adoption of a child, or the care of a seriously ill child, spouse, or parent; (2) employers may
require employees to take any unused paid sick leave as part of the 12-week leave provided
in the law; (3) employees taking leave are entitled to receive health benefits while they are
on unpaid leave; and (4) employers must guarantee employees the right to return to their
previous or equivalent position with no loss of benefits at the end of the leave; however, the
law provides a limited exception from this provision. Vague interpretations of the law have
resulted in leaves sometimes being approved even when they were not legitimate.
G. FMLA Guidelines—managers who want to avoid granting nonrequired FMLA leaves must
understand the law.
H. Severance Pay—a one-time payment when terminating an employee, severance is
considered a humanitarian gesture and good public relations. Most managers expect
employees to give them at least one or two weeks’ notice if they plan to quit; it therefore
seems appropriate to provide at least one or two weeks’ severance if an employee is being
dismissed. A severance plan may be subject to ERISA if the employer has a legal
obligation to make severance payments, as is the case under some union contracts. Even
voluntary plans could become subject to ERISA if the employer identifies it as a plan
established or maintained by the employer in employee handbooks.
I. HR Practices around the Globe: Severance Pay in France—French labor law is complex
and, aimed mostly at protecting employees’ rights.
J. Supplemental Unemployment Benefits—these benefits supplement the employee’s
unemployment compensation and help the person maintain his/her standard of living for a
time while he/she is out of work due to layoffs, reduced workweeks, and relocations. They
are becoming more prevalent in union agreements.
III. Insurance Benefits
A. Workers’ Compensation—refers to the sure, prompt income and medical benefits provided
in work-related accidents to the victims or their dependents, regardless of fault. Every state
has its own workers’ compensation law and administrative commission, and some run their
own insurance programs. Most states require employers to carry workers’ compensation
Copyright © 2024 Pearson Education, Inc.
, Chapter 13: Benefits and Services 13-4
insurance. Neither the state nor the federal government contributes any funds for workers’
compensation.
1. How Benefits Are Determined—workers’ compensation can be monetary or medical.
Monetary awards are based on a formula regarding the disability involved and the
worker’s average weekly wages. Some disabilities or losses also receive monetary
awards based on a schedule of those losses.
2. Controlling Workers’ Compensation Costs—the costs of insurance premiums depend
on the number and dollar amount of claims, thus minimizing such claims is important.
Some ways to reduce such claims is to screen out accident-prone workers, reduce
accident-causing conditions in facilities, institute effective safety and health programs,
and comply with government standards on these matters. Many firms institute
rehabilitation programs to get injured employees back on the job as fast as possible,
since workers’ compensation costs accumulate as long as the person is out of work.
B. Hospitalization, Health, and Disability Insurance—these benefits are aimed at providing
protection against hospitalization costs and loss of income arising from accidents or illness
occurring from off-the-job causes. They are offered by most employers because medical
care and insurance are so expensive. Employer health and hospitalization plans must
comply with the Americans with Disabilities Act. Accidental death and dismemberment
coverage provides a lump-sum benefit in addition to life insurance benefits when death is
accidental. Disability insurance provides income protection for loss of salary due to illness
or accident.
1. A health maintenance organization (HMO) is a medical organization consisting of
several specialists operating out of a community-based health-care center.
2. Preferred provider organizations (PPOs), a cross between HMOs and the traditional
doctor/patient arrangement, are groups of health-care providers that contract to provide
medical care services at a reduced fee. The costs of mental health treatment are rising
because of widespread drug and alcohol problems. There is an increase in the number
of states requiring employers to offer a minimum package of mental health benefits.
3. The Mental Health Parity Act of 1996 sets minimum mental health-care benefits at the
national level.
C. Know Your Employment Law: Patient Protection and Affordable Care Act of 2010, and
other laws—The Patient Protection and Affordable Care Act requires employers with at
least 50 full-time-equivalent employees offer minimum levels of affordable health-care
coverage or pay a penalty. States also run health insurance exchanges for health insurance.
D. COBRA—the Consolidated Omnibus Budget Reconciliation Act requires most private
employers to continue to make health benefits available to separated employees and their
families for a time, generally 19 months after separation. The former employee must pay
for the coverage.
E. Other Laws—there are other laws that are pertinent as well: the Employee Retirement
Income Security Act of 1974 (ERISA), the Newborn Mother’s Protection Act of 1996, the
Health Insurance Portability and Accountability Act of 1996 (HIPAA), the Americans with
Disabilities Act, and the Genetic Information Nondiscrimination Act of 2008 (GINA).
F. Trends in Employer Health-Care Cost Control—many employers are changing their
medical plans and using cost-containment specialists to reduce health-care costs. Also,
consumer education is among the most important initiatives in health administration.
Employees must know the costs of health choices in order to make better decisions. More
Copyright © 2024 Pearson Education, Inc.
