CHAPTER 5
LEGISLATION AND COMPENSATION
In the latter part of the nineteenth century, governments began to significantly influence the
compensation practices of organizations. Since then, minimum wages, hours worked, retirement plans,
unemployment insurance, and workers’ compensation for employees disabled as a result of work-related
accident or illness have all been influenced by legislation. In the 1930s, the United States government
became actively involved in and significantly influenced the compensation behavior of organizations.
Legislation that influences compensation practices may be grouped under such major headings as
1. Wage and Hour Legislation
2. Employer Pension and Welfare (Benefits) Legislation
Many pieces of legislation have been passed over the years that directly influence only federal
2. Major wages, hours, and benefits acts and the requirements they place on organizations.
4. The increasing recognition of tax treatment on compensation practices by employees at all
levels.
SIGNIFICANT POINTS OF INTEREST
1. A major area of government influence over compensation practices has been the
2. Although government influence over compensation practices has been developing over
3. Variation among the state workers’ compensation laws will become less evident as more
states reform their laws and improve worker benefits under their respective laws.
4. In addition to the Department of Labor, other federal departments and agencies that
6. The U.S. Treasury Department enforces tax provisions.
8. The Equal Employment Opportunity Commission enforces nondiscriminatory employment
practices which include many areas covered in compensation.
10. The Council on Wage and Price Stability is within the Executive Office of the President and
can influence wages and prices.